Document:

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

                              REMOTE DYNAMICS, INC.

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

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

      For value received, Remote Dynamics, Inc., a Delaware corporation (the
"Maker"), hereby promises to pay to the order of _______________________
(together with its successors, representatives, and permitted assigns, the
"Holder"), in accordance with the terms hereinafter provided, the principal
amount of ________________________ ($______________), together with interest
thereon. Concurrently with the issuance of this Note, the Maker is issuing
separate series B subordinated secured convertible promissory notes and separate
original issue discount series B subordinated secured convertible promissory
notes (the "Other Notes") to separate purchasers (the "Other Holders") pursuant
to the Purchase Agreement (as defined in Section 1.1 hereof).

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

                                    ARTICLE I

      Section 1.1 Purchase Agreement. This Note has been executed and delivered
pursuant to the Note and Warrant Purchase Agreement dated as of November 30,
2006 (the "Purchase Agreement") by and among the Maker and the purchasers listed
therein. Capitalized terms used and not otherwise defined herein shall have the
meanings set forth for such terms in the Purchase Agreement.

      Section 1.2 Payment of Principal.

<PAGE>

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

      (b) If the Maker elects to pay the Principal Installment Amount in
registered shares of Common Stock, the number of registered shares of Common
Stock to be issued to the Holder shall be an amount equal to the greater of (i)
$0.02, subject to adjustment as provided in Section 3.6 hereof, and (ii) an
amount equal to the Principal Installment Amount divided by ninety percent (90%)
of the average of the VWAP (as defined in Section 1.2(c) hereof) for the ten
(10) Trading Days immediately preceding the Principal Payment Date; provided,
however, that if the Holder has delivered a Conversion Notice to the Maker or
delivers a Conversion Notice prior to the Principal Payment Date, the Holder
shall indicate in such Conversion Notice whether the principal amount of this
Note to be so converted shall be applied against the final Principal Installment
Amount or some other Principal Installment Amount. Notwithstanding the foregoing
to the contrary, the Maker may elect to pay the Principal Installment Amount in
registered shares of Common Stock on any Principal Payment Date only if (A) the
registration statement providing for the resale of the shares of Common Stock
issuable upon conversion of this Note (the "Registration Statement") is
effective and has been effective, without lapse or suspension of any kind, for a
period of twenty (20) consecutive calendar days, (B) trading in the Common Stock
shall not have been suspended by the Securities and Exchange Commission or the
OTC Bulletin Board (or other exchange or market on which the Common Stock is
trading), (C) the Maker is in material compliance with the terms and conditions
of this Note and the other Transaction Documents and no Event of Default exists
and is continuing, and (D) the issuance of shares of Common Stock on the
Principal Payment Date does not violate the provisions of Section 3.4 hereof.

                                        2
<PAGE>

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

      Section 1.3 Security Agreement. The obligations of the Maker hereunder are
secured by a continuing security interest in certain assets of the Maker
pursuant to the terms of a security agreement dated as of November 30, 2006 by
and among the Maker, on the one hand, and the Holder and the Other Holders, on
the other hand.

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

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

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

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

                                   ARTICLE II

                           EVENTS OF DEFAULT; REMEDIES

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

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

                                        3
<PAGE>

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

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

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

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

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

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

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

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

                                        4
<PAGE>

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

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

      (l) the failure of the Maker to instruct its transfer agent to remove any
legends from shares of Common Stock eligible to be sold under Rule 144 of the
Securities Act and issue such unlegended certificates to the Holder within three
(3) business days of the Holder's request so long as the Holder has complied
with Section 5.1 of the Purchase Agreement; or

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

      (n) the occurrence of an Event of Default under the Other Notes, the OID
Notes or any promissory notes issued by the Maker pursuant to the Share Exchange
Transaction (as defined in the Purchase Agreement).

                                        5
<PAGE>

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

                                   ARTICLE III

                      CONVERSION; ANTIDILUTION; PREPAYMENT

      Section 3.1 Conversion Option.

      (a) At any time on or after the date that is fifteen (15) months following
the Issuance Date, this Note shall be convertible (in whole or in part), at the
option of the Holder (the "Conversion Option"), into such number of fully paid
and non-assessable shares of Common Stock (the "Conversion Rate") as is
determined by dividing (x) that portion of the outstanding principal balance
under this Note as of such date that the Holder elects to convert by (y) the
Conversion Price (as defined in Section 3.2(a) hereof) then in effect on the
date on which the Holder faxes a notice of conversion (the "Conversion Notice"),
duly executed, to the Maker (facsimile number (972) 301-2263, Attn.: Chief
Executive Officer) (the "Voluntary Conversion Date"), provided, however, that
the Conversion Price shall be subject to adjustment as described in Section 3.6
below. The Holder shall deliver this Note to the Maker at the address designated
in the Purchase Agreement at such time that this Note is fully converted. With
respect to partial conversions of this Note, the Maker shall keep written
records of the amount of this Note converted as of each Conversion Date.

                                        6
<PAGE>

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

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

      Section 3.2 Conversion Price.

      (a) The term "Conversion Price" shall mean $.016, subject to adjustment
under Sections 3.2(b) and 3.6 hereof.

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

                                        7
<PAGE>

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

      Section 3.3 Mechanics of Conversion.

      (a) Not later than three (3) Trading Days after any Conversion Date, the
Maker or its designated transfer agent, as applicable, shall issue and deliver
to the Depository Trust Company ("DTC") account on the Holder's behalf via the
Deposit Withdrawal Agent Commission System ("DWAC") as specified in the
Conversion Notice, registered in the name of the Holder or its designee, for the
number of shares of Common Stock to which the Holder shall be entitled. In the
alternative, not later than three (3) Trading Days after any Conversion Date,
the Maker shall deliver to the applicable Holder by express courier a
certificate or certificates which shall be free of restrictive legends and
trading restrictions (other than those required by Section 5.1 of the Purchase
Agreement) representing the number of shares of Common Stock being acquired upon
the conversion of this Note (the "Delivery Date"). Notwithstanding the foregoing
to the contrary, the Maker or its transfer agent shall only be obligated to
issue and deliver the shares to the DTC on the Holder's behalf via DWAC (or
certificates free of restrictive legends) if such conversion is in connection
with a sale and the Holder has complied with the applicable prospectus delivery
requirements (as evidenced by documentation furnished to and reasonably
satisfactory to the Maker). If in the case of any Conversion Notice such
certificate or certificates are not delivered to or as directed by the
applicable Holder by the Delivery Date, the Holder shall be entitled by written
notice to the Maker at any time on or before its receipt of such certificate or
certificates thereafter, to rescind such conversion, in which event the Maker
shall immediately return this Note tendered for conversion, whereupon the Maker
and the Holder shall each be restored to their respective positions immediately
prior to the delivery of such notice of revocation, except that any amounts
described in Sections 3.3(b) and (c) shall be payable through the date notice of
rescission is given to the Maker.

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<PAGE>

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

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

                                        9
<PAGE>

      Section 3.4 Ownership Cap and Certain Conversion Restrictions.

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

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

      Section 3.5 Intentionally Omitted.

      Section 3.6 Adjustment of Conversion Price.

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

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

                                       10
<PAGE>

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

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

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

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

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

                                       11
<PAGE>

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

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

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

                                       12
<PAGE>

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

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

                  (2) in the event of any consolidation or merger of the Maker
in which the Maker is not the surviving corporation or in which the previously
outstanding shares of Common Stock of the Maker shall be changed into or
exchanged for the stock or other securities of another corporation, or in the
event of any sale of all or substantially all of the assets of the Maker for
stock or other securities of any corporation, the Maker shall be deemed to have
issued a number of shares of its Common Stock for stock or securities or other
property of the other corporation computed on the basis of the actual exchange
ratio on which the transaction was predicated, and for a consideration equal to
the fair market value on the date of such transaction of all such stock or
securities or other property of the other corporation. If any such calculation
results in adjustment of the applicable Conversion Price, or the number of
shares of Common Stock issuable upon conversion of the Notes, the determination
of the applicable Conversion Price or the number of shares of Common Stock
issuable upon conversion of the Notes immediately prior to such merger,
consolidation or sale, shall be made after giving effect to such adjustment of
the number of shares of Common Stock issuable upon conversion of the Notes. In
the event Common Stock is issued with other shares or securities or other assets
of the Maker for consideration which covers both, the consideration computed as
provided in this Section 3.6(viii) shall be allocated among such securities and
assets as determined in good faith by the Board of Directors of the Maker.

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

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

                                       13
<PAGE>

      (d) No Impairment. The Maker shall not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Maker, but will at all times in good
faith, assist in the carrying out of all the provisions of this Section 3.6 and
in the taking of all such action as may be necessary or appropriate in order to
protect the Conversion Rights of the Holder against impairment. In the event a
Holder shall elect to convert any Notes as provided herein, the Maker cannot
refuse conversion based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of law, violation
of an agreement to which such Holder is a party or for any reason whatsoever,
unless, an injunction from a court, or notice, restraining and or adjoining
conversion of all or of said Notes shall have issued and the Maker posts a
surety bond for the benefit of such Holder in an amount equal to one hundred
thirty percent (130%) of the amount of the Notes the Holder has elected to
convert, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Holder (as liquidated damages) in the event it obtains judgment.

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

                                       14
<PAGE>

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

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

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

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

      Section 3.7 Prepayment.

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

                                       15
<PAGE>

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

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

      (d) Intentionally Omitted.

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

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

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

                                       16
<PAGE>

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

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

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

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

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

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

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

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

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

      (g) Intentionally Omitted.

                                       17
<PAGE>

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

      (i) Mechanics of Prepayment at Option of Holder Upon Triggering Event.
Within one (1) business day after the occurrence of a Triggering Event, the
Maker shall deliver written notice thereof via facsimile and overnight courier
("Notice of Triggering Event") to each holder of the Notes. At any time after
the earlier of a holder's receipt of a Notice of Triggering Event and such
holder becoming aware of a Triggering Event, any holder of this Note and the
Other Notes then outstanding may require the Maker to prepay all of the Notes on
a pro rata basis by delivering written notice thereof via facsimile and
overnight courier ("Notice of Prepayment at Option of Holder Upon Triggering
Event") to the Maker, which Notice of Prepayment at Option of Holder Upon
Triggering Event shall indicate (i) the amount of the Note that such holder is
electing to have prepaid and (ii) the applicable Triggering Event Prepayment
Price, as calculated pursuant to Section 3.7(c) above. A holder shall only be
permitted to require the Maker to prepay the Note pursuant to Section 3.7 hereof
for the greater of a period of ten (10) days after receipt by such holder of a
Notice of Triggering Event or for so long as such Triggering Event is
continuing.

      (j) Payment of Prepayment Price. Upon the Maker's receipt of a Notice(s)
of Prepayment at Option of Holder Upon Triggering Event or a Notice(s) of
Prepayment at Option of Holder Upon Major Transaction from any holder of the
Notes, the Maker shall immediately notify each holder of the Notes by facsimile
of the Maker's receipt of such Notice(s) of Prepayment at Option of Holder Upon
Triggering Event or Notice(s) of Prepayment at Option of Holder Upon Major
Transaction and each holder which has sent such a notice shall promptly submit
to the Maker such holder's certificates representing the Notes which such holder
has elected to have prepaid. The Maker shall deliver the applicable Triggering
Event Prepayment Price, in the case of a prepayment pursuant to Section 3.7(i),
to such holder within five (5) business days after the Maker's receipt of a
Notice of Prepayment at Option of Holder Upon Triggering Event and, in the case
of a prepayment pursuant to Section 3.7(h), the Maker shall deliver the
applicable Major Transaction Prepayment Price immediately prior to the
consummation of the Major Transaction; provided that a holder's original Note
shall have been so delivered to the Maker; provided further that if the Maker is
unable to prepay all of the Notes to be prepaid, the Maker shall prepay an
amount from each holder of the Notes being prepaid equal to such holder's
pro-rata amount (based on the number of Notes held by such holder relative to
the number of Notes outstanding) of all Notes being prepaid. If the Maker shall
fail to prepay all of the Notes submitted for prepayment (other than pursuant to
a dispute as to the arithmetic calculation of the Prepayment Price), in addition
to any remedy such holder of the Notes may have under this Note and the Purchase
Agreement, the applicable Prepayment Price payable in respect of such Notes not
prepaid shall bear interest at the rate of two percent (2%) per month (prorated

                                       18
<PAGE>

for partial months) until paid in full. Until the Maker pays such unpaid
applicable Prepayment Price in full to a holder of the Notes submitted for
prepayment, such holder shall have the option (the "Void Optional Prepayment
Option") to, in lieu of prepayment, require the Maker to promptly return to such
holder(s) all of the Notes that were submitted for prepayment by such holder(s)
under this Section 3.7 and for which the applicable Prepayment Price has not
been paid, by sending written notice thereof to the Maker via facsimile (the
"Void Optional Prepayment Notice"). Upon the Maker's receipt of such Void
Optional Prepayment Notice(s) and prior to payment of the full applicable
Prepayment Price to such holder, (i) the Notice(s) of Prepayment at Option of
Holder Upon Triggering Event or the Notice(s) of Prepayment at Option of Holder
Upon Major Transaction, as the case may be, shall be null and void with respect
to those Notes submitted for prepayment and for which the applicable Prepayment
Price has not been paid, (ii) the Maker shall immediately return any Notes
submitted to the Maker by each holder for prepayment under this Section 3.7(j)
and for which the applicable Prepayment Price has not been paid and (iii) the
Conversion Price of such returned Notes shall be adjusted to the lesser of (A)
the Conversion Price as in effect on the date on which the Void Optional
Prepayment Notice(s) is delivered to the Maker and (B) the lowest Closing Bid
Price during the period beginning on the date on which the Notice(s) of
Prepayment of Option of Holder Upon Major Transaction or the Notice(s) of
Prepayment at Option of Holder Upon Triggering Event, as the case may be, is
delivered to the Maker and ending on the date on which the Void Optional
Prepayment Notice(s) is delivered to the Maker; provided that no adjustment
shall be made if such adjustment would result in an increase of the Conversion
Price then in effect. A holder's delivery of a Void Optional Prepayment Notice
and exercise of its rights following such notice shall not effect the Maker's
obligations to make any payments which have accrued prior to the date of such
notice. Payments provided for in this Section 3.7 shall have priority to
payments to other stockholders in connection with a Major Transaction.

      (k) Intentionally Omitted.

      Section 3.8 Inability to Fully Convert.

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

                                       19
<PAGE>

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

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

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

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

In the event a Holder shall elect to convert any portion of its Notes as
provided herein, the Maker cannot refuse conversion based on any claim that such
Holder or any one associated or affiliated with such Holder has been engaged in
any violation of law, violation of an agreement to which such Holder is a party
or for any reason whatsoever, unless, an injunction from a court, on notice,
restraining and or adjoining conversion of all or of said Notes shall have been
issued and the Maker posts a surety bond for the benefit of such Holder in an
amount equal to 130% of the principal amount of the Notes the Holder has elected
to convert, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Holder in the event it obtains judgment.

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

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

                                       20
<PAGE>

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

      Section 3.9 No Rights as Shareholder. Nothing contained in this Note shall
be construed as conferring upon the Holder, prior to the conversion of this
Note, the right to vote or to receive dividends or to consent or to receive
notice as a shareholder in respect of any meeting of shareholders for the
election of directors of the Maker or of any other matter, or any other rights
as a shareholder of the Maker.

                                   ARTICLE IV

                                  MISCELLANEOUS

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

                                       21
<PAGE>

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

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

      Section 4.4 Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, at law or in equity
(including, without limitation, a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit a holder's right to pursue actual damages for any failure by the
Maker to comply with the terms of this Note. Amounts set forth or provided for
herein with respect to payments, conversion and the like (and the computation
thereof) shall be the amounts to be received by the holder thereof and shall
not, except as expressly provided herein, be subject to any other obligation of
the Maker (or the performance thereof). The Maker acknowledges that a breach by
it of its obligations hereunder will cause irreparable and material harm to the
Holder and that the remedy at law for any such breach may be inadequate.
Therefore the Maker agrees that, in the event of any such breach or threatened
breach, the Holder shall be entitled, in addition to all other available rights
and remedies, at law or in equity, to seek and obtain such equitable relief,
including but not limited to an injunction restraining any such breach or
threatened breach, without the necessity of showing economic loss and without
any bond or other security being required.

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

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

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

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

                                       22
<PAGE>

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

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

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

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

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

                                       23
<PAGE>

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

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

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

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

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

                                                     REMOTE DYNAMICS, INC.

                                                     By:________________________
                                                        Name:
                                                        Title:

                                       24
<PAGE>

                                    EXHIBIT A

                                WIRE INSTRUCTIONS

Payee: _________________________________________________________________________

Bank: __________________________________________________________________________

Address: _______________________________________________________________________

         _______________________________________________________________________

Bank No.: ______________________________________________________________________

Account No.: ___________________________________________________________________

Account Name: __________________________________________________________________

                                       25
<PAGE>

                                     FORM OF

                              NOTICE OF CONVERSION

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

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

Date of Conversion _____________________________________________________________

Applicable Conversion Price ____________________________________________________

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

Signature_______________________________________________________________________
         [Name]

Address:________________________________________________________________________

        ________________________________________________________________________

                                       26THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.

                         SERIES E-7 WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                              REMOTE DYNAMICS, INC.

                            Expires December 4, 2013

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

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

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

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

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

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

<PAGE>

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

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

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

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

                  A =     the Warrant Price.

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

      (d) Issuance of Stock Certificates. In the event of any exercise of this
Warrant in accordance with and subject to the terms and conditions hereof, (i)
certificates for the shares of Warrant Stock so purchased shall be dated the
date of such exercise and delivered to the Holder hereof within a reasonable
time, not exceeding three (3) Trading Days after such exercise (the "Delivery
Date") or, at the request of the Holder (provided that a registration statement
under the Securities Act providing for the resale of the Warrant Stock is then
in effect), issued and delivered to the Depository Trust Company ("DTC") account
on the Holder's behalf via the Deposit Withdrawal Agent Commission System
("DWAC") within a reasonable time, not exceeding three (3) Trading Days after
such exercise, and the Holder hereof shall be deemed for all purposes to be the
holder of the shares of Warrant Stock so purchased as of the date of such
exercise and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been canceled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof at the Issuer's
expense within such time.

                                        2
<PAGE>

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

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

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

                                        3
<PAGE>

      (h) Compliance with Securities Laws.

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

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

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

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

                                        4
<PAGE>

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

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

      (a) Stock Fully Paid. The Issuer represents, warrants, covenants and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise hereunder will, when issued in accordance with the
terms of this Warrant, be duly authorized, validly issued, fully paid and
non-assessable and free from all taxes, liens and charges created by or through
the Issuer. The Issuer further covenants and agrees that during the period
within which this Warrant may be exercised, the Issuer will at all times have
authorized and reserved for the purpose of the issuance upon exercise of this
Warrant such number of shares of Common Stock that are not issued or reserved
for issuance as of the Original Issue Date; provided, however, upon the Issuer
filing the Charter Amendment (as defined in the Purchase Agreement), the Issuer
shall take all action necessary to at all times have authorized, and reserved
for the purpose of issuance, free of preemptive rights and other similar
contractual rights of stockholders, a number of shares of Common Stock equal to
one hundred twenty percent (120%) of the number of shares of Common Stock as
shall from time to time be sufficient to provide for the exercise of this
Warrant.

                                        5
<PAGE>

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

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

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

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

                                        6
<PAGE>

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

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

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

                                        7
<PAGE>

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

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

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

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

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

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

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

                                        8
<PAGE>

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

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

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

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

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

      (e) Issuance of Common Stock Equivalents. If at any time the Issuer shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which the Issuer is the surviving corporation)
issue or sell, any Common Stock Equivalents, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or exchange shall
be less than the Warrant Price in effect immediately prior to the time of such
issue or sale, or if, after any such issuance of Common Stock Equivalents, the
price per share for which Additional Shares of Common Stock may be issuable
thereafter is amended or adjusted, and such price as so amended shall be less
than the Warrant Price in effect at the time of such amendment or adjustment,
then the Warrant Price then in effect shall be adjusted as provided in Section
4(d). No further adjustments of the number of shares of Common Stock for which
this Warrant is exercisable and the Warrant Price then in effect shall be made
upon the actual issue of such Common Stock upon conversion or exchange of such
Common Stock Equivalents.

                                        9
<PAGE>

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

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

                                       10
<PAGE>

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

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

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

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

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

                                       11
<PAGE>

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

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

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

            (b) The Holder may not exercise the Warrant hereunder to the extent
such exercise would result in the Holder beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules thereunder) in
excess of 9.9% of the then issued and outstanding shares of Common Stock,
including shares issuable upon exercise of the Warrant held by the Holder after
application of this Section; provided, however, that upon a holder of this
Warrant providing the Issuer with a Waiver Notice that such holder would like to
waive this Section 7(b) with regard to any or all shares of Common Stock
issuable upon exercise of this Warrant, this Section 7(b) shall be of no force
or effect with regard to those shares of Warrant Stock referenced in the Waiver
Notice; provided, further, that this provision shall be of no further force or
effect during the sixty-one (61) days immediately preceding the expiration of
the term of this Warrant.

                                       12
<PAGE>

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

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

            "Additional Shares of Common Stock" means all shares of Common Stock
      issued by the Issuer after the Original Issue Date, and all shares of
      Other Common, if any, issued by the Issuer after the Original Issue Date,
      except: (i) securities issued (other than for cash) in connection with a
      merger, acquisition, or consolidation, (ii) securities issued pursuant to
      the conversion or exercise of convertible or exercisable securities issued
      or outstanding on or prior to the date hereof or issued pursuant to the
      Purchase Agreement or the Share Exchange Transaction (as defined in the
      Purchase Agreement), (iii) the Warrant Stock, (iv) securities issued in
      connection with bona fide strategic license agreements or other partnering
      arrangements so long as such issuances are not for the purpose of raising
      capital, (v) Common Stock issued or the issuance or grants of options to
      purchase Common Stock pursuant to the Issuer's stock option plans and
      employee stock purchase plans as they now exist on the Original Issue
      Date, (vi) any warrants issued to the placement agent and its designees
      for the transactions contemplated by the Purchase Agreement, (vii) Common
      Stock issued in connection with consulting or advisory services not in
      excess of 50,000,000 shares, and (viii) the payment of any principal in
      shares of Common Stock pursuant to the Notes or the promissory notes
      issued pursuant to the Share Exchange Transaction.

                                       13
<PAGE>

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

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

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

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

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

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

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

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

            "Independent Appraiser" means a nationally recognized or major
      regional investment banking firm or firm of independent certified public
      accountants of recognized standing (which may be the firm that regularly
      examines the financial statements of the Issuer) that is regularly engaged
      in the business of appraising the Capital Stock or assets of corporations
      or other entities as going concerns, and which is not affiliated with
      either the Issuer or the Holder of any Warrant.

                                       14
<PAGE>

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

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

            "Notes" means the series B subordinated secured convertible
      promissory notes issued by the Issuer to the Purchasers pursuant to the
      Purchase Agreement.

            "Original Issue Date" means December 4, 2006.

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

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

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

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

            "Per Share Market Value" means on any particular date (a) the VWAP,
      or (b) if the Common Stock is not then publicly traded the fair market
      value of a share of Common Stock as determined by an Independent Appraiser
      selected in good faith by the Majority Holders; provided, however, that
      the Issuer, after receipt of the determination by such Independent
      Appraiser, shall have the right to select an additional Independent
      Appraiser, in which case, the fair market value shall be equal to the
      average of the determinations by each such Independent Appraiser; and
      provided, further that all determinations of the Per Share Market Value
      shall be appropriately adjusted for any stock dividends, stock splits or
      other similar transactions during such period. The determination of fair
      market value by an Independent Appraiser shall be based upon the fair
      market value of the Issuer determined on a going concern basis as between
      a willing buyer and a willing seller and taking into account all relevant
      factors determinative of value, and shall be final and binding on all
      parties. In determining the fair market value of any shares of Common
      Stock, no consideration shall be given to any restrictions on transfer of
      the Common Stock imposed by agreement or by federal or state securities
      laws, or to the existence or absence of, or any limitations on, voting
      rights.

                                       15
<PAGE>

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

            "Purchasers" means the purchasers of the Notes and the Warrants
      issued by the Issuer pursuant to the Purchase Agreement.

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

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

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

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

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

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

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

                                       16
<PAGE>

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

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

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

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

      10. Other Notices. In case at any time:

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

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

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

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

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

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

                                       17
<PAGE>

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

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

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

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

                                       18
<PAGE>

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

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

Copies of notices to the Holder shall be sent to Kramer Levin Naftalis & Frankel
LLP, 1177 Avenue of the Americas, New York, New York 10036, Attention:
Christopher S. Auguste, Tel. No.: (212) 715-9100, Fax. No.: (212) 715-8000. Any
party hereto may from time to time change its address for notices by giving at
least ten (10) days written notice of such changed address to the other party
hereto.

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

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

                                       19
<PAGE>

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

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

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

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

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       20
<PAGE>

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

                                                     REMOTE DYNAMICS, INC.

                                                     By:________________________
                                                        Name:
                                                        Title:

                                       21
<PAGE>

                                  EXERCISE FORM
                               SERIES E-7 WARRANT

                              REMOTE DYNAMICS, INC.

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

Dated: _________________            Signature___________________________________

                                    Address  ___________________________________
                                             ___________________________________

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

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

                  Cash Exercise___________

                  Cashless Exercise_______

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

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

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

Where:

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

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

The Warrant Price ______________ ("A").

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

                                       22
<PAGE>

                                   ASSIGNMENT

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

Dated: _________________            Signature___________________________________

                                    Address  ___________________________________
                                             ___________________________________

                               PARTIAL ASSIGNMENT

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

Dated: _________________            Signature___________________________________

                                    Address  ___________________________________
                                             ___________________________________

                           FOR USE BY THE ISSUER ONLY:

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

                                       23

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