Document:

EXHIBIT
10.1

COMMON STOCK AND WARRANT PURCHASE AGREEMENT

THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT
(the “Agreement”) is entered into as of August 21, 2006, by
and among VUBOTICS, INC., a
Nevada corporation (the “Company”), with headquarters located at 5555
Glenridge Connector, Suite 200, Atlanta, Georgia 30342, and the purchasers
(collectively, the “Purchasers” and each a “Purchaser”) set forth
on Schedule 1
hereof, with regard to the following:

RECITALS

A.            The
Company and Purchasers are executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by the provisions of
Regulation D (“Regulation D”), as promulgated by the United
States Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “Securities Act”).

B.            The
Purchasers desire to (a) purchase, upon the terms and conditions stated in
this Agreement, shares of the Company’s Common Stock, $.001 par value per share
(the “Common Stock”) and (b) purchase, upon the terms and conditions stated in
this Agreement, the Stock Purchase Warrants (the “Warrants”) to purchase
shares of Common Stock, in the form attached hereto as Exhibit A.  The shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants are referred to herein as “Warrant
Shares.”  The shares of Common Stock
issued to the Purchasers hereunder (exclusive of the Warrant Shares) are
referred to herein as the “Common Shares.”  The Common Shares, the Warrants and the
Warrant Shares are collectively referred to herein as the “Securities”.

C.            Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement in the form attached
hereto as Exhibit B
(the “Registration Rights Agreement,” and collectively with this
Agreement, the Warrants and any other documents or agreements executed in
connection with the transactions contemplated hereunder, the “Transaction
Documents”), pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act, the rules and regulations
promulgated thereunder and applicable state securities laws.

AGREEMENTS

NOW, THEREFORE, in consideration of their respective
promises contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Purchasers hereby agree as follows:

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ARTICLE I

PURCHASE AND SALE OF COMMON STOCK AND WARRANTS

1.1           Purchase of Common Stock and
Warrants.  Subject to the terms and
conditions of this Agreement, the issuance, sale and purchase of the Common
Shares and Warrants shall be consummated in a “Closing.”  The purchase price (the “Purchase Price”)
shall be THIRTY CENTS ($.30) per Unit, for up to TWO MILLION
TWO HUNDRED THOUSAND DOLLARS ($2,200,000) for 7,333,333 Units. 
Each “Unit” will consist of (a) one (1) share of Common
Stock, and (b) a Warrant for the purchase of one (1) Warrant Share at an
exercise price of SIXTY CENTS ($.60) per share, with a term of five (5) years.  On the date
of the Closing, subject to the satisfaction or waiver of the conditions set
forth in ARTICLES VI and VII hereof, the Company shall issue
and sell to each Purchaser, and each Purchaser severally agrees to purchase
from the Company, the number of Common Shares and a Warrant to purchase the
number of Warrant Shares set forth on Schedule 1 hereto.  Each
Purchaser’s obligation to purchase Common Shares and Warrants hereunder is
distinct and separate from each other Purchaser’s obligation to purchase, and
no Purchaser shall be required to purchase hereunder more than the number of
Common Shares and a Warrant to purchase the number of Warrant Shares set forth
on Schedule 1
hereto.  The obligations of the Company
with respect to each Purchaser shall be separate from the obligations of each
other Purchaser and shall not be conditioned as to any Purchaser upon the
performance of obligations of any other Purchaser.  The Purchase Price will be paid into Escrow
as provided in Exhibit C hereto.

1.2           Closing Fee.  The Purchaser acknowledges that the Company
has engaged placement agents (each, a “Placement Agent”) in connection
with the offering of the Units (the “Offering”) and, as consideration
for their services, has agreed to pay each Placement Agent at the Closing a
cash commission equal to seven percent (7%) of the gross proceeds resulting
from funds each raises pursuant to the Offering and issue each Placement Agent
a warrant (the “Placement Agent Warrant”) to purchase a number of shares
of Common Stock equal to eight percent (8%) of the quotient obtained by
dividing (a) the aggregate gross proceeds resulting from funds each raises
pursuant to the offering, by (b) the exercise price of the Warrant issued to
Purchaser hereunder. Each Placement Agent Warrant will have a term of five
years and be exercisable at a price equal to the exercise price of the Warrant
issued to Purchaser hereunder. At or before the Closing, the Company will also
reimburse each Placement Agent for all expenses incurred by such Placement Agent, subject
to any limitations set forth in agreements between the Company and such
Placement Agents.  The Company hereby
agrees to indemnify and hold harmless the Placement Agents and their officers,
directors, employees, agents and shareholders, individually and collectively (“Placement
Agent Indemnified Person(s)”) from and against any and all claims,
liabilities, losses, damages, costs and reasonable expenses incurred by any
Placement Agent Indemnified Person (including reasonable fees and disbursements
of counsel) which are related to or arising out of: (i) any untrue statement of
any material fact made by the Company; or (ii) any omission of material fact
necessary to make any statement not misleading, made by the Company.  The Company will not however, be responsible
for any claims, liabilities, losses, damages, or expenses, which resulted
directly or indirectly from any Placement Agent’s negligence or willful
misconduct.

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1.3           Closing Date.  Subject to the satisfaction (or waiver) of
the conditions set forth in ARTICLES VI
and VII below, the date and time
of the issuance, sale and purchase of the Common Shares and Warrants pursuant
to this Agreement shall be on or before 5:00 p.m.
Georgia time, on August 21, 2006.

ARTICLE II

PURCHASER’S REPRESENTATIONS AND WARRANTIES

Each
Purchaser represents and warrants to the Company, as of the date hereof and as
of the Closing, severally and not jointly with respect to itself and its
purchase hereunder and not with respect to any other Purchaser or the purchase
hereunder by any other Purchaser, that the following statements are true and
correct:

2.1               Investment Purpose.  Purchaser is purchasing the Common Shares and
the Warrants for Purchaser’s own account for investment only and not with a
view toward or in connection with the public sale or distribution thereof.
Purchaser will not, directly or indirectly, offer, sell, pledge or otherwise
transfer its Common Shares, Warrants or any interest therein except pursuant to
transactions that are exempt from the registration requirements of the
Securities Act and/or sales registered under the Securities Act.  Purchaser understands that Purchaser must
bear the economic risk of this investment indefinitely, unless the Securities
are registered pursuant to the Securities Act and any applicable state
securities laws or an exemption from such registration is available, and that
the Company has no present intention of registering any such Securities other
than as contemplated by the Registration Rights Agreement.

2.2               Accredited Investor Status.  Purchaser is an “accredited investor” as that
term is defined in Rule 501(a) of Regulation D as provided in Exhibit C
hereto.

2.3               Reliance
on Exemptions.  Purchaser understands
that the Common Shares and Warrants are being offered and sold to Purchaser in
reliance upon specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying upon
the truth and accuracy of, and Purchaser’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of Purchaser to acquire the Common Shares and Warrants.

2.4               Information. 
The Company has made available the documents publicly filed by the
Company with the SEC (such documents collectively, the “SEC Documents”).  Purchaser has been afforded the opportunity
to ask questions of the Company, was permitted to meet with the Company’s officers
and has received what the Purchaser believes to be complete and satisfactory
answers to any such inquiries.  Except
for the SEC Documents and the answers received by Purchaser as a result of
inquiries made by Purchaser to Company officers, and except as otherwise
provided in this Agreement, the Purchaser is not relying upon any information,
representations or warranties of any other party.  Neither such inquiries nor any other due
diligence investigation conducted by Purchaser or any of its representations
shall modify, amend or affect Purchaser’s right to rely on the Company’s
representations and

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warranties contained in ARTICLE III.  Purchaser
understands that Purchaser’s investment in the Securities involves a high
degree of risk, including, without limitation, the risks and uncertainties
disclosed in the SEC Documents.

2.5               Governmental Review.  Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.

2.6               Transfer
or Resale.  Purchaser understands
that (i) except as provided in the Registration Rights Agreement, the
Securities have not been and are not being registered under the Securities Act
or any state securities laws, and may not be offered, sold, pledged or
otherwise transferred unless subsequently registered thereunder or an exemption
from such registration is available (which exemption the Company expressly
agrees may be established as contemplated in clauses (b) and (c) of
Section 5.1 hereof); (ii) any sale of such Securities made in
reliance on Rule 144 under the Securities Act (or a successor rule) (“Rule 144”)  may be made only in accordance with the terms
of Rule 144 and further, if Rule 144 is not applicable, any resale of
such Securities without registration under the Securities Act under
circumstances in which the seller may be deemed to be an underwriter (as that
term is defined in the Securities Act) may require compliance with some other
exemption under the Securities Act or the rules and regulations of the SEC
thereunder in order for such resale to be allowed, (iii) the Company is
under no obligation to register such Securities under the Securities Act or any
state securities laws or to comply with the terms and conditions of any
exemption thereunder (in each case, other than pursuant to this Agreement or
the Registration Rights Agreement) and (iv) the Company has agreed to
register the Common Shares and Warrant Shares as provided in the Registration
Rights Agreement.

2.7               Legends.  Purchaser understands that, subject to ARTICLE V hereof, the
certificates for the Warrants and, until such time as the Warrant Shares and
Common Shares have been registered under the Securities Act as contemplated by
the Registration Rights Agreement or otherwise may be sold by Purchaser
pursuant to Rule 144 (subject to and in accordance with the procedures
specified in ARTICLE V
hereof), the certificates for the Common Shares and the Warrant Shares will
bear a restrictive legend (the “Legend”), which will include language in
substantially the following form:

THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.

2.8               Authorization;
Enforcement.  This Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of Purchaser and are valid and binding agreements of
Purchaser enforceable in accordance with their respective terms, except to the
extent that such validity or enforceability may be subject to

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or affected by any bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights or remedies of
creditors generally, or by other equitable principles of general application.

2.9               Residency. 
Purchaser is a resident of the jurisdiction set forth under Purchaser’s
name on the signature page hereto executed by Purchaser.

2.10             Short Sales and Confidentiality
Prior To the Date Hereof. Other than the transaction contemplated
hereunder, such Purchaser has not directly or indirectly, nor has any Person
acting on behalf of or pursuant to any understanding with such Purchaser,
executed any disposition, including short sales, in the securities of the
Company during the period commencing from the time that such Purchaser first
received a term sheet (written or oral) from the Company or any other person
setting forth the material terms of the transactions contemplated hereunder
until the date hereof. Other than to other parties to this Agreement, such
Purchaser has maintained the confidentiality of all disclosures made to it in
connection with this transaction (including the existence and terms of this
transaction).

2.11             General Solicitation.  No Purchaser is purchasing the Securities as
a result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to each
Purchaser as of the date hereof and as of the Closing that the following
statements are true and correct, except as set forth on the disclosure
schedules indicated below and attached hereto (the “Company Disclosure Schedules”)
and accept as disclosed in the SEC Documents.

3.1               Organization and Qualification.  Each of the Company and its subsidiaries as
set forth in Schedule 3.1 is a corporation duly organized and existing in good
standing under the laws of the jurisdiction in which it is incorporated, and
has the requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company and each of its subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction where the failure so to qualify or be in good standing
could reasonably be expected to have a Material Adverse Effect. “Material
Adverse Effect” means any effect which, individually or in the aggregate
with all other effects, reasonably would be expected to be materially adverse
to the business, operations, properties, financial condition, operating results
or prospects of the Company and its subsidiaries, taken as a whole on a
consolidated basis or on the transactions contemplated hereby.

3.2               Authorization; Enforcement.  (a) The Company has the requisite
corporate power and authority to enter into and perform under the Transaction
Documents, and to issue, sell and perform its obligations with respect to the
Securities in accordance with the

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terms hereof and thereof and in accordance with the
terms and conditions of the Securities; (b)  the execution, delivery and,
subject to receipt of the Capital Increase (as such term is hereinafter
defined), performance, of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Common Shares and the
Warrants, and the reservation for issuance of the Warrant Shares) have been
duly authorized by all necessary corporate action and no further consent or
authorization of the Company, its board of directors, or its stockholders or
any other Person is required with respect to any of the transactions
contemplated hereby or thereby, except for the Capital Increase; (c)  this
Agreement, the Registration Rights Agreement, the Common Shares, and the
Warrants have been duly executed and delivered by the Company; and
(d) this Agreement, the Registration Rights Agreement, the Common Shares,
and the Warrants constitute legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except (i) to the extent that such validity or enforceability may be
subject to or affected by any bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally the
enforcement of, creditors’ rights or remedies of creditors generally, or by
other equitable principles of general application, and (ii) as rights to
indemnity and contribution under the Registration Rights Agreement may be
limited by federal or state securities laws. “Person” means any
individual, sole proprietorship, partnership, limited liability company, joint
venture, trust, unincorporated association, corporation, entity or government
(whether federal, state, county, city or otherwise, including, without
limitation, any instrumentality, division, agency or department thereof).

3.3               Capitalization. 
The capitalization of the Company as of August 15, 2006 including
the authorized capital stock, the number of shares issued and outstanding, the
number of shares reserved for issuance pursuant to the Company’s stock option
plans, the number of shares reserved for issuance pursuant to securities (other
than the Warrants) exercisable for, or convertible into or exchangeable for,
any shares of Common Stock and the number of shares to be reserved for issuance
upon exercise of the Warrants is set forth on Schedule 3.3 hereof. All of such outstanding shares of
capital stock have been, or upon issuance will be, validly issued, fully paid
and nonassessable.  No shares of capital
stock of the Company (including the Common Shares and the Warrant Shares) are
subject to preemptive rights or any other similar rights of the stockholders of
the Company or any liens or encumbrances. 
Except as disclosed in Schedule 3.3
hereof, as of the date of this Agreement, (i) there are no outstanding
options, warrants, scrip, rights to subscribe for, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exercisable or exchangeable for, any shares of capital stock of the Company or
any of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
subsidiaries, (ii) issuance of the Securities will not trigger
anti-dilution rights for any other outstanding or authorized securities of the
Company, and (iii) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
its or their securities under the Securities Act (except the Registration Rights
Agreement).  The Company has made
available to Purchaser true and correct copies of the Company’s Articles of
Incorporation, as amended and in effect on the date hereof (“Articles of
Incorporation”), and the Company’s By-laws, as amended and in effect on the
date hereof (the “By-laws”).  The
Company has set forth on Schedule 3.3
hereof all instruments and agreements (other than the Articles of Incorporation
and By-laws) governing securities convertible into or

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exercisable or exchangeable for Common Stock of the
Company (and the Company shall provide to Purchaser copies thereof upon the
request of Purchaser).

3.4               No Conflicts. 
Except as set forth in Schedule 3.4, the execution, delivery and
performance of the Transaction Documents by the Company, and the consummation
by the Company of transactions contemplated hereby and thereby (including,
without limitation, the issuance and reservation for issuance, as applicable,
of the Securities) do not and will not (a) result in a violation of the
Articles of Incorporation or By-laws or (b) conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would become
a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which the Company or any of its subsidiaries is a party, or result in a
violation of any law, rule, regulation, order, judgment or decree (including
U.S. federal and state securities laws) applicable to the Company or any of its
subsidiaries, or by which any property or asset of the Company or any of its
subsidiaries, is bound or affected (except for such possible conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse
Effect).  Neither the Company nor any of
its subsidiaries is in violation of its Articles of Incorporation or other
organizational documents. Neither the Company nor any of its subsidiaries, is
in default (and no event has occurred which has not been waived which, with
notice or lapse of time or both, could reasonably be expected to put the
Company or any of its subsidiaries in default) under, nor has there occurred
any event giving others (with notice or lapse of time or both) any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, except for possible violations, defaults or rights as would not, individually
or in the aggregate, have a Material Adverse Effect.  The businesses of the Company and its
subsidiaries are not being conducted, and shall not be conducted so long as a
Purchaser owns any of the Securities, in violation of any law, ordinance or
regulation of any governmental entity, except for possible violations the
sanctions for which either individually or in the aggregate would not have a
Material Adverse Effect.  Except as
(A) such as may be required under the Securities Act in connection with the
performance of the Company’s obligations under the Registration Rights
Agreement, (B) filing of a Form D with the SEC, and
(C) compliance with the state securities or Blue Sky laws of applicable
jurisdictions, the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the Registration
Rights Agreement or to perform its obligations in accordance with the terms
hereof or thereof.

3.5               Consents. 
Except as set forth in Schedule 3.5, the execution, delivery and
performance by the Company of the Transaction Documents and the offer, issuance
and sale of the Securities require no consent of, action by or in respect of,
or filing with, any Person, governmental body, agency, or official other than
(i) filings that have been made pursuant to applicable state securities laws,
(ii) post-sale filings pursuant to applicable state and federal securities
laws, and (iii) any consent, action or filing that either individually or in
the aggregate would not have a Material Adverse Effect.  Subject to the accuracy of the
representations and warranties of each Purchaser set forth in ARTICLE II hereof, the Company has
taken all action necessary to exempt (i) the issuance and sale of the Common
Shares, (ii) the issuance of the Common Shares, (iii) the issuance of the
Warrants, and (iv) the issuance of the Warrant Shares,

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from the provisions of any stockholder rights plan
or other “poison pill” arrangement, any anti-takeover, business combination or
control share law or statute binding on the Company or to which the Company or
any of its assets and properties may be subject and any provision of the
Company’s Articles of Incorporation or By-laws that is or could reasonably be
expected to become applicable to the Purchasers as a result of the transactions
contemplated hereby, including without limitation, the issuance of the
Securities and the ownership, disposition or voting of the Securities by the
Purchasers or the exercise of any right granted to the Purchaser pursuant to
this Agreement or the other Transaction Documents.

3.6               SEC Documents; Financial Statements.  Since November 14, 2005, the Company has
timely filed the SEC Documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”).  The
Company has made available to each Purchaser true and complete copies of the
SEC Documents.  As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.  None of the statements made in any such SEC
Documents which is required to be updated or amended under applicable law has
not been so updated or amended.  The
consolidated financial statements of the Company included in the SEC Documents
have been prepared in accordance with U.S. generally accepted accounting
principles, consistently applied, and the rules and regulations of the SEC
during the periods involved (except (i) as may be otherwise indicated in
such consolidated financial statements or the notes thereto, or (ii) in
the case of unaudited interim statements, to the extent they do not include
footnotes or are condensed or summary statements) and present accurately and
completely the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).  Except as set forth in a manner clearly
evident to a sophisticated institutional investor in the consolidated financial
statements or the notes thereto of the Company included in the SEC Documents, the
Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business consistent
with past practice subsequent to the date of such financial statements and
(ii) obligations under contracts and commitments incurred in the ordinary
course of business consistent with past practice and not required under
generally accepted accounting principles to be reflected in such financial
statements.  To the extent required by
the rules of the SEC applicable thereto, the SEC Documents contain a complete
and accurate list of all material undischarged written or oral contracts,
agreements, leases or other instruments to which the Company or any subsidiary
is a party or by which the Company or any subsidiary is bound or to which any
of the properties or assets of the Company or any subsidiary is subject (each a
“Contract”).  None of the Company,
its subsidiaries or, to the Company’s Knowledge, any of the other parties
thereto, is in breach or violation of any Contract, which breach or violation
would have a Material Adverse Effect.  No
event, occurrence or condition exists which, with the lapse of time, the giving
of notice, or both, could become a default by the Company or its subsidiaries
thereunder which could reasonably be expected to have a Material Adverse
Effect.  For purposes of this Agreement, “Company’s
Knowledge”

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means the actual knowledge of the executive officers
(as defined in Rule 405 under the Securities Act) of the Company, after due
inquiry.

3.7               Absence of Certain Changes.  Since December
31, 2005, there has been no material adverse change and no material
adverse development in the business, properties, operations, financial
condition, results of operations or prospects of the Company, or clearly
evident to a sophisticated institutional investor from the SEC Documents,
including, without limitation:

(i)            any change in the consolidated assets, liabilities,
financial condition or operating results of the Company from that reflected in
the financial statements included in the Company’s Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2005, except for changes in the ordinary
course of business which have not and could not reasonably be expected to have
a Material Adverse Effect, individually or in the aggregate;

(ii)           any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock of
the Company, or any redemption or repurchase of any securities of the Company;

(iii)          any material damage, destruction or loss, whether or not
covered by insurance to any assets or properties of the Company or its
subsidiaries;

(iv)          any waiver, not in the ordinary course of business, by the
Company or any subsidiary of a material right or of a material debt owed to it;

(v)           any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company or a subsidiary, except
in the ordinary course of business and which is not material to the assets,
properties, financial condition, operating results or business of the Company
and its subsidiaries taken as a whole (as such business is presently conducted
and as it is proposed to be conducted);

(vi)          any change or amendment to the Company’s Articles of
Incorporation or By-laws, or material change to any material contract or
arrangement by which the Company or any subsidiary is bound or to which any of
their respective assets or properties is subject;

(vii)         any material labor difficulties or labor union organizing
activities with respect to employees of the Company or any subsidiary;

(viii)        any material transaction entered into by
the Company or a subsidiary other than in the ordinary course of business;

(ix)           the loss of the services of any key employee, or material
change in the composition or duties of the senior management of the Company or
any subsidiary;

(x)            the loss or threatened loss of any customer which has had
or could reasonably be expected to have a Material Adverse Effect; or

 9
 

 

(xi)           any other event or condition of any character that has had
or could reasonably be expected to have a Material Adverse Effect.

3.8               Absence of Litigation.  Except as disclosed in Schedule 3.8 hereof and as
disclosed in the Company’s SEC Documents filed by it with the SEC, there is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, or self-regulatory organization or body
pending or, to the Company’s Knowledge or any of its subsidiaries, threatened
against or affecting the Company, any of its subsidiaries, or any of their
respective directors or officers in their capacities as such.  There are no facts known to the Company
which, if known by a potential claimant or governmental authority, could
reasonably be expected to give rise to a claim or proceeding which, if asserted
or conducted with results unfavorable to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect.

3.9               Tax Matters. 
The Company and each subsidiary has timely prepared and filed all tax
returns required to have been filed by the Company or such subsidiary with all
appropriate governmental agencies and timely paid all taxes shown thereon or
otherwise owed by it.  The charges,
accruals and reserves on the books of the Company in respect of taxes for all
fiscal periods are adequate in all material respects, and there are no material
unpaid assessments against the Company or any subsidiary nor, to the Company’s
Knowledge, any basis for the assessment of any additional taxes, penalties or interest
for any fiscal period or audits by any federal, state or local taxing authority
except for any assessment which is not material to the Company and its
subsidiaries, taken as a whole.  All
taxes and other assessments and levies that the Company or any subsidiary is
required to withhold or to collect for payment have been duly withheld and
collected and paid to the proper governmental entity or third party when
due.  There are no tax liens or claims
pending or, to the Company’s Knowledge, threatened against the Company or any
subsidiary or any of their respective assets or property.  There are no outstanding tax sharing
agreements or other such arrangements between the Company and any subsidiary or
other corporation or entity.

3.10             Transactions with Affiliates.  Except as disclosed in the SEC Documents,
none of the officers or directors of the Company and, to the Company’s
Knowledge, none of the employees of the Company is presently a party to any
transaction with the Company or any subsidiary (other than as holders of stock
options and/or warrants, and for services as employees, officers and
directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the Company’s Knowledge, any entity
in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.

3.11             Internal Controls.  The Company and the subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable

 10
 

 

intervals and appropriate action is taken with
respect to any difference.  The Company
maintains and will continue to maintain a standard system of accounting
established and administered in accordance with GAAP and the applicable
requirements of the Exchange Act. The Company’s officers certified to the
Company’s internal controls as of the filing of the Company’s Form 10-QSB for
the quarter ended June 30, 2006
and since that date, that there have been no significant changes in the
Company’s internal controls (as such term is defined in Section 307(b) of
Regulation S-K) or, to the Company’s Knowledge, any other facts that would
significantly affect the Company’s internal controls.  The Company is not required at this date to
certify its internal controls under Section 404 of the Sarbanes-Oxley Act of
2002 and has not taken any steps necessary to evaluate its internal controls to
determine whether it will be able to take such a certification.

3.12             Disclosure. 
No information relating to or concerning the Company set forth in this
Agreement contains an untrue statement of a material fact.  No information relating to or concerning the
Company set forth in any of the SEC Documents contains a statement of material
fact that was untrue as of the date such SEC Document was filed with the
SEC.  The Company has not omitted to
state a material fact necessary in order to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading.  Except for the execution and
performance of this Agreement, no material fact (within the meaning of the
federal securities laws of the United States and of applicable state securities
laws) exists with respect to the Company which has not been publicly disclosed.

3.13             Acknowledgment Regarding Purchaser’s Purchase of the
Securities.  The Company acknowledges
and agrees that Purchaser is not acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this Agreement or the
transactions contemplated hereby, that this Agreement and the transaction
contemplated hereby, and the relationship between each Purchaser and the
Company, are “arms-length,” and that any statement made by Purchaser (except as
set forth in ARTICLE II),
or any of its representatives or agents, in connection with this Agreement and
the transactions contemplated hereby is not advice or a recommendation, is
merely incidental to Purchaser’s purchase of the Securities and has not been
relied upon as such in any way by the Company, its officers or directors.  The Company further represents to Purchaser
that the Company’s decision to enter into this Agreement and the transactions
contemplated hereby has been based solely on an independent evaluation by the
Company and its representatives.

3.14             No General Solicitation.  Neither the Company nor any distributor
participating on the Company’s behalf in the transactions contemplated hereby
(if any) nor any person acting for the Company, or any such distributor, has
conducted any “general solicitation,” as described in Rule 502(c) under
Regulation D, with respect to any of the Securities being offered hereby.

3.15             No Integrated Offering.  Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
the registration under the Securities Act pursuant to the provisions of
Regulation D.  The transactions
contemplated hereby are exempt from the registration

 11
 

 

requirements of the Securities Act, assuming the
accuracy of the representations and warranties herein contained of each
Purchaser.

3.16             No Brokers. 
Except as set forth in Schedule 3.16, the Company has taken no action
which would give rise to any claim by any person for brokerage commissions,
finder’s fees or similar payments by Purchaser relating to this Agreement or
the transactions contemplated hereby.

3.17             Intellectual Property.

(i)            To the Company’s Knowledge, all Intellectual Property of
the Company and its subsidiaries is currently in compliance with all legal
requirements (including timely filings, proofs and payments of fees) and is
valid and enforceable, except where the failure to be in compliance or to be
valid and enforceable has not and could not reasonably be expected to have a
Material Adverse Effect on the Company and its subsidiaries taken as a
whole.  No Intellectual Property of the
Company or its subsidiaries which is necessary for the conduct of Company’s and
each of its subsidiaries’ respective businesses as currently conducted or as
currently proposed to be conducted has been or is now involved in any
cancellation, dispute or litigation, and, to the Company’s Knowledge, no such
action is threatened.  No patent of the
Company or its subsidiaries has been or is now involved in any interference,
reissue, re-examination or opposition proceeding.  “Intellectual Property” means all of
the following: (a) patents, patent applications, patent disclosures and inventions
(whether or not patentable and whether or not reduced to practice); (b)
trademarks, service marks, trade dress, trade names, corporate names, logos,
slogans and Internet domain names, together with all goodwill associated with
each of the foregoing; (c) copyrights and copyrightable works; (d)
registrations, applications and renewals for any of the foregoing; and (e)
proprietary computer software (including but not limited to data, data bases
and documentation).

(ii)           All of the licenses and sublicenses and consent, royalty
or other agreements concerning Intellectual Property which are necessary for
the conduct of the Company’s and each of its subsidiaries’ respective
businesses as currently conducted or as currently proposed to be conducted to
which the Company or any subsidiary is a party or by which any of their assets
are bound (other than generally commercially available, non custom, off the
shelf software application programs having a retail acquisition price of less
than $5,000 per license) (collectively, “License Agreements”) are valid
and binding obligations of the Company or its subsidiaries that are parties
thereto and, to the Company’s Knowledge, the other parties thereto, enforceable
in accordance with their terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors’ rights generally, and there exists no event or condition which will
result in a material violation or breach of or constitute (with or without due
notice or lapse of time or both) a default by the Company or any of its
subsidiaries under any such License Agreement.

(iii)          The Company and its subsidiaries own or have the valid
right to use all of the Intellectual Property that is necessary for the conduct
of the Company’s and each of its subsidiaries’ respective businesses as
currently conducted or as currently proposed to be conducted and for the
ownership, maintenance and operation of the Company’s and its

 12
 

 

subsidiaries’ properties and assets, free and clear of all liens,
encumbrances, adverse claims or obligations to license all such owned
Intellectual Property, other than licenses entered into in the ordinary course
of the Company’s and its subsidiaries’ businesses.  The Company and its subsidiaries have a valid
and enforceable right to use all third party Intellectual Property and
confidential information used or held for use in the respective businesses of
the Company and its subsidiaries.

(iv)          To the Company’s Knowledge, the conduct of the Company’s
and its subsidiaries’ businesses as currently conducted does not infringe or
otherwise impair or conflict with (collectively, “Infringe”) any
Intellectual Property rights of any third party or any confidentiality
obligation owed to a third party, and, to the Company’s Knowledge, the
Intellectual Property and confidential information of the Company and its
subsidiaries which are necessary for the conduct of Company’s and each of its
subsidiaries’ respective businesses as currently conducted or as currently
proposed to be conducted are not being Infringed by any third party.  There is no litigation or order pending or
outstanding or, to the Company’s Knowledge, threatened or imminent, that seeks
to limit or challenge or that concerns the ownership, use, validity or
enforceability of any Intellectual Property or confidential information of the
Company and its subsidiaries and the Company’s and its subsidiaries’ use of any
Intellectual Property or confidential information owned by a third party, and,
to the Company’s Knowledge, there is no valid basis for the same.

(v)           The consummation of the transactions contemplated hereby
will not result in the alteration, loss, impairment of or restriction on the Company’s
or any of its subsidiaries’ ownership or right to use any of the Intellectual
Property or confidential information which is necessary for the conduct of
Company’s and each of its subsidiaries’ respective businesses as currently
conducted or as currently proposed to be conducted.

(vi)          The Company and its subsidiaries have taken reasonable
steps to protect the Company’s and its subsidiaries’ rights in their
Intellectual Property.  Each employee,
consultant and contractor who has had access to confidential information which
is necessary for the conduct of Company’s and each of its subsidiaries’
respective businesses as currently conducted or as currently proposed to be
conducted has executed an agreement to maintain the confidentiality of such
confidential information and has executed appropriate agreements that are
substantially consistent with the Company’s standard forms thereof.  Except under confidentiality obligations,
there has been no material disclosure of any of the Company’s or its subsidiaries’
confidential information to any third party.

3.18             Environmental Matters.  Neither the Company nor any subsidiary is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), owns or operates
any real property contaminated with any substance that is subject to any
Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, or is subject to any claim relating to any
Environmental Laws; and there is no pending or, to the Company’s Knowledge,
threatened investigation that might lead to such a claim.

 13

 

3.19             Certificates, Authorities and Permits.  The Company and each subsidiary possess
adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now operated
by it, and neither the Company nor any subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company or such
subsidiary, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.

3.20             Key Employees. 
No Key Employee, to the Company’s Knowledge, is, or is now expected to
be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each Key Employee does
not subject the Company or any of its subsidiaries to any liability with
respect to any of the foregoing matters. 
No Key Employee has, to the Company’s Knowledge, any intention to
terminate his employment with, or services to, the Company or any of its
subsidiaries. “Key Employee” means Philip Lundquist, the Chairman of the Company.

3.21             Labor Matters.

(i)            The Company is not a party to or bound by any collective
bargaining agreements or other agreements with labor organizations.  The Company has not violated in any material
respect any laws, regulations, orders or contract terms, affecting the
collective bargaining rights of employees, labor organizations or any laws,
regulations or orders affecting employment discrimination, equal opportunity
employment, or employees’ health, safety, welfare, wages and hours.

(ii)           (A) There are no labor disputes existing, or to the
Company’s Knowledge, threatened, involving strikes, slow-downs, work stoppages,
job actions, disputes, lockouts or any other disruptions of or by the Company’s
employees, (B) there are no unfair labor practices or petitions for election
pending or, to the Company’s Knowledge, threatened before the National Labor
Relations Board or any other federal, state or local labor commission relating
to the Company’s employees, (C) no demand for recognition or certification
heretofore made by any labor organization or group of employees is pending with
respect to the Company and (D) to the Company’s Knowledge, the Company enjoys
good labor and employee relations with its employees and labor organizations.

(iii)          To the Company’s Knowledge, the Company is, and at all
times has been, in full compliance in all material respects with all applicable
laws respecting employment (including laws relating to classification of
employees and independent contractors) and employment practices, terms and conditions
of employment, wages and hours, and immigration and naturalization.  There are no claims pending against the
Company before the Equal Employment Opportunity Commission or any other
administrative body or in any court asserting any violation of Title VII of the
Civil Rights Act of 1964, the Age Discrimination Act of 1967, 42 U.S.C. §§ 1981
or 1983 or any other federal, state or local law, statute or ordinance barring
discrimination in employment.

 14
 

 

(iv)          The Company is not a party to, or bound by, any employment
or other contract or agreement that contains any severance, termination pay or
change of control liability or obligation, including, without limitation, any “excess
parachute payment,” as defined in Section 2806(b) of the Internal Revenue Code.

ARTICLE IV

COVENANTS AND AGREEMENTS

4.1               Reasonable Efforts.  The parties shall use their commercially
reasonable efforts to timely satisfy each of the conditions described in ARTICLES VI and VII of this Agreement and to seek
its Board of Directors’ approval of this Agreement.

4.2               Securities Laws; Disclosure; Press Release.  The Company agrees to file a Form D with
respect to the Securities with the SEC as required under Regulation D. The
Company shall, on or prior to the date of Closing, take such action as is
necessary to sell the Securities to each Purchaser under applicable securities
laws of the states of the United States. 
The Company agrees to file a Form 8-K disclosing this Agreement and
the transactions contemplated hereby with the SEC within four (4) business
days following the date of Closing.  The
Company and each Purchaser shall consult with each other in connection with the
Form 8-K disclosing this Agreement and the transactions contemplated hereby,
and in issuing any other press releases with respect to the transactions
contemplated hereby, and no Purchaser shall issue any such press release or
otherwise make any such public statement without the prior consent of the
Company, which consent shall not unreasonably be withheld, except if such disclosure
is required by law, in which case the disclosing party shall promptly provide
the other party with prior notice of such public statement or communication.

4.3               Reporting Status.  So long as any Purchaser beneficially owns
any of the Securities but no longer then forty eight (48) months after the
Closing Date, the Company shall use commercially reasonable efforts to timely
file all reports required to be filed with the SEC pursuant to the Exchange
Act, and the Company shall not voluntarily terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination.

4.4               Reservation of Common Stock. The Company shall
take all action necessary to at all times have authorized, and reserved for the
purpose of issuance, not less than (i) prior to the Capital Increase, none of
the shares of its authorized Common Stock for the issuance of shares of Common
Stock upon exercise of all of the Warrants and (ii) from and after receipt of
the Capital Increase, subject to Stockholder Approval, 7,333,333 of the shares
of its authorized Common Stock for the issuance of shares of Common Stock upon
exercise of all of the Warrants. After the Capital Increase the Company shall
continue to reserve and keep available at all times, free of preemptive rights,
a sufficient number of shares of Common Stock for the purpose of enabling the
Company to issue the Warrant Shares pursuant to any exercise of the Warrants.

4.5               Stockholder Approval.  The Company shall provide each stockholder

 15
 

 

entitled to vote
at a special or annual meeting of stockholders of the Company (the “Stockholder Meeting”),
which initially shall be promptly called and held not later than December 31,
2006 (the “Stockholder Meeting
Deadline”), a proxy statement, substantially in the form which has
been previously reviewed by the Purchasers and a counsel of their choice at the
expense of the Company, soliciting each such stockholder’s affirmative vote at
the Stockholder Meeting for approval of resolutions (the “Resolutions”) providing for an increase in
the number of authorized shares of Common Stock to not less than 75,000,000
shares of Common Stock (the “Capital Increase”) (such affirmative approval
being referred to herein as the “Stockholder Approval”
and the date such approval is obtained, the “Stockholder Approval Date”), and the Company shall use its
reasonable best efforts to solicit its stockholders’ approval of the
Resolutions and to cause the Board to recommend to the stockholders that they
approve the Resolutions.  The Company
shall be obligated to seek to obtain the Stockholder Approval by the
Stockholder Meeting Deadline.  If, despite
the Company’s reasonable best efforts, the Stockholder Approval is not obtained
on or prior to the Stockholder Meeting Deadline, the Company shall cause an
additional Stockholder Meeting to be held every three (3) months thereafter
until such Stockholder Approval is obtained and the Company. If Stockholder
Approval is not for any reason obtained by the Stockholder Meeting Deadline,
then the Company shall make the payments to each Purchaser as provided in the
next sentence as liquidated damages and not as a penalty.  The amount to be paid by the Company to each
Purchaser shall be equal to 1% (the “Liquidated Damage Rate”) of the product of
(i) the per unit Purchase Price of the Units purchased by the Purchaser under
this Agreement and (ii) the number of Warrant Shares issuable upon exercise of
all of the Warrants then held by such Purchaser for each 30-day period after
the Stockholder Meeting Deadline during which Stockholder Approval is not
obtained, subject to an overall limit of up to 50 months of partial liquidated
damages. Such payments shall be made to each Purchaser no less frequently than
every 60 days.

4.6               Preemptive Right on Certain Issuances.

(a)               Grant
of Rights.  For a period of two years
after the Closing Date, the Company hereby grants to each Purchaser the right
to purchase, pro rata, all (or any part) of any New Securities (as defined in
Section 4.6(f) below) that the Company may, from time to time during such
period, propose to sell or issue.  The
Purchaser’s pro rata share of the New Securities (its “Pro Rata Amount”) for
purposes of this Section 4.6, is equal to the ratio of (i) the sum of the
number of shares of Common Stock then held by the Purchasers plus the number of
shares issuable to the Investor assuming all of the all of the Warrants held by
the Purchaser are exercised in accordance with their respective terms (the “Purchaser
Shares”) to (ii) the sum of (A) the total number of shares of the Common Stock
issued and outstanding as of the date of such determination, plus (B) the total
number of Purchaser Shares.

(b)               Notice.  The Company shall not issue, sell or exchange,
agree to issue, sell or exchange, or reserve or set aside for issuance, sale or
exchange any New Securities unless the Company shall deliver to each Purchaser
a written notice of any proposed or intended issuance, sale or exchange of New
Securities (the “Preemptive Offer”), which Preemptive Offer shall (i) identify
and describe the New Securities, (ii) describe the price and other terms upon
which they are to be issued, sold or exchanged, and the number or amount of the
New Securities to be issued, sold or exchanged, (iii) identify the persons or
entities, if known, to which or with which the New Securities are to be
offered, issued, sold or exchanged and (iv) offer to issue and

 16
 

 

sell to or exchange with such Purchaser such
Purchaser’s Pro Rata Amount.  The
Purchaser shall have the right, for a period of 15 days following delivery of
the Preemptive Offer, to purchase or acquire, at a price and upon the other
terms specified in the Preemptive Offer, the number or amount of New Securities
described above.  The Preemptive Offer by
its terms shall remain open and irrevocable for such 15-day period.

(c)               Acceptance of Preemptive Offer.  To accept a Preemptive Offer, in whole or in
part, a Purchaser must deliver a written notice to the Company prior to the end
of the 15-day Preemptive Offer period, setting forth the portion of the
Purchaser’s Pro Rata Amount that such Purchaser elects to purchase (the “Notice
of Acceptance”).

(d)               Company Sales of Refused
Securities.  The Company shall have
180 days from the expiration of the period set forth in Section 4.6(c) above to
issue, sell or exchange all or any part of such New Securities as to which a
Notice of Acceptance has not been given by the Purchaser (the “Refused
Securities”), but only upon terms and conditions that are not materially more
favorable to the purchaser of such New Securities as described in the
Preemptive Offer.  Notwithstanding
anything contained in this Section 4.6 to the contrary, the Preemptive Offer
need not be given prior to the purchase by the party intending to purchase the
New Securities described in the Preemptive Offer; provided that (i) such
Preemptive Offer is sent within five (5) days after the sale to such party is
consummated and remains open for a fifteen (15) day period from the receipt
thereof, (ii) the Company has set aside a number of shares sufficient to
satisfy the obligations of the Company pursuant to this Section 4.6, and (iii)
such New Securities purchased by the party intending to purchase the New
Securities described in the Preemptive Offer are not considered for purposes of
determining each Purchaser’s Pro Rata Amount pursuant to Section 4.6(a) hereof.

(e)               Completion of Purchase.  Upon the closing of the issuance, sale or
exchange of all or less than all the Refused Securities, the Purchaser shall
acquire from the Company, and the Company shall issue to the Purchaser, the
number or amount of New Securities specified in the Notices of Acceptance upon
the terms and conditions specified in the Preemptive Offer.  The purchase by the Purchaser of any New
Securities is subject in all cases to the preparation, execution and delivery
by the Company and the Purchaser or like investors of a purchase agreement
relating to such New Securities reasonably satisfactory in form and substance
to the Purchaser and the Company.

(f)                “New
Securities” Defined.  “New Securities”
means (a) any shares of Common Stock, preferred stock or other equity
securities of the Company, whether now authorized or not issued after the date
hereof; and (b) any options, warrants, convertible notes, or similar rights
issued after the date hereof that are or may become convertible into or
exercisable or exchangeable for, or that carry rights to subscribe for, any
equity securities of the Company (each, a “Derivative Security”); provided,
however, that the term “New Securities” does not include (i) securities issued
pursuant to the acquisition of another entity by the Company by merger,
consolidation, amalgamation, exchange of shares, the purchase of all or substantially
all of the assets, or otherwise; (ii) options issued to any directors or
employees of, or consultants to, the Company or its subsidiaries pursuant to
any incentive stock plan or other form of incentive compensation approved by
the Company’s Board of Directors (whether now authorized or not) and all shares
of Common Stock issued upon the exercise thereof; (iii) shares of Common Stock

 17
 

 

issued upon the exercise of or conversion of any
Derivative Security that is outstanding on the date hereof; (iv) shares of
Common Stock or other securities issued upon the exercise or conversion of any
Derivative Security as to which the Preemptive Offer has already been made or
is otherwise exempt from this Section; (v) shares of Common Stock or other
capital stock issued to the Company’s stockholders upon any stock split, stock
dividend, combination or other similar event with respect to the Company’s
Common Stock or other capital stock; and (vi) securities of any type issued (a)
to any broker, finder or agent acting on behalf of the Company in satisfaction
of commission payments (whether now due and owing or not) or (b) for services
rendered to the Company at any time (including, without limitation, in
connection with financing activities) and, to the extent that any such
securities constitute Derivative Securities, the shares of Common Stock that
are issued upon the exercise or conversion thereof.

4.7               Corporate
Existence.  So long as any Purchaser
beneficially owns any Securities, the Company shall maintain its corporate
existence, except in the event of a merger, consolidation or sale of all or
substantially all of the Company’s assets, as long as the surviving or
successor entity in such transaction assumes the Company’s obligations
hereunder and under the agreements and instruments entered into in connection
herewith.

4.8               Hedging Transactions.  No Purchaser has an existing short position
with respect to the Company’s Common Stock. 
Each Purchaser agrees not to, directly or indirectly, enter into any
short sales with respect to the Common Stock prior to the date on which such
Purchaser is entitled to sell or transfer the number of shares of Common Stock
as to which such Purchaser proposes to establish a net short position or at any
time prior to the Registration Statement registering the Registrable Shares
being declared effective by the Securities and Exchange Commission (the “Effective
Date”). This Section 4.8 shall not prohibit such Purchaser from at any
time subsequent to the Effective Date to enter into options contracts with
respect to the Common Stock, including puts and calls including delivering
Common Stock in satisfaction of any exercised options.

4.9               Use
of Proceeds.  The Company will use
the proceeds of the sale for working capital needs consistent with financial
budgets approved from time to time by the Company’s Board of Directors.

4.10             Anti-Dilution Adjustment.  (a) In the event that prior to the first
anniversary of the Effective Date Deadline, as defined in the Registration
Rights Agreement, dated August 21, 2006, the Company issues or is deemed to
have issued additional Common Shares at a purchase price of less than $0.30 per
share (the “Diluting Event”), the Company will within ten (10) days after such
issuance or deemed issuance issue to the Purchaser, without any further
consideration of any kind being required to be paid by any person to the
Company, such a number of additional Common Shares that will be necessary to
maintain the Purchaser’s ownership percentage of the outstanding Common Shares
at the same level (calculated to one-hundredth of one percent) as immediately
prior to the Diluting Event. For purposes of the preceding sentence, Common
Shares shall be deemed to have been issued immediately upon the issuance by the
Company or any affiliate of the Company of securities exercisable or
exchangeable for, or convertible into, Common Shares (“Convertible Securities”)
and the purchase price for such Common Shares shall be the sum of the
consideration per share paid by the acquirer for such Convertible Securities
plus the additional consideration per share, if any,

 18
 

 

payable by the
holder of such Convertible Securities to acquire the Common Shares upon
exercise, exchange or conversion of such Convertible Securities.

(b) There shall be
no adjustment for issuance of any of the following: (i) up to 2,500,000 shares
issued under any Company’s Employee Stock Option Plan; (ii) shares issued for
consideration other than cash pursuant to a merger, consolidation, acquisition,
or similar business combination approved by the Board; (iii) shares issued
pursuant to any equipment loan or leasing arrangement, real property leasing
arrangement or debt financing from a bank or similar financial institution
approved by the Board; (iv) the exercise of any Warrant outstanding on the date
hereof; (v) up to 600,000 shares issued to consultants of the Company pursuant
to any stock or option plan duly adopted by a majority of the non-employee
members of the Board of Directors of the Company or a majority of the members of
a committee of non-employee directors established for such purpose; and (vi)
shares issued with the prior written consent of the majority of the Purchasers.

ARTICLE V

LEGEND REMOVAL, TRANSFER, CERTAIN SALES, ADDITIONAL SHARES

5.1               Removal of Legend.  The Legend shall be removed and the Company
shall issue a certificate without such Legend to the holder of any Security
upon which it is stamped, and a certificate for a security shall be originally
issued without the Legend, if, (a) the sale of such Security is registered
under the Securities Act, (b) such holder provides the Company with an
opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions and reasonably satisfactory to the Company
and its counsel (the reasonable cost of which shall be borne by the Company if,
after one (1) year, neither an effective registration statement under the
Securities Act or Rule 144 is available in connection with such sale) to
the effect that a public sale or transfer of such Security may be made without
registration under the Securities Act pursuant to an exemption from such
registration requirements or (c) such Security can be sold pursuant to
Rule 144 and the holder provides the Company with reasonable assurances
that the Security can be so sold without restriction or (d) such Security
can be sold pursuant to Rule 144(k). 
The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section. 
Each Purchaser agrees to sell all Securities, including those
represented by a certificate(s) from which the Legend has been removed, or
which were originally issued without the Legend, pursuant to an effective
registration statement, in accordance with the manner of distribution described
in such registration statement and to deliver a prospectus in connection with
such sale, or in compliance with an exemption from the registration
requirements of the Securities Act.  In
the event the Legend is removed from any Security or any Security is issued
without the Legend and the Security is to be disposed of other than pursuant to
the registration statement or pursuant to Rule 144, then prior to, and as
a condition to, such disposition such Security shall be relegended as provided
herein in connection with any disposition if the subsequent transfer thereof
would be restricted under the Securities Act. 
Also, in the event the Legend is removed from any Security or any
Security is issued without the Legend and thereafter the effectiveness of a
registration statement covering the resale of such Security is suspended or the
Company determines that a supplement or amendment

 19
 

 

thereto is required by applicable securities laws,
then upon reasonable advance notice to Purchaser holding such Security, the
Company may require that the Legend be placed on any such Security that cannot
then be sold pursuant to an effective registration statement or Rule 144 or
with respect to which the opinion referred to in clause (b) next above has
not been rendered, which Legend shall be removed when such Security may be sold
pursuant to an effective registration statement or Rule 144 or such holder
provides the opinion with respect thereto described in clause (b) next above.

5.2               Transfer Agent Instructions.  The Company agrees that following the
effective date of the registration statement or at such time as such legend is
no longer required under Section 5.1, it will, no later than ten
(10)  days following the delivery by a
Purchaser to the Company or the Company’s transfer agent of a certificate
representing Warrant Shares issued with a restrictive legend (such date, the “Legend
Removal Date”), deliver or cause to be delivered to such Purchaser a
certificate representing such Securities that is free from all restrictive and
other legends, registered in the name of each Purchaser or its nominee for the
Warrant Shares in such amounts determined in accordance with the terms of the
Warrants.  The Company covenants that no
instruction other than such instructions referred to in this ARTICLE V, and stop transfer
instructions to give effect to Section 2.6 hereof in the case of the
Warrant Shares prior to registration of the Warrant Shares under the Securities
Act, will be given by the Company to its transfer agent and that the Securities
shall otherwise be freely transferable on the books and records of the
Company.  Nothing in this Section shall
affect in any way each Purchaser’s obligations and agreement set forth in
Section 5.1 hereof to resell the Securities pursuant to an effective
registration statement and to deliver a prospectus in connection with such sale
or in compliance with an exemption from the registration requirements of
applicable securities laws.  If
(a) a Purchaser provides the Company with an opinion of counsel, which
opinion of counsel shall be in form, substance and scope customary for opinions
of counsel in comparable transactions and reasonably satisfactory to the
Company and its counsel (the reasonable cost of which shall be borne by the
Company if, after one (1) year, neither an effective registration
statement under the Securities Act or Rule 144 is available in connection
with such sale), to the effect that the Securities to be sold or transferred
may be sold or transferred pursuant to an exemption from registration or
(b) a Purchaser transfers Securities to an affiliate which is an
accredited investor (within the meaning of Regulation D under the
Securities Act) and which delivers to the Company in written form the same
representations, warranties and covenants made by Purchaser hereunder or
pursuant to Rule 144, the Company shall permit the transfer, and, in the
case of the Warrant Shares, promptly instruct its transfer agent to issue one
or more certificates in such name and in such denomination as specified by such
Purchaser.  The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to a
Purchaser by vitiating the intent and purpose of the transaction contemplated
hereby.  Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this ARTICLE V will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the
provisions of this ARTICLE V,
that a Purchaser shall be entitled, in addition to all other available remedies
to an injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond
or other security being required.

 20
 

 

ARTICLE VI

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL

6.1               Conditions to the Company’s Obligation to Sell.  The obligation of the Company hereunder to
issue and sell the Common Shares and Warrants to a Purchaser at the Closing is
subject to the satisfaction, as of the date of the Closing and with respect to
such Purchaser, of each of the following conditions thereto, provided that
these conditions are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion:

(i)            Such Purchaser shall have executed and delivered the
signature page to this Agreement and the Registration Rights Agreement;

(ii)           Such Purchaser shall have wired its aggregate Purchase
Price set forth on Schedule 1
hereto to the Company;

(iii)          The representations and warranties of such Purchaser shall
be true and correct as of the date when made and as of the Closing with the
same force and effect as though such representations and warranties had been
made on and as of the date of Closing (except for representations and
warranties that speak as of a specific date), and such Purchaser shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the applicable Purchaser at or prior to the Closing;

(iv)          No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which restricts or prohibits the consummation of any of the transactions
contemplated by this Agreement;

(v)           The Company shall have obtained all waivers,
authorizations, approvals and consents needed to consummate the transaction
contemplated by this Agreement which the Company agrees to diligently procure;

(vi)          Purchaser shall have delivered an officer’s certificate, in
form and substance reasonably acceptable to the Company, as to the accuracy of
such Purchaser’s representations and warranties pursuant to ARTICLE II; and

(vii)         Any right of first offer has been complied with or waived.

ARTICLE VII

CONDITIONS TO EACH PURCHASER’S OBLIGATION TO PURCHASE

7.1               The obligation of each Purchaser hereunder to purchase
the Common Shares and Warrants to be purchased by it on the date of the Closing
is subject to the satisfaction

 21
 

 

of each of the following conditions, provided that
these conditions are for each Purchaser’s sole benefit and may be waived by
such Purchaser at any time in such Purchaser’s sole discretion:

(i)            The Company shall have executed and delivered the
signature page to this Agreement and the Registration Rights Agreement;

(ii)           The Company shall have delivered to the Purchaser duly
issued certificates for the Common Shares and Warrants being so purchased by
Purchaser;

(iii)          The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as of
the Closing with the same force and effect as though such representations and
warranties had been made on and as of the date of Closing, and the Company
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the
Closing;

(iv)          No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement;

(v)           The Company shall have delivered an officer’s certificate,
in form and substance reasonably acceptable to the Purchaser, as to the
accuracy of the Company’s representations and warranties pursuant to ARTICLE III; and

(vi)          Any right of first offer has been complied with or waived.

ARTICLE VIII

GOVERNING LAW; MISCELLANEOUS

8.1               Governing Law: Jurisdiction.  This Agreement shall be governed by and
construed in accordance with the Nevada Revised Statutes (in respect of matters
of corporation law) and the laws of the State of New York (in respect of all
other matters) applicable to contracts made and to be performed in the State of
New York.  The parties hereto irrevocably
consent to the jurisdiction of the United States federal courts and state
courts located in the County of New York in the State of New York in any suit
or proceeding based on or arising under this Agreement or the transactions
contemplated hereby and irrevocably agree that all claims in respect of such
suit or proceeding may be determined in such courts.  The Company and each Purchaser irrevocably
waives the defense of an inconvenient forum to the maintenance of such suit or
proceeding in such forum.  The Company
and each Purchaser further agrees that service of process upon the Company or
such Purchaser, as applicable, mailed by the first class mail in accordance
with Section 8.6 shall be deemed in every respect effective service of
process upon the Company or such Purchaser in any suit or proceeding arising hereunder.  Nothing

 22
 

 

herein shall affect Purchaser’s right to serve
process in any other manner permitted by law. 
The parties hereto agree that a final non-appealable judgment in any
such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.  The parties hereto irrevocably waive any
right to a trial by jury under applicable law.

8.2           Costs and Expenses. 
At the Closing, the Company has agreed to reimburse Great American
Investors, Inc. (“Great American”), for the fees and expenses of the Purchasers’
advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such Purchasers incident to the negotiation, preparation,
execution, delivery and performance of this Agreement, which shall not exceed
$15,000. The Company shall pay all transfer agent fees, stamp taxes and other
taxes and duties levied in connection with the delivery of any Securities to
the Purchasers.

8.3           Counterparts. 
This Agreement may be executed in two or more counterparts, including,
without limitation, by facsimile transmission, all of which counterparts shall
be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party.  In the event any signature page
is delivered by facsimile transmission, the party using such means of delivery
shall cause additional original executed signature pages to be delivered to the
other parties as soon as practicable thereafter.

8.4           Headings. 
The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.

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

8.6           Entire Agreement; Amendments.  This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
maters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor any Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement may be waived
other than by an instrument in writing signed by the party to be charged with
enforcement and no provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and each Purchaser.

8.7           Notice.  Any
notice herein required or permitted to be given shall be in writing and may be
personally served or delivered by nationally-recognized overnight courier or by
facsimile machine confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile
transmission).  The addresses for such
communications shall be:

	
  if to the Company:

  	
  Vubotics, Inc.

  
	
   

  	
  5555 Glenridge
  Connector

  

 

 23
 

 

 

	
  

  	
  Atlanta, Georgia 30342

  
	
   

  	
  Attention:

  
	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
  with a copy to:

  	
  Sichenzia Ross Friedman Ference LLP

  
	
   

  	
  1065 Avenue of
  the Americas, 21st Floor

  
	
   

  	
  New York, NY
  10018

  
	
   

  	
  Attention:
  Darrin M. Ocasio, Esq.

  
	
   

  	
  Facsimile:
  (212) 930-9725

  
	
   

  	
   

  
	
  If to the
  Purchasers:

  	
  See Schedule 1

  
	
   

  	
   

  
	
  with a
  copy to:

  	
  Jay Weil, Esq.

  
	
   

  	
  27 Viewpoint
  Road

  
	
   

  	
  Wayne, New
  Jersey 07470

  
	
   

  	
  Attention:

  
	
   

  	
  Facsimile:
                    

  

 

 

If to any other Purchaser, to such address set forth
under such Purchaser’s name on the signature page hereto executed by such
Purchaser.  Each party shall provide
notice to the other parties of any change in address.

8.8             Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns.  Neither the Company nor any Purchaser shall
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the other.  Notwithstanding
the foregoing, each Purchaser may assign its rights and obligations hereunder
to any of its “affiliates,” as that term is defined under the Securities Act,
without the consent of the Company so long as such affiliate is an accredited
investor (within the meaning of Regulation D under the Securities Act) and
agrees in writing to be bound by this Agreement.  This provision shall not limit each Purchaser’s
right to transfer the Securities pursuant to the terms of this Agreement or to
assign such Purchaser’s rights hereunder to any such transferee.  In that regard, if Purchaser sells all or
part of its Common Shares to someone that acquires the shares subject to
restrictions on transferability (other than restrictions, if any, arising out
of the transferee’s status as an affiliate of the Company), Purchaser shall be
permitted to assign its rights hereunder, in whole or in part, to such
transferee.

8.9             Third Party Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

8.10           Survival; Indemnification.  The representations and warranties of the
Company and the agreements and covenants shall survive the closing hereunder
notwithstanding any due diligence investigation conducted by or on behalf of
Purchaser.  The Company agrees to

 24
 

 

indemnify and hold harmless each Purchaser and each
of each Purchaser’s officers, directors, employees, partners, agents and
affiliates from and against any and all losses, claims, damages, liabilities
and expenses (including without limitation reasonable attorneys’ fees and
disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement thereof) (collectively, “Losses”)  arising as a result of or related to any
breach or alleged breach by the Company of any of its representations or
covenants set forth herein, including advancement of expenses as they are
incurred.  The representations and
warranties of the Purchasers shall survive the Closing hereunder and each
Purchaser shall indemnify and hold harmless the Company and each of its
officers, directors, employees, partners, agents and affiliates from and
against any and all Losses arising as a result of the breach of such Purchaser’s
representations and warranties.

8.11           Further Assurances. 
Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

8.12           Remedies.  No
provision of this Agreement providing for any remedy to a Purchaser shall limit
any remedy which would otherwise be available to such Purchaser at law or in
equity.  Nothing in this Agreement shall
limit any rights a Purchaser may have with any applicable federal or state
securities laws with respect to the investment contemplated hereby.  The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to a Purchaser.  Accordingly, the Company acknowledges that
the remedy at law for a material breach of its obligations under this Agreement
will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Agreement, that a Purchaser shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate compliance, without the
necessity of showing economic loss and without any bond or other security being
required.

8.13           Final Agreement. 
This Agreement, when executed by the parties hereto, shall constitute
the final agreement between the parties and upon such execution Purchasers and
the Company accept the terms hereof and have no cause of action against each
other for prior negotiations preceding the execution of this Agreement.

8.14           Attorney-in-Fact. 
The undersigned Purchasers hereby appoint Vubotics, Inc. as their
Attorney-in-Fact to execute the Registration Rights Agreement, which is Exhibit
B to this Agreement.

 25
 

 

IN WITNESS WHEREOF, the undersigned
Purchasers and the Company have caused this Agreement to be duly executed as of
the date first above written.

COMPANY:

VUBOTICS, INC.

	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:   President and Chief
  Executive Officer

  

 

PURCHASERS:

	
  

  	
   

  	
  $              

  
	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Number of Units:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name Typed or Printed

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Telephone:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $                

  
	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
  Number of Units:            

  
	
   

  	
   

  	
   

  
	
  Name Typed or Printed

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Telephone:

  	
   

  	
   

  	
   

  

 26
 

 

LIST OF EXHIBITS

	
  EXHIBIT A

  	
   

  	
  -

  	
   

  	
  FORM OF WARRANT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
   

  	
  -

  	
   

  	
  REGISTRATION RIGHTS AGREEMENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
   

  	
  -

  	
   

  	
  ESCROW AGREEMENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT D

  	
   

  	
  -

  	
   

  	
  ACCREDITED INVESTOR QUESTIONNAIRE

  

 

 27

 

Exhibit A

To

Common Stock and Warrant Purchase Agreement

FORM OF WARRANT

 

Exhibit B

To

Common Stock and Warrant Purchase Agreement

REGISTRATION RIGHTS
AGREEMENT

 

Exhibit C

To

Common Stock and Warrant Purchase Agreement

ESCROW AGREEMENT 

 

Exhibit D

To

Common Stock and Warrant Purchase Agreement

ACCREDITED INVESTOR QUESTIONNAIRE

 

List of Schedules

to

Common Stock and Warrant Purchase Agreement

	
  Schedule 1

  	
  -

  	
  List of Investors

  
	
   

  	
   

  	
   

  
	
  Schedule 3.1

  	
  -

  	
  Organization and Qualification

  
	
   

  	
   

  	
   

  
	
  Schedule 3.3

  	
  -

  	
  Capitalization

  
	
   

  	
   

  	
   

  
	
  Schedule 3.4

  	
  -

  	
  No Conflicts

  
	
   

  	
   

  	
   

  
	
  Schedule 3.5

  	
  -

  	
  Consents

  
	
   

  	
   

  	
   

  
	
  Schedule 3.8

  	
  -

  	
  Absence of Litigation

  
	
   

  	
   

  	
   

  
	
  Schedule 3.9

  	
  -

  	
  Tax Matters

  
	
   

  	
   

  	
   

  
	
  Schedule 3.16

  	
  -

  	
  No BrokersEXHIBIT
10.2

Exhibit A

to

Common Stock and Warrant Purchase Agreement

FORM OF WARRANT

NEITHER
THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “SECURITIES ACT”).  THIS WARRANT AND THE COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE OFFERED, SOLD, OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR UNLESS
SUCH OFFER, SALE OR TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

VUBOTICS,
INC.

COMMON
STOCK WARRANT

	
  No. 

  	
  August              ,
  2006

  

 

VUBOTICS, INC., a Nevada corporation (the “Company”), hereby certifies that                                                                 ,
its permissible transferees, designees, successors and assigns (collectively,
the “Holder”), for value received, is entitled to purchase from the
Company at any time commencing on the effective date (the “Effective Date”),
which shall be the date of the Closing (as defined in Common Stock and Purchase
Agreement, dated as of August 21, 2006, by
and among the Company and the Purchasers listed on Schedule 1 thereto),
and terminating on the fifth anniversary of such date (the “Termination Date”)
up to                                  
shares (each, a “Share” and collectively the “Shares”) of the
Company’s common stock, $.001 par value per Share (the “Common Stock”),
at an exercise price per Share equal to SIXTY CENTS ($.60) (the “Exercise
Price”).  The number of Shares
purchasable hereunder and the Exercise Price are subject to adjustment as
provided in Section 4 hereof.

1.                                       Method of Exercise; Payment.

(a)                                  Cash
Exercise.  The purchase rights
represented by this Warrant may be exercised by the Holder, in whole or in
part, at any time, or from time to time, by the surrender of this Warrant (with
the notice of exercise form (the “Notice of Exercise”) attached hereto
as Exhibit A duly executed) at the principal office of the Company, and
by payment to the Company of an amount equal to the Exer­cise Price multiplied
by the number of the Shares being purchased, which amount may be paid, at the
election of the Holder, by (i) wire transfer or certified check payable to the
order of the Company, 

 1
 

 

(ii) cancellation by the Holder of indebtedness or
other obligations of the Company to the Holder or (iii) a combination of (i)
and (ii).  The person or persons in whose
name(s) any certificate(s) repre­senting Shares shall be issuable upon exercise
of this Warrant shall be deemed to have become the holder(s) of record of, and
shall be treated for all purposes as the record holder(s) of, the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised.

(b)                                 Net
Issue Exercise. As to                         (1)
Shares which may be acquired by the Holder upon exercise of this Warrant, in
lieu of exercising this warrant pursuant to Section l (a) hereof, the Holder
may elect to receive a number of Shares equal to of the value (as determined
below) of such portion of this Warrant (or the portion thereof being canceled)
by surrender of this Warrant at the principal office of the Company together
with Notice of Cashless Exercise annexed hereto as Exhibit C duly executed;
provided that the Net Issue Exercise set forth in this Section 1(b) is subject
to adjustments set forth in Section 4 of this Warrant. In such event, the Company
shall issue to the Holder a number of Shares computed using the following
formula:

	
  X = Y (A-B)

  
	
   

  	
  A

  

 

	
  Where X

  	
   

  	
  =

  	
  the number of Shares to be issued to the Holder.

  
	
  Y

  	
   

  	
  =

  	
  the number of Shares subject to this Warrant or, if only
  a portion of this Warrant is being exercised, the portion of the Warrant
  being canceled (at the time of such calculation).

  
	
  A

  	
   

  	
  =

  	
  the fair market value of one share of the Company’s Common
  Stock (at the date of such calculation).

  
	
  B

  	
   

  	
  =

  	
  the Exercise Price (as adjusted to the date of such calculation).

  

 

(1) 50% of the
amount of the Shares.

 

(c)                                  Fair
Market Value.  For purposes of this
Section 1, the fair market value of the Company’s Common Stock shall mean:

(i)                                     The
average of the closing bid and asked prices of the Company’s Common Stock
quoted on the Nasdaq Stock Market or in the Over-The-Counter Market
Summary or the closing price quoted on any exchange on which the Common Stock
is listed, whichever is applicable, as published in the The Wall Street
Journal for the ten (10) trading days prior to the date of determination of
fair market value;

 

 

(ii)                                  If
the Company’s Common Stock is not traded on the Nasdaq Stock Market or
Over-The-Counter or on an exchange, the fair market value of the Common Stock
per share shall be agreed upon by the parties hereto.  If parties cannot agree on the fair market
value within five (5) business days of delivery of the Notice of Exercise, the
Board of Directors in good faith shall determine the fair market value of the
Common Stock; provided, however, that the fair market value of the Common Stock
shall be no greater than the price at which the Company last sold its Common
Stock or the exercise price of its last granted options, whichever occurs
later.

(d)                                 Stock
Certificates.  In the event of any
exercise of the rights represented by this Warrant, as promptly as practicable
on or after the date of exercise and in any event within ten (10) days
thereafter, the Company at its expense shall issue and deliver to the person or
persons entitled to receive the same a certificate or certificates for the
number of Shares issuable upon such exercise. 
In the event this Warrant is exercised in part, the Company at its
expense will execute and deliver a new Warrant of like tenor exercisable for
the number of Shares for which this Warrant may then be exercised.

(e)                                  Taxes.  The issuance of the Shares upon the exercise
of this Warrant, and the delivery of certificates or other instruments
representing such Shares, shall be made without charge to the Holder for any
tax or other charge in respect of such issuance.

2.                                       Warrant.

(a)                                  Exchange, Transfer and Replacement.  At
any time prior to the exercise hereof, this Warrant may be exchanged upon
presentation and surrender to the Company, alone or with other warrants of like
tenor of different denominations registered in the name of the same Holder, for
another warrant or warrants of like tenor in the name of such Holder
exercisable for the aggregate number of Shares as the warrant or warrants
surrendered.

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

(c)                                  Cancellation; Payment of Expenses.  Upon
the surrender of this Warrant in connection with any transfer, exchange or
replacement as provided in this Section 2, this Warrant shall be
promptly canceled by the Company.  The
Holder shall pay all taxes and all other expenses (including legal expenses, if
any, incurred by the Holder or transferees) and charges payable in connection
with the preparation, execution and delivery of Warrants pursuant to this Section
2.

 

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

3.                                             Rights and Obligations of Holders of this Warrant.  The
Holder of this Warrant shall not, by virtue hereof, be entitled to any rights
of a stockholder in the Company, either at law or in equity; provided, however,
that in the event any certificate representing shares of Common Stock or other
securities is issued to the holder hereof upon exercise of this Warrant, such
holder shall, for all purposes, be deemed to have become the holder of record
of such Common Stock on the date on which this Warrant, together with a duly
executed Election to Purchase, was surrendered and payment of the aggregate
Exercise Price was made, irrespective of the date of delivery of such Common
Stock certificate.

4.                                             Adjustments.

(a)                                  Stock Dividends, Reclassifications,
Recapitalizations, Etc.  In the event the Company:  (i) pays a dividend in Common Stock or
makes a distribution in Common Stock, (ii) subdivides its outstanding
Common Stock into a greater number of shares, (iii) combines its
outstanding Common Stock into a smaller number of shares or (iv) increases
or decreases the number of shares of Common Stock outstanding by
reclassification of its Common Stock (including a recapitalization in
connection with a consolidation or merger in which the Company is the
continuing corporation), then (1) the Exercise Price on the record date of
such division or distribution or the effective date of such action shall be
adjusted by multiplying such Exercise Price by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately before
such event and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event, and (2) the number of shares of
Common Stock for which this Warrant may be exercised immediately before such
event shall be adjusted by multiplying such number by a fraction, the numerator
of which is the Exercise Price immediately before such event and the
denominator of which is the Exercise Price immediately after such event.

(b)                                 Cash Dividends and Other Distributions.  In
the event that at any time or from time to time the Company shall distribute to
all holders of Common Stock (i) any dividend or other distribution of
cash, evidences of its indebtedness, shares of its capital stock or any other
properties or securities or (ii) any options, warrants or other rights to
subscribe for or purchase any of the foregoing (other than in each case,
(w) the issuance of any rights under a shareholder rights plan,
(x) any dividend or distribution described in Section 4(a),
(y) any rights, options, warrants or securities described in Section 4(c) and
(z) any cash dividends or other cash distributions from current or retained
earnings), then the number of shares of Common Stock issuable upon the exercise
of this Warrant shall be increased to a number determined by multiplying the
number of shares of Common Stock issuable upon the exercise of this Warrant

 

immediately prior to the record date for any such
dividend or distribution by a fraction, the numerator of which shall be such
Current Market Value (as hereinafter defined) per share of Common Stock on the
record date for such dividend or distribution, and the denominator of which
shall be such Current Market Value per share of Common Stock on the record date
for such dividend or distribution less the sum of (x) the amount of cash, if
any, distributed per share of Common Stock and (y) the fair value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be evidenced by a board resolution, a copy of which will be
sent to the Holders upon request) of the portion, if any, of the distribution
applicable to one share of Common Stock consisting of evidences of
indebtedness, shares of stock, securities, other property, warrants, options or
subscription or purchase rights; and the Exercise Price shall be adjusted to a
number determined by dividing the Exercise Price immediately prior to such
record date by the above fraction.  Such
adjustments shall be made whenever any distribution is made and shall become
effective as of the date of distribution, retroactive to the record date for
any such distribution.  No adjustment
shall be made pursuant to this Section 4(b) which shall have the effect
of decreasing the number of shares of Common Stock issuable upon exercise of
this Warrant or increasing the Exercise Price.

(c)                                  Combination: Liquidation. 
(i) In the event of a Combination (as defined below), each Holder
shall have the right to receive upon exercise of the Warrant the kind and
amount of shares of capital stock or other securities or property which such
Holder would have been entitled to receive upon or as a result of such
Combination had such Warrant been exercised immediately prior to such event
(subject to further adjustment in accordance with the terms hereof).  Unless paragraph (ii) is applicable to a
Combination, the Company shall provide that the surviving or acquiring Person
(the “Successor Company”) in such Combination will assume by written
instrument the obligations under this Section 4 and the obligations
to deliver to the Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the Holder may be entitled to
acquire. “Combination” means an event in which the Company consolidates
with, mergers with or into, or sells all or substantially all of its assets to
another Person, where “Person” means any individual, corporation,
partnership, joint venture, limited liability company, association, joint-stock
company, trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity; (ii)  In the event of (x) a Combination where
consideration to the holders of Common Stock in exchange for their shares is
payable solely in cash or (y) the dissolution, liquidation or winding-up of the
Company, the Holders shall be entitled to receive, upon surrender of their
Warrant, distributions on an equal basis with the holders of Common Stock or
other securities issuable upon exercise of the Warrant, as if the Warrant had
been exercised immediately prior to such event, less the Exercise Price.  In case of any Combination described in this Section 4,
the surviving or acquiring Person and, in the event of any dissolution,
liquidation or winding-up of the Company, the Company, shall deposit promptly
with an agent or trustee for the benefit of the Holders of the funds, if any,
necessary to pay to the Holders the amounts to which they are entitled as
described above.  After such funds and
the surrendered Warrant are received, the Company is required to deliver a
check in such amount as is appropriate (or, in the case or consideration other
than cash, such other consideration as is appropriate) to such

 

Person or Persons as it may be directed in writing by
the Holders surrendering such Warrant.

(d)           In the event that prior to the first
anniversary of the Effective Date Deadline, as defined in the Registration
Rights Agreement, dated August 21, 2006, the Company issues or is deemed to
have issued any Additional Stock (as defined below) for a consideration per
share less than the Exercise Price in effect immediately prior to the issuance
of such Additional Stock, the Exercise Price in effect immediately prior to
each such issuance shall forthwith be adjusted to a price equal to the price
paid per share for such Additional Stock. In the case of the issuance of
Additional Stock for cash, the consideration shall be deemed to be the amount
of cash paid therefor before deducting any reasonable discounts, commissions or
other expenses allowed, paid or incurred by the Company for any underwriting or
otherwise in connection with the issuance and sale thereof. In the case of the
issuance of the Additional Stock for a consideration in whole or in part other
than cash, the consideration other than cash shall be deemed to be the fair
value thereof as determined in good faith by the Board
of Directors of the Company. For purposes of this Section 4(d), the term “Additional
Stock” means any Common Stock or securities which  by their terms are convertible into or
exchangeable for Common Stock or options to purchase or rights to subscribe for
such convertible or exchangeable securities, except for: (i) up to 600,000 shares issued under any
Company’s Employee Stock Option Plan; (ii) shares issued for consideration
other than cash pursuant to a merger, consolidation, acquisition, or similar
business combination approved by the Board; (iii) shares issued pursuant to any
equipment loan or leasing arrangement, real property leasing arrangement or
debt financing from a bank or similar financial institution approved by the
Board; (iv) the exercise of any Warrant outstanding on the date hereof;
(v) up to 600,000 shares issued to consultants of the Company pursuant to any
stock or option plan duly adopted by a majority of the non-employee members of
the Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose; and (vi)
shares issued with the prior written consent of the majority of the Purchasers.
The consideration paid for Additional Stock which is options, warrants or
convertible securities shall be deemed to be the sum of the consideration per
share paid for such securities plus the additional consideration per share, if
any, payable by the holder of such securities to acquire the Common Stock upon
exercise, exchange or conversion of such securities. If the Exercise Price is
adjusted pursuant to this Section 4(d), then the number of shares of Common
Stock for which this Warrant may be exercised immediately before such
adjustment shall be adjusted by multiplying such number by a fraction, the
numerator of which is the Exercise Price immediately before such event and the
denominator of which is the Exercise Price immediately after such event.

(e)                                  Notice of Adjustment. 
Whenever the Exercise Price or the number of shares of Common Stock and
other property, if any, issuable upon exercise of the Warrant is adjusted, as
herein provided, the Company shall deliver to the holders of the Warrant in
accordance with Section 10 a certificate of the Company’s Chief
Financial Officer setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated (including a
description of the basis on which (i) the Board of Directors determined the
fair value of any evidences of

 

indebtedness, other securities or property or
warrants, options or other subscription or purchase rights and (ii) the Current
Market Value of the Common Stock was determined, if either of such
determinations were required), and specifying the Exercise Price and number of
shares of Common Stock issuable upon exercise of  Warrant after giving effect to such
adjustment.

(f)                                    Notice of Certain Transactions.  In
the event that the Company shall propose (a) to pay any dividend payable
in securities of any class to the holders of its Common Stock or to make any
other non-cash dividend or distribution to the holders of its Common Stock,
(b) to offer the holders of its Common Stock rights to subscribe for or to
purchase any securities convertible into shares of Common Stock or shares of
stock of any class or any other securities, rights or options, (c) to
effect any capital reorganization, reclassification, consolidation or merger
affecting the class of Common Stock, as a whole, or (d) to effect the
voluntary or involuntary dissolution, liquidation or winding-up of the Company,
the Company shall, within the time limits specified below, send to each Holder
a notice of such proposed action or offer. 
Such notice shall be mailed to the Holders at their addresses as they
appear in the Warrant Register (as defined in Section 2(d)), which
shall specify the record date for the purposes of such dividend, distribution
or rights, or the date such issuance or event is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to be
fixed, and shall briefly indicate the effect of such action on the Common Stock
and on the number and kind of any other shares of stock and on other property,
if any, and the number of shares of Common Stock and other property, if any,
issuable upon exercise of each Warrant and the Exercise Price after giving
effect to any adjustment pursuant to Section 4 which will be
required as a result of such action. 
Such notice shall be given as promptly as possible and (x) in the case
of any action covered by clause (a) or (b) above, at least ten (10) days prior
to the record date for determining holders of the Common Stock for purposes of
such action or (y) in the case of any other such action, at least twenty (20)
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of Common Stock, whichever shall be the
earlier.

(g)           Current
Market Value.  “Current Market
Value” per share of Common Stock or any other security at any date means
(i) if the security is not registered under the Securities Exchange Act of 1934
and/or traded on a national securities exchange, quotation system or bulletin
board, as amended (the “Exchange Act”), (a) the value of the security,
determined in good faith by the Board of Directors of the Company and certified
in a board resolution, based on the most recently completed arm’s-length
transaction between the Company and a Person other than an affiliate of the
Company or between any two such Persons and the closing of which occurs on such
date or shall have occurred within the six-month period preceding such date, or
(b) if no such transaction shall have occurred within the six-month period, the
value of the security as determined by an independent financial expert or an
agreed upon financial valuation model or (ii) if the security is registered
under the Exchange Act and/or traded on a national securities exchange,
quotation system or bulletin board, the average of the daily closing bid prices
(or  the equivalent in an
over-the-counter market) for each day on which the Common Stock is traded for
any period on the principal securities exchange or other securities market on
which the common Stock is being traded (each, a “Trading Day”) during
the

 

period commencing thirty (30) days before such date
and ending on the date one day prior to such date.

5.                                             Registration Rights.  The
Holder is entitled to the benefit of such registration rights in respect of the
Shares as are set forth in the Registration Rights Agreement dated as of August
21, 2006 by and between the Company and the Holder.

6.                                             Fractional Shares.  In
lieu of issuance of a fractional share upon any exercise hereunder, the Company
will issue an additional whole share in lieu of that fractional share,
calculated on the basis of the Exercise Price.

7.                                             Legends.  Prior to issuance of the
shares of Common Stock underlying this Warrant, all such certificates
representing such shares shall bear a restrictive legend to the effect that the
Shares represented by such certificate have not been registered under the 1933
Act, and that the Shares may not be sold or transferred in the absence of such
registration or an exemption therefrom, such legend to be substantially in the
form of the bold-face language appearing at the top of Page 1 of this Warrant.

8.                                             Disposition of Warrants or Shares.  The
Holder of this Warrant, each transferee hereof and any holder and transferee of
any Shares, by his or its acceptance thereof, agrees that no public
distribution of Warrants or Shares will be made in violation of the provisions
of the 1933 Act.  Furthermore, it shall
be a condition to the transfer of this Warrant that any transferee thereof
deliver to the Company his or its written agreement to accept and be bound by
all of the terms and conditions contained in this Warrant.

9.                                             Merger or Consolidation.  The
Company will not merge or consolidate with or into any other corporation, or
sell or otherwise transfer its property, assets and business substantially as
an entirety to another corporation, unless the corporation resulting from such
merger or consolidation (if not the Company), or such transferee corporation,
as the case may be, shall expressly assume, by supplemental agreement
reasonably satisfactory in form and substance to the Holder, the due and
punctual performance and observance of each and every covenant and condition of
this Warrant to be performed and observed by the Company.

10.                                       Notices.  Except as otherwise specified
herein to the contrary, all notices, requests, demands and other communications
required or desired to be given hereunder shall only be effective if given in
writing by certified or registered U.S. mail with return receipt requested and
postage prepaid; by private overnight delivery service (e.g. Federal Express);
by facsimile transmission (if no original documents or instruments must
accompany the notice); or by personal delivery. 
Any such notice shall be deemed to have been given (a) on the business
day immediately following the mailing thereof, if mailed by certified or
registered U.S. mail as specified above; (b) on the business day immediately
following deposit with a private overnight delivery service if sent by said
service; (c) upon receipt of confirmation of transmission if sent by facsimile
transmission; or (d) upon personal delivery of the notice.  All such notices shall be sent to

 

the following addresses (or to such other address or
addresses as a party may have advised the other in the manner provided in this Section 10):

	
  if to the Company:

  	
  Vubotics, Inc.

  
	
   

  	
  5555 Glenridge Connector

  
	
   

  	
  Atlanta, Georgia 30342

  
	
   

  	
  Attention: 

  	
   

  	
   

  
	
   

  	
  Facsimile: 

  	
   

  	
   

  
	
   

  	
   

  
	
  with copy to:

  	
  Sichenzia Ross Friedman Ference LLP

  
	
   

  	
  1065 Avenue of the Americas, 21st Floor

  
	
   

  	
  New York, NY 10018

  
	
   

  	
  Attention: Darrin M. Ocasio, Esq.

  
	
   

  	
  Facsimile: (212) 930-9725

  
	
   

  	
   

  
	
  if to the Holder:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile: 

  	
   

  	
   

  
							

 

Notwithstanding the time of
effectiveness of notices set forth in this Section, an Election to Purchase
shall not be deemed effectively given until it has been duly completed and
submitted to the Company together with this original Warrant and payment of the
Exercise Price in a manner set forth in this Section.

11.                                       Limitation
on Exercise. Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Holder upon
any exercise of this Warrant (or otherwise in respect hereof) shall be limited
to the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned
by such Holder and its affiliates and any other persons whose beneficial
ownership of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Exchange Act, does not exceed 4.999% of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. Each delivery of an Exercise Notice hereunder will
constitute a representation by the Holder that it has evaluated the limitation
set forth in this paragraph and determined that issuance of the full number of
Warrant Shares requested in such Exercise Notice is permitted under this
paragraph. This provision shall not restrict the number of shares of Common
Stock which a Holder may receive or beneficially own in order to determine
the amount of securities or other consideration that such Holder
may receive in the event of a

 

merger or other business combination or
reclassification involving the Company. This restriction may not be waived
without the consent of the Holder.

12.                                       Governing Law.  This
Warrant shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be performed in the State
of New York.

13.                                       Successors and Assigns.  This
Warrant shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.

14.                                       Headings.  The headings of various
sections of this Warrant have been inserted for reference only and shall not
affect the meaning or construction of any of the provisions hereof.

15.                                       Severability. If any provision of this Warrant is held to
be unenforceable under applicable law, such provision shall be excluded from
this Warrant, and the balance hereof shall be interpreted as if such provision
were so excluded.

16.                                       Modification and Waiver.  This
Warrant and any provision hereof may be amended, waived, discharged or
terminated only by an instrument in writing signed by the Company and the
Holder.

17.                                       Specific Enforcement.  The
Company and the Holder acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Warrant were not
performed in accordance with their specific terms or were otherwise
breached.  It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of this Warrant and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to
which either of them may be entitled by law or equity.

18.                                       Assignment.  Subject  to prior written approval by the Company,
this Warrant may be transferred or assigned, in whole or in part, at any time
and from time to time by the then Holder by submitting this Warrant to the Company
together with a duly executed Assignment in substantially the form and
substance of the Form of Assignment which accompanies this Warrant, as Exhibit B hereto, and, upon
the Company’s receipt hereof, and in any event, within five (5) business days thereafter,
the Company shall issue a warrant to the Holder to evidence that portion of
this Warrant, if any as shall not have been so transferred or assigned.

19.                                       Redemption Right of
the Company.  Should at any time after both (a) a registration statement covering
the resale by the Holder of all Shares which the Holder may purchase upon
exercise of this Warrant be declared effective by the Securities and Exchange
Commission and (b) the closing sales price of the Common Stock of the Company
on its principal trading market shall be $1.80 or greater per share (as such
price shall be appropriately adjusted for stock splits, stock dividends,
combinations, recapitalizations and the like) for ten (10) consecutive Trading
Days, as reported by the Over-The-Counter Bulletin
Board (or, if the Over-The-Counter
Bulletin Board is not then

 

representing such prices, by a comparable reporting
service of national reputation selected by the Company), the Company may, at
its sole option, force conversion of up to 50% of the outstanding Warrants by
requiring the Holder to exercise the Warrants at a purchase price of $0.60 per
Share (as appropriately adjusted for stock splits, stock dividends,
combinations, recapitalizations and the like); provided that the Company shall
give the Holder fifteen (15) days’ prior written notice

 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed, manually or by facsimile,
by one of its officers thereunto duly authorized.

	
  

  	
  VUBOTICS, INC.

  
	
   

  	
   

  
	
  Date: August     , 2006

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:    President and Chief
  Executive Officer

  

 

 

EXHIBIT
A

TO

WARRANT CERTIFICATE

ELECTION TO PURCHASE

To Be Executed by the Holder

in Order to Exercise the Warrant

The undersigned Holder
hereby elects to purchase                   
Shares pursuant to the attached Warrant, and requests that certificates for
securities be issued in the name of:

(Please type or print name and address)

(Social Security or Tax Identification Number)

and delivered

to:

                                                                                                                             .

(Please type or print name and address if
different from above)

If such number of Shares
being purchased hereby shall not be all the Shares that may be purchased
pursuant to the attached Warrant, a new Warrant for the balance of such Shares
shall be registered in the name of, and delivered to, the Holder at the address
set forth below.

In full payment of the
purchase price with respect to the Shares purchased and transfer taxes, if any,
the undersigned hereby tenders payment of $                           
by check, money order or wire transfer payable in United States currency to the
order of VUBOTICS, INC.

	
  

  	
  HOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
						

 

 

EXHIBIT
B

TO

WARRANT

FORM OF ASSIGNMENT

(To be signed only on transfer of Warrant)

For value received, the
undersigned hereby sells, assigns, and transfers unto                            
the right represented by the within Warrant to purchase                       
shares of Common Stock of Vubotics, Inc., a Nevada corporation, to which the
within Warrant relates, and appoints                            
Attorney to transfer such right on the books of Vubotics, Inc., a Nevada
corporation, with full power of substitution of premises.

	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  (signature must conform
  to name of holder as specified on the fact of the Warrant)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  

 

Signed in the presence of :

 

Dated:

 2
 

 

EXHIBIT C

TO

WARRANT

NOTICE
OF EXERCISE OF COMMON STOCK WARRANT

PURSUANT TO NET ISSUE (“CASHLESS”) EXERCISE PROVISIONS

Vubotics, Inc.

5555 Glenridge Connector

Suite 200

Atlanta, Georgia 30342

Number of Shares

of Common Stock

to be Issued Under

this Notice:

CASHLESS
EXERCISE

Gentlemen:

The
undersigned, registered holder of the Warrant to Purchase Common Stock
delivered herewith (“Warrant”) hereby irrevocably exercises such Warrant for,
and purchases thereunder, shares of the Common Stock of VUBOTICS, INC., a Nevada corporation, as
provided below.  Capitalized terms used
herein, unless otherwise defined herein, shall have the meanings given in the
Warrant.  The portion of the Aggregate
Price (as hereinafter defined) to be applied toward the purchase of Common
Stock pursuant to this Notice of Exercise is $                ,
thereby leaving a remainder Aggregate Price (if any) equal to $                .  Such exercise shall be pursuant to the net
issue exercise provisions of Section 1(b) of the Warrant. Therefore, the holder
makes no payment with this Notice of Exercise. 
The number of shares to be issued pursuant to this exercise shall be
determined by reference to the formula in Section 1(b) of the Warrant which
requires the use of the fair market value (as defined in Section 1(c) of the
Warrant) of the Company’s Common Stock on the business day immediately
preceding the day on which this Notice is received by the Company.  To the extent the foregoing exercise is for
less than the full Aggregate Price of the Warrant, the remainder of the Warrant
representing a number of Shares equal to the quotient obtained by dividing the
remainder of the Aggregate Price by the Warrant Price (and otherwise of like
form, tenor and effect) may be exercised under Section 1(b) of the Warrant. For
purposes of this Notice the term “Aggregate Price” means the product obtained
by multiplying (i) the number of shares of Common Stock for which the Warrant
is exercisable times the Warrant Price; provided that, upon exercise of this
Warrant using the cashless method set out in Section 1 (b) of the Warrant, in
lieu of exercising this warrant pursuant to Section l (a) of the Warrant, the
Holder may acquire only up to 50% of the number of Shares which the Holder may
otherwise been entitled to exercise pursuant to said Section 1(a).

	
  Signature:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
					

 

 3

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