Document:

EXHIBIT 10.4

 

 

PLAN AND
AGREEMENT OF REORGANIZATION

 

 

BY AND BETWEEN

 

 

QUANTUMREADER,
INC.

 

 

AND

 

 

VUBOTICS, INC.

 

 

November 17
, 2004

 

 

TABLE OF
CONTENTS

 

	
  Plan of Reorganization

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Agreement

  	
   

  	
   

  	
   

  
	
  1.

  	
  Transfer of QuantumReader Shares

  	
   

  
	
  2.

  	
  Issuance of Exchange Stock to QuantumReader Stockholders, Delivery of
  Certificate

  	
   

  
	
   

  	
  (a)

  	
  Issuance
  of Vubotics Stock

  	
   

  
	
   

  	
  (b)

  	
  Delivery
  of Certificates

  	
   

  
	
   

  	
  (c)

  	
  Legend on Stock Certificates

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
  Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Deliveries
  at Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Covenants, Representations and Warranties of QuantumReader and the
  Stockholders

  	
   

  
	
   

  	
  (a)

  	
  Organization and Standing of QuantumReader

  	
   

  
	
   

  	
  (b)

  	
  Subsidiaries

  	
   

  
	
   

  	
  (c)

  	
  Capitalization

  	
   

  
	
   

  	
  (d)

  	
  Absence of Undisclosed Liabilities

  	
   

  
	
   

  	
  (e)

  	
  Absence
  of Certain Changes

  	
   

  
	
   

  	
  (f)

  	
  Title
  to Properties

  	
   

  
	
   

  	
  (g)

  	
  Litigation

  	
   

  
	
   

  	
  (h)

  	
  Exhibits Relating to Certain Members

  	
   

  
	
   

  	
  (i)

  	
  Contracts

  	
   

  
	
   

  	
  (j)

  	
  Taxes

  	
   

  
	
   

  	
  (k)

  	
  Authority to Execute Agreement

  	
   

  
	
   

  	
  (l)

  	
  Finder’s
  Fees

  	
   

  
	
   

  	
  (m)

  	
  Disclosure

  	
   

  
	
   

  	
  (n)

  	
  Compliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Access
  and Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Covenants, Representations and Warranties of Vubotics

  	
   

  
	
   

  	
  (a)

  	
  Organization and Standing of Vubotics

  	
   

  
	
   

  	
  (b)

  	
  Subsidiaries

  	
   

  
	
   

  	
  (c)

  	
  Capitalization

  	
   

  
	
   

  	
  (d)

  	
  Absence
  of Certain Changes

  	
   

  
	
   

  	
  (e)

  	
  Litigation

  	
   

  
	
   

  	
  (f)

  	
  Contracts

  	
   

  
	
   

  	
  (g)

  	
  Authority to Execute Agreement

  	
   

  
	
   

  	
  (h)

  	
  Finder’s
  Fees

  	
   

  
	
   

  	
  (i)

  	
  Disclosure

  	
   

  
	
   

  	
  (j)

  	
  Compliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8

  	
  Conditions Precedent to Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Post Closing Covenant of Vubotics

  	
   

  

 

 

	
  10.

  	
  Miscellaneous
  Provisions

  	
   

  
	
   

  	
  (a)

  	
  Waivers

  	
   

  
	
   

  	
  (b)

  	
  Assignment

  	
   

  
	
   

  	
  (c)

  	
  Section Headings

  	
   

  
	
   

  	
  (d)

  	
  Enforceability:

  	
   

  
	
   

  	
  (e)

  	
  Merger and Expense of Enforceability

  	
   

  
	
   

  	
  (f)

  	
  Pronouns

  	
   

  
	
   

  	
  (g)

  	
  Additional
  Documents

  	
   

  
	
   

  	
  (h)

  	
  Entire
  Agreement

  	
   

  
	
   

  	
  (i)

  	
  Construction

  	
   

  
	
   

  	
  (j)

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  
	
   

  	
  QuantumReader, Inc. Stockholders

  	
   

  
	
   

  	
  Exceptions to Covenants, Representations
  and Warranties of QuantumReader, Inc. and the Stockholders

  	
   

  
	
   

  	
  Consent of the Board of Directors of
  Quantum Reader, Inc

  	
   

  
	
   

  	
  Exception to Covenants, Representations and
  Warranties of Vubotics, Inc

  	
   

  
	
   

  	
  Consent of the Board of Directors of
  Vubotics, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attachments

  	
   

  
	
   

  	
  Agreement to Perform Programming Services
  And Acknowledgement of Intellectual Property

  	
   

  
	
   

  	
  General Assignments of Intellectual
  Property

  	
   

  

 

 

PLAN AND
AGREEMENT OF REORGANIZATION

 

THIS PLAN AND AGREEMENT OF REORGANIZATION (this
“Agreement”) is entered into on this  17th
day of November, 2004, by and among QUANTUMREADER, INC., a
Delaware corporation (“Quantum Reader”), VUBOTICS, INC., a
Nevada corporation (“Vubotics”) and those persons listed in Exhibit ”A”
hereto being all of the stockholders of QuantumReader on this date (the “Stockholders”
or the “QuantumReader Stockholders”).

 

PLAN OF REORGANIZATION

 

The
transaction contemplated by QuantumReader, Vubotics and the QuantumReader
Stockholders is to be a reorganization under Section 368(a)(1)(B) of
the Internal Revenue Code of 1986, as amended (the “Code”), Pursuant to such
reorganization, Vubotics is to acquire 100%, or approximately One Million
(1,000,000) shares, of QuantumReader’s issued and outstanding common stock, par
value $.001 per share, all in exchange for Five Hundred Thousand (500,000)
shares of Vubotics’s common stock, par value $0 001 per share (the “Vubotics
Common Stock”)..

 

Under the,
terms of this Agreement, Vubotics will acquire One Million (1,000,000) shares
(the “Exchangeable Common Shares”) of QuantumReader’s issued and outstanding
common stock, par value $0.001 per share, owned by the QuantumReader
Stockholders, constituting not less than one hundred percent (100%) of the
issued and outstanding shares of common stock of QuantumReader as of the
Closing.. The Exchangeable Common Shares shall be referred to herein as the “QuantumReader
Stock” or the “QuantumReader Shares.”

 

AGREEMENT

 

1. Transfer of
QuantumReader Shares. The QuantumReader Stockholders shall transfer,
assign, convey and deliver to Vubotics at the date of closing as hereinafter
defined (the “Closing” or the “Closing Date”), certificates representing the
QuantumReader Shares that will be transferred pursuant to this Agreement, which
in no event can be less than one hundred percent (100%) of the issued and
outstanding common stock of QuantumReader as of the Closing. The transfer of
the QuantumReader Shares shall be made free and clear of all liens, mortgages,
pledges, encumbrances or charges, whether disclosed or undisclosed, except as
the QuantumReader Stockholders and Vubotics shall have otherwise agreed in
writing.

 

2.                                       Issuance of
Exchange Stock to QuantumReader Stockholders; Delivery of Certificates.

 

(a) Issuance of Vubotics Stock. As
consideration for the transfer, assignment, conveyance and delivery of the
QuantumReader Stock hereunder, Vubotics shall issue to the QuantumReader
Stockholders, in the aggregate.

 

(i)                                     a
number of shares of the Vubotics Common Stock (the “Issuable Common Shares”)
equal to Five Hundred Thousand (500,000);

 

1

 

(ii) the
Issuable Common Shares shall be issued pro rata in accordance with each
Stockholder’s ownership of QuantumReader common stock immediately prior to the
Closing,

 

(b) Delivery of Certificates,. At
the Closing, Vubotics shall deliver certificates (the “Certificates”)
representing the Issuable Shares, in the names of the respective QuantumReader
Stockholders as set forth on attached Exhibit ”A”; and

 

(c) Legend on Stock Certificates.
None of the Vubotics Common Stock issued to the Stockholders nor any of the
QuantumReader Stock transferred to Vubotics hereunder shall, at the time of
Closing, be registered under federal securities laws but, rather, shall be
considered “restricted stock” within the meaning of Rule 144 promulgated
under the Securities Act of 1933, as amended (the “Act”) All of such shares
shall bear a legend worded substantially as follows:

 

“The shares represented by this certificate have not been registered under the Securities Act of 1933
(the ‘Act”) and are ‘restricted securities’ as that term is defined in Rule 144
under the Act The shares may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration statement under the
Act, or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the Company “

 

The respective transfer agents of Vubotics
and QuantumReader shall annotate their records to reflect the restrictions on
transfer embodied in the legend set forth above. There shall be no requirement
that Vubotics register the Issuable Common Shares under the Act, nor shall
QuantumReader or the Stockholders be required to register any QuantumReader
Shares under the Act.

 

3 Closing. The
Closing of the exchange shall take place on a date chosen by mutual agreement
of QuantumReader and Vubotics within thirty (30) days from the date of this
Agreement, unless a later time shall be mutually agreed upon by the parties, at
the office of Gambrel] & Stolz, L.L.P. located at Monarch Plaza, 3414
Peachtree Road, Suite 1600, Atlanta, Georgia, 30326 Each of Vubotics and a
duly appointed representative of the QuantumReader Stockholders has the
unilateral right, one time only, to extend the Closing Date up to twenty (20)
days..

 

4.                                       Deliveries at Closing

 

(a)                                QuantumReader and the
Stockholders shall deliver to Vubotics at Closing.

 

0)                                    certificates
representing all shares of the QuantumReader Stock as described in Section 1,
each endorsed in blank by the registered owner;

 

(ii) a
copy of a consent of QuantumReader’s Board of Directors authorizing
QuantumReader to take the necessary steps toward Closing the transaction
described by this Agreement; and

 

(iv) a
copy of a Certificate of Good Standing for QuantumReader issued not more than
thirty (30) days prior to Closing by the Delaware Secretary of State.

 

2

 

(b) Vubotics
shall deliver to the QuantumReader Stockholder, at Closing, the Certificates, in
the names of the appropriate Stockholders, each in the appropriate
denomination, as described in Section 2.

 

5 Covenants, Representations
and Warranties of QuantumReader and the Stockholders Subject to the schedule of
exceptions attached hereto as Exhibit ”B” and incorporated herein
by this reference (which schedule shall be acceptable to Vubotics),
QuantumReader, and QuantumReader Stockholders, severally but not jointly,
represent and warrant to Vubotics as follows:

 

(a) Organization and Standing
of QuantumReader QuantumReader is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia Copies of
QuantumReader’s Certificate of Incorporation and all amendments thereof to
date, certified by the proper Delaware officials, and of Quantum Reader’s
bylaws as amended to date, together with all minutes of stockholder and
directors’ meetings, certified by QuantumReader’s Secretary, will be delivered
to Vubotics within ten (10) business days following the date of this
Agreement and will be complete and correct as of
the date of delivery The same shall be subject to the review and approval of
counsel for Vubotics.

 

(c) Capitalization. The aggregate number of
shares of common stock, par value

 

(b) Subsidiaries.. QuantumReader has no
subsidiaries.

 

$.001 per share, which QuantumReader is
authorized to issue is Ten Million (10,000,000) shares, of which One Million
(1,000,000) shares are currently issued and outstanding All of such outstanding
shares are validly issued, fully paid and nonassessable.

 

The aggregate
number of shares of Preferred Stock which QuantumReader is authorized to issue
is none.

 

(d) Absence of Undisclosed
Liabilities,. Except to the extent reflected in Exhibit ”B”
QuantumReader has no liabilities of any nature, whether accrued, absolute,
contingent or otherwise.

 

(e) Absence of Certain Changes.
Except as disclosed in Exhibit ”B”, since January 2, 2004,
there has not been, and as of the Closing there will not be, (i) any
change in QuantumReader’s financial condition, assets, liabilities or business,
other than changes in the ordinary course of business, none of which taken
individually or considered together with other changes has been or, as of the
Closing will be materially adverse, and (ii) any damage, destruction or
loss, whether or not covered by insurance, materially and adversely affecting
QuantumReader’s properties or business.

 

(f) Title to Properties. QuantumReader
has good and marketable title to all of its properties and assets, real and
personal, tangible and intangible, none of which is subject to any security
interest, mortgage, pledge, lien, encumbrance or charge, except for liens, if
any, shown on Exhibit ”B” prepared in compliance with subsection (j)
below securing specified liabilities set forth therein (with respect to which
no default exists) and, except for minor imperfections of title and
encumbrances, if any, which are not substantial in amount, do not materially
detract from the value of the properties subject

 

3

 

thereto or materially impair QuantumReader’s
operations and have arisen in the ordinary course of business

 

(g) Litiqation. Except as disclosed in Exhibit ”B”
to this Agreement, there is no litigation or proceeding pending, or to
QuantumReader’s knowledge threatened, against or relating to QuantumReader, its
properties or business, nor does QuantumReader know, or have reasonable grounds
to know, of any basis for any such action, or of any governmental investigation
relative to QuantumReader, its properties or business that could have a
material adverse impact on the properties or business of QuantumReader..
QuantumReader is not, and on the Closing Date will not be, in default under or
with respect to any judgment, order, writ, injunction or decree of any court or
of any federal, state, municipal or other governmental authority, department,
commission, board, agency or other instrumentality; and QuantumReader has, and
on the Closing Date will have, complied in all material respects with all laws,
rules, regulations and orders presently applicable to it and to its business,
if any.

 

(h) Exhibits  Relatinq
to  Certain  Matters. Exhibit ”B , attached hereto,
contains a complete and accurate recitation of the following documents: a
description of all liens, mortgages, charges and encumbrances that are
outstanding with respect to any of the properties and assets of QuantumReader;
a list of all leases wherein QuantumReader is either lessor or lessee; a list
of all other material written or oral contracts, commitments, agreements and
other contractual obligations to which QuantumReader is a party (for purposes
of this Agreement, any contract, commitment, agreement or obligation is deemed
material if it provides for payment or performance by either party thereto of
an aggregate value in excess of $5,000 and if it is not cancelable upon 30 days’
or less notice); a list of all insurance policies carried by QuantumReader; a
description of all bonus, pension, profit-sharing, retirement, stock purchase,
stock option, hospitalization, insurance and other executive or employee
compensation or benefit plans to which QuantumReader is a party; a list of all
notes payable of QuantumReader; and a list of all notes and contracts
receivable of QuantumReader..

 

(i) Contracts. QuantumReader is not a party to
any contract not made in the ordinary course of business, except contracts
described in Exhibit ”B” and, except as set forth in Exhibit ”B”
is QuantumReader not a party to any written or oral:

 

(i)                                     employment
agreement that is not terminable on 30 days’ notice,

 

(ii)                                  contract
with any labor union or other person, firm or corporation with respect to the
terms or conditions of employment of employees of QuantumReader; or

 

(iii)                               commitment
for capital expenditures in excess of $5,000.

 

QuantumReader has in all material respects
performed all obligations required to be performed by it to date and is not in
default in any material respect under any agreements, leases or other documents
to which it is a party, except as disclosed in Exhibit ”B” to this
Agreement

 

0)                                    Taxes. QuantumReader has filed all income tax
returns due with respect to all periods through June 30, 2004, and all
real and personal property tax schedules, franchise, sales or use tax returns,
and all federal and state employment and withholding

 

4

 

tax returns that are required to be filed,
and has paid all taxes as shown on said returns and all assessments received by
it to the extent that such taxes and assessments have become due. The Internal
Revenue Service has not notified QuantumReader of its intent to audit any
federal income tax returns of QuantumReader that have been filed with the
Internal Revenue Service

 

(k) Authority  to  Execute
Aqreement. The Board of Directors of QuantumReader, pursuant to the
power and authority legally vested in it, has duly authorized the execution,
sealing and delivery by QuantumReader of this Agreement and has duly authorized
each of the transactions hereby contemplated, A copy of the Consent of the
Board of Directors of QuantumReader authorizing such action is attached hereto
as Exhibit ”C” and incorporated herein by this reference.
QuantumReader has the power and authority to execute, seal and deliver this
Agreement, to consummate the transactions hereby contemplated and to take all
other actions required by law, its Certificate of Incorporation, as amended,
its bylaws, as amended, or otherwise to authorize the execution, sealing and
delivery of this Agreement. This Agreement is valid and binding upon
QuantumReader and the Stockholders in accordance with its terms. Neither the
execution, sealing and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation or breach of the
Certificate of Incorporation, as amended, or the bylaws, as amended, of
QuantumReader or any agreement, stipulation, order, writ, injunction, decree,
law, rule or regulation applicable to QuantumReader..

 

(1) Finder’s Fees. QuantumReader and the Stockholders
are not, and on the Closing Date will not be, liable or obligated to pay any
finder’s, agent’s or broker’s fee arising out of or in connection with this
Agreement or the transactions contemplated by this Agreement

 

(m) Disclosure. No representation or warranty
by QuantumReader in this Agreement, nor any statement or certificate hereto or
in connection with the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact or omits or will omit to state
a material fact necessary to make the statements contained therein not
misleading.

 

(n) Compliance. QuantumReader has complied in
all material respects with all applicable laws, orders and regulations of
federal, state, municipal and/or other governments and/or any instrumentality
thereof, domestic or foreign, currently applicable to its assets and to the
business conducted by it.

 

For the
purposes of this Section 5, the limiting condition to the “best of their
knowledge” shall include either actual knowledge or such knowledge that a
director of a company, who has taken an active role in the management of the
business and financial affairs of said company, knew or had reason to know as a
result of said role as a director.

 

6. Access and information.
QuantumReader and the Stockholders shall give to Vubotics and to Vubotics’s
counsel, accountants and other representatives full access during normal
business hours throughout the period prior to the Closing to all of Quantum
Reader’s properties, books, contracts, commitments and records, information
concerning products and customer base, and furnish Vubotics during such period
with all such information concerning QuantumReader’s affairs as Vubotics
reasonably may request.

 

5

 

7..  Covenants,
Representations and Warranties of Vubotics Subject to the schedule of
exceptions attached hereto as Exhibit ”D”, and incorporated herein
by this reference, Vubotics represents and warrants as follows:

 

(a) Organization and
Standing of Vubotics, Vubotics is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada,

 

(b) Subsidiaries. Vubotics has no
subsidiaries.

 

(c) Capitalization,.
As of the date of this Agreement, the aggregate number of shares of common
stock, par value $0.001 per share, which Vubotics is authorized to issue is
Fifty Million (50,000,000), of which Nineteen Million Two Hundred Twenty-Two
Thousand Four Hundred Eighty-Six (19,222,486) shares are currently issued and
outstanding No options or rights to purchase warrants for common stock or
preferred stock are currently or will be as of the closing outstanding, the
aggregate number of shares of preferred stock, which Vubotics is authorized to
issue is Ten Million (10,000,000) par value $0.001 of which Nine Hundred
Seventy Six Thousand Five Hundred (976,500) are issued and outstanding. All
securities issued by Vubotics as of the date of this Agreement have been issued
in compliance with all applicable state and federal laws.

 

(d) Absence
of Certain Changes. Since January 1, 2004, there has not been any
change in Vubotics’s financial condition, assets or liabilities, except the
incurring of expenses in connection with securities laws compliance matters and
the acquisition of QuantumReader.

 

(e) Litigation.
There is no litigation or proceeding pending, or to Vubotics’s knowledge
threatened, against or relating to Vubotics, nor does Vubotics know or have
reasonable grounds to know of any basis for any such action or of any
governmental investigation relative to Vubotics. Vubotics is not, and on the
Closing Date will not be, in default under or with respect to any judgment,
order, writ, injunction or decree of any court or of any federal, state,
municipal or other governmental authority, department, commission, board,
agency or other instrumentality, and Vubotics has, and on the Closing Date will
have, complied in all material respects with all laws, rules, regulations and
orders applicable to it, if any,

 

(f) Contracts.
Vubotics is not a party to any contract, nor is Vubotics a party to any written
or oral commitment, for capital expenditures. Vubotics has in all material
respects performed all obligations required to be performed by it to date and
is not in default in any material respect under any agreements or other
documents to which it was a party.

 

(g) Authority
to Execute Agreement. The Board of Directors of Vubotics, pursuant to the
power and authority legally vested in it, has duly authorized the execution,
sealing and delivery by Vubotics of this Agreement and the lssuable Common
Shares and has duly authorized each of the transactions herby contemplated. A
copy of the consent of the Board of Directors of Vubotics authorizing such
action in the form of Exhibit ”E” to be attached hereto on or
before Closing and which shall be incorporated herein by this reference.
Vubotics has the power and authority to execute, seal and deliver this
Agreement, to consummate the transactions hereby contemplated and to take all
other actions required by law, its Certificate of Incorporation, as amended,
its

 

6

 

bylaws, as amended, or otherwise to authorize
the execution, sealing and delivery of the Issuable Common Shares pursuant to
the provisions hereof. This Agreement is valid and binding upon Vubotics in
accordance with its terms Neither the execution, sealing and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
constitute a violation or breach of the Certificate of incorporation, as
amended, or the bylaws, as amended, of Vubotics or any agreement, stipulation,
order, writ, injunction, decree, law, rule or regulation applicable to
Vubotics.

 

(h) Finder’s Fees.
Vubotics is not, and on the Closing Date will not be, liable or obligated to pay any finder’s, agent’s or broker’s fee arising out of or
in connection with this Agreement or the transactions contemplated by this
Agreement.

 

(i) Disclosure. No
representation or warranty by Vubotics in this Agreement, nor any statement or
certificate furnished or to be furnished to QuantumReader or the Stockholders
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
therein not misleading

 

(j) Compliance Vubotics
has complied in all material respects with all applicable laws, orders and
regulations of federal, state, municipal and/or other governments and/or any
instrumentality thereof, domestic or foreign, currently applicable to its
assets and to the business conducted by it.

 

8. Conditions
Precedent to Closing. All obligations of Vubotics and QuantumReader
and the QuantumReader Stockholders under this Agreement are subject to the
fulfillment, prior to or at the Closing, of all conditions elsewhere herein set
forth and of each of the following conditions:

 

(a) QuantumReader’s,
the QuantumReader Stockholders’ and Vubotics’s representations and warranties
contained in this Agreement shall be true at the time of Closing as though such
representations and warranties were made at such time.

 

(b) QuantumReader,
the QuantumReader Stockholders and Vubotics shall have performed and complied
with all agreements and conditions required by this Agreement to be performed
or complied with by each prior to or at the Closing,

 

(c) Each
QuantumReader Stockholder will be required, at Closing, to sign an agreement
confirming that all the Issuable Common Shares received will be acquired for
investment and not with a view to or for sale in connection with any
distribution thereof. Each transferring QuantumReader Stockholder will be
required to transfer to Vubotics at the Closing his/her respective
QuantumReader Shares, free and clear of all liens, mortgages, pledges,
encumbrances or changes, whether disclosed or undisclosed.

 

(d) Craig J.
Larson will have executed and delivered to Vubotics an “Agreement to Perform
Programming Services And Acknowledgement of Intellectual Property Rights” in
the form of Attachment I attached hereto.

 

(e) Craig
J. Larson will have executed and delivered to Vubotics a “General Assignment of
Intellectual Property” in the form of Attachment II attached hereto.

 

7

 

(f) Ken
Wiltsee will have executed and delivered to Vubotics a “General Assignment of
Intellectual Property in the form of Attachment III attached hereto.

 

(g) Joseph
J. van Greuninger will have executed and delivered to Vubotics a “General Assignment
of Intellectual Property in the form of Attachment Ill attached hereto

 

9.                                       Post Closing
Covenant of Vubotics..

 

(a) Vubotics
and the QuantumReader Stockholders agree that a key condition of this merger
transaction is Vubotics promise to fund the ongoing software developmental
activities presently engaged in by QuantumReader. Vubotics has agreed to fund a
minimum of Five Hundred Thousand Dollars ($500,000) for working capital,
software development, inventory purchases and promotion of the QuantumReader
software Vubotics has promised that a minimum of Two Hundred Fifty Thousand
Dollars ($250,000) will be available during the first six (6) months
following Closing, and an additional Two Hundred Fifty Thousand Dollars
($250,000) will be available during the second six (6) months following
Closing (the “Minimum Working Capital Amount”). Vubotics agrees that if it
fails to provide the Minimum Working Capital Amount during the twelve (12)
month period following Closing, unless as otherwise agreed in writing between
the QuantumReader Stockholders, Vubotics agrees to transfer all of its right
and interest in the QuantumReader software and related intellectual property to
Craig J. Larson, a Georgia resident. This transaction is to
be effected pursuant to Vubotics receiving a written request from Craig J.
Larson detailing the failure of Vubotics to fund the required
Minimum Working Capital Amount, and requesting that Vubotics move expeditiously
to transfer the intellectual property.

 

(b) In
the event that this Post Closing Covenant of Vubotics becomes effective, the
nature of the legal documentation required to effectuate the transfer of the
QuantumReader Intellectual Property to Craig J. Larson will be in the form of a
nonexclusive, worldwide, perpetual, irrevocable, paid-up license under any patents and patent applications that are
owned by Vubotics. The scope of the license is to make, have made, use,
have used, sell, license, or transfer items, an to practice and have practiced
methods to the extent required to exercise e rights granted back to Craig J.
Larson.

 

(c) This
Covenant shall survive the Closing.

 

	
   

  	
   

  	
  

  	
   

  	
  

  	
   

  
	
   

  	
   

  	
  Vubotics

  	
   

  	
  La on

  	
   

  

 

10.                                 Miscellaneous Provisions.

 

(a) Waivers. Neither
this Agreement nor any term hereof may be changed, waived, amended or terminated
orally but only by written act of QuantumReader, Vubotics or the QuantumReader
Stockholders (or, in respect of a waiver, the waiving party or parties).

 

(b) Assignment. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors and
legal representatives but shall not be assignable by any party
without the written consent of the other party.

 

8

 

(c) Section Headings. The section and
paragraph headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning and interpretation of this
Agreement.

 

(d) Enforceability  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.

 

(e) Merger  and  Expense
of  Enforceability.. This Agreement, in all of its particulars,
shall be enforceable by legal action for the recovery of damages or by way of
specific performance, and the terms and conditions of this Agreement shall
remain in full force and effect subsequent to Closing and shall not be deemed
to be merged into any documents conveyed and delivered at the time of Closing.
In the event that any person is required to initiate any action at law or in
equity for the enforcement of this Agreement, the
prevailing party in such litigation shall be entitled to recover from the party
determined to be in default all of its reasonable costs incurred in
said litigation, including attorneys’ fees,

 

(f) Pronouns. All pronouns used herein shall be
deemed to refer to the masculine, feminine or neuter gender, as the context
requires

 

(g) Additional Documents The parties
hereto will at any time after the date hereof sign, execute and deliver or
cause others so to do all such powers of attorney, deeds, assignments,
documents and instruments and do or cause to be done all such other acts and
things as may be necessary or proper to carry out the transactions contemplated
by this Agreement

 

(h) Entire Agreement. This Agreement
constitutes the entire agreement among the parties hereto and supersedes and cancels
any prior agreements, representations, warranties or communications, whether
oral or written, among the parties hereto relating to the transactions
contemplated hereby or the subject matter herein. Neither this Agreement nor
any provision hereof may be changed, waived, discharged or terminated orally,
but only by an agreement in writing signed by the party against whom or which
the enforcement of such change, waiver, discharge or termination is sought.

 

(i) Construction. This Agreement is intended
to be performed in the State of Georgia and shall be construed and enforced in
accordance with the laws of that state,

 

U) Counterparts. This
Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which, together, shall
constitute one and the same instrument.

 

[Remainder
of this page intentionally left blank]

 

9

 

IN WITNESS WHEREOF, the
parties have duly executed this Agreement as of the date first above written

 

	
  QUANTUMREADER, INC.

  	
  VUBOTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
  Its.

  	
   

  	
   

  	
  Its:

  	
  [ILLEGIBLE]

  	
   

  

 

SIGNATURE OF QUANTUMREADER, INC. STOCKHOLDERS

 

Craig

 

 

	
  /s/ [ILLEGIBLE]

  	
   

  
	
  Hans G. Ehrnrooth

  

 

10

 

Exhibit A

 

QuantumReader, Inc. Stockholders

 

 

Craig J. Larson

 

Hans G. Ehrnrooth

 

11

 

Exhibit B

 

Exceptions to Covenants, Representations and Warranties of

QuantumReader, Inc. and the Stockholders

 

 

1,                                       Outstanding
legal bill to Smith Gambrell in the amount of $2,528,89.

 

No federal or Georgia tax returns have been filed by
QuantumReader, Inc.

 

3                                          QuantumReader, Inc.
has filed with the Delaware Secretary of State, the required filings to
reinstate the Corporation to be in “Good Standing” in the State of Delaware.

 

QuantumReader, Inc, has a verbal agreement
with Ken Wiltsee and with Joseph J van Greuninger to pay them a sum not to
exceed $                        for
work done in QuantumReader IP Phase 1 Development.

 

QuantumReader, Inca does not guarantee that any of its IP as
it exists as of the Closing will ever be commerciably viable or work in any
form or fashion.

 

12

 

Exhibit C

 

Consent of the
Board of Directors of QuantumReader, Inc.

 

13

 

Exhibit D

 

Exceptions to Covenants, Representations and Warranties

of Vubotics, Inc.

 

 

(1)                                  Pending
lawsuit over alleged nonpayment of Promissory Note filed in State of Florida, Lawsuit
is being contested by the Company and is pending.

 

(2). Cellmart Wireless, Inc holds a judgment
against the Company in the State of Texas The judgment was for $100,000 and was
entered in August of 2002.

 

14

 

Exhibit E

 

Consent of the Board of Directors of Vubotics, Inc.

 

15

 

Attachment I

 

Agreement to Perform Programming Services and

Acknowledgement of
Intellectual Property Rights

 

16

 

Attachment
11

 

General
Assignments of Intellectual Property

 

17PRIDE BUSINESS DEVELOPMENT HOLDINGS, INC.
                             SUBSCRIPTION AGREEMENT

                                  INSTRUCTIONS

                IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING.
          SIGNIFICANT REPRESENTATIONS ARE CONTAINED IN THIS DOCUMENT.

1.          Individual Investors must fill in their name and amount subscribed
            for and complete the requested information on pages 10 and 11 and
            sign the signature page on page 11.

2.          Entity Investors must fill in their name and amount subscribed for
            and complete the requested information on pages 12 and 13 and if
            applicable, page 14 and sign the signature page on page 12 and if
            applicable, page 13.

3.          Every Investor must complete the NASD questionnaire found on pages
            15 through 20, and sign the signature page on page 20.

4.          Every Investor

            U.S. Taxpayers: Please complete the Form W-9, Request for Taxpayer
            Identification Number and Certification, and return it along with
            the rest of this Subscription Agreement to the Partnership. You do
            not need to fill out the Form W-8BEN.

            Non-U.S. Taxpayers: Please complete the Form W-8BEN, Certificate of
            Foreign Status of Beneficial Owner for U. S. Tax Withholding, and
            return it along with the rest of this Subscription Agreement to the
            Partnership. You do not need to fill out the Form W-9.

            Note: Certain non-U. S. taxpayers (including those that are
            engaged in a U.S. trade or business, are foreign governments or
            are foreign intermediaries), instead of completing Form W-8BEN,
            will need to complete either (i) Form W-8ECI, Certificate of
            Foreign Person's Claim for Exemption From Withholding on Income
            Effectively Connected With the Conduct Of a Trade or Business in
            the United States; (ii) Form W-8EXP, Certificate of Foreign
            Government Or Other Foreign Organization for United States Tax
            Withholding; or (iii) Form W-8IMY, Certificate of Foreign
            Intermediary, Foreign Partnership, or Certain U. S. Branches for
            U. S. Tax Withholding. These forms, and their instructions, may be

<PAGE>

           obtained from the General Partner or from the Internal Revenue
           Service world wide web site at
           http://www.irs.gov/forms_pubs/forms.html. Again, in such case you do
           not need to fill out the Form W-9.

           Whether you are filling out the Form W-9 or the Form W-8BEN (or
           W-8ECI, W-8EXP or W-8IMY), please complete the information requested
           therein and return the Form, along with this Subscription Agreement.
           Do not file any of the above forms with the Internal Revenue Service.

             DELIVER THE EXECUTED AGREEMENTS AND NASD QUESTIONNAIRE
                                AND TAX FORM TO:

                    Pride Business Development Holdings, Inc.
                             15760 Ventura Boulevard
                                   Suite 1020
                            Encino, California 91436
                               Fax: (818) 206-0053
                               Tel: (866) 868-0461

     ALONG WITH PAYMENT FOR THE SHARES SUBSCRIBED FOR

If you have any questions regarding this form, please contact Ari L. Markow at
the Issuer.

<PAGE>

                             SUBSCRIPTION AGREEMENT

      This Subscription Agreement is executed by Pride Business Development
Holdings, Inc., a Nevada corporation, with an office at 15760 Ventura Boulevard,
Suite 1020, Encino, California (hereinafter referred to as the "ISSUER" or Pride
or the Company) and the undersigned, with an office/residence at the address on
the signature page hereof (hereinafter referred to as the ("SUBSCRIBER").

      The ISSUER will sell units ("Units") in an offering on a "no minimum,
seven and onehalf (7 1/2) Unit maximum basis" at one hundred thousand
(US$100,000.00) per Unit (subscriptions for fractional Units are permitted and
may be accepted at ISSUER'S discretion). Each Unit consists of the following:

The Offering

Issuer:           Pride Business Development Holdings, Inc. ("Pride" or the
                  "Company"), a Nevada Corporation located at 15760 Ventura
                  Boulevard, Suite 1020, Encino, CA 91436.

Type of Security:  Subordinated 12% Bridge Notes.

Interest:          Interest on the Note is payable in arrears and in cash.

                  If the Note is not repaid in 6 months from the date of the
                  issue, the interest rate increases to 13%.

                  If the Note is not repaid 9 months from the date of issue, the
                  interest rate increases to 14%.

Term:              Earlier of:

                  Six Months from the date of issue. OR an equity financing of
                  no less than $2 Million.

Amount:            No greater than USD $750,000.00

Shares:           The Company will issue 140,000 shares of Pride common
                  stock, US$.001 par value (the "Shares") to investors for
                  each $100,000 of Notes purchased.

                  If the Note is not repaid in 6 months from the date of the
                  issue, the Company will issue warrants to purchase 25,000
                  additional Shares at $0.75 per share for every $100,000 of
                  notes subscribed. The term of the warrants will be 3 years
                  from the date of issue.

<PAGE>

                  If the Note is not repaid in 9 months from the date of the
                  issue, the Company will issue additional warrants to purchase
                  25,000 additional Shares at $0.75 per share for every $100,000
                  of notes subscribed. The term of the warrants will be 3 years
                  from the date of issue.

Use of Proceeds:   General working capital of the Company.

Security:         A lien on all assets of the Company, which will be subordinate
                  to those already existing and to any letter of credits issued
                  to support working capital needs of the company. The Company
                  will pay the expenses of filing and recording the liens under
                  this Agreement.

Registration:     The Company will file a registration statement within 9
                  months of issuance of the Note and include all the
                  underlying shares of common stock issued for the notes and
                  any exercise of the warrants. The note holders will have
                  piggy-back registration rights if the Company files
                  registration for any other Shares before this 9 month
                  period. Piggy-back registration will be with the acceptance
                  of the underwriters as selected by the Company.

Capitalization:   All Shares and warrants are based on approximately 14,000,000
                  fully diluted shares outstanding in the Company excluding the
                  Shares, and warrants included in this offering.

Reorganization:   In case the Company reorganizes itself, this entire
                  agreement will be applicable to any future entity
                  arising out of the reorganization.

Placement Agent:  Watson Securities Corp. located at 100, Park Avenue,
                  Suite 1600, New York, NY 10017.

Fees:             The Company will pay the Placement Agents a cash fee of 2.5%
                  of the proceeds of the offering and out of pocket expenses.
                  The Company will also grant a total of 12,600 common Shares of
                  the Company for $100; to Strategic Capital Management LLC for
                  every $100,000 of the Notes subscribed.

      The ISSUER intends to have the proceeds released from the escrow of
subscription funds held by ISSUER from time to time, at which time the ISSUER
will accept the subscription and direct its transfer agent to issue the stock
certificate representing the Shares subscribed and to be sent by the transfer
agent. The offering will continue until the ISSUER in its sole discretion
decides to terminate the offering. There will be no notice of the termination of
the offering to any persons, including SUBSCRIBER. Subscriptions may be
rejected, in whole or in part, in which case the ISSUER will return the
subscription funds, without interest, after deduction of the amount due for an
accepted partial subscription, if any. This offering is being made by the ISSUER
in reliance upon the exemption contained in Section 4(2) of the Securities Act
of 1933, as amended ("Securities Act").

      Because the offering is being made on a no minimum basis, and there is no
assurance that all the securities offered will be subscribed for, if you are an
early investor/subscriber, you bear a disproportionate risk that your funds will

<PAGE>

be the only ones received by the ISSUER and will be inadequate to implement the
ISSUER's business plan. All funds delivered to the ISSUER will be considered
those of the ISSUER at the time of receipt, subject to the rights of creditors
of the ISSUER.

      Each of the parties hereto hereby represents and warrants to, and agrees
with, the other as follows:

        1. Agreement to Subscribe; Subscription Price.

            a. Subscription. SUBSCRIBER hereby subscribes for, and ISSUER agrees
to sell the Units for an aggregate purchase price of US$100,000.00 times the
number of Units subscribed for ("Purchase Price"). To subscribe, the SUBSCRIBER
must complete the appropriate investor questionnaire, the NASD questionnaire,
the signature page and complete the Internal Revenue Service Form, and return
all four items to the ISSUER. (If you do not complete the required tax form, you
may be subject to backup withholding taxes.)

            b. Form of Payment. SUBSCRIBER shall pay the Purchase Price for the
Units purchased hereunder by wire transfer of same day funds in United States
Dollars to the ISSUER. ISSUER shall deliver one or more certificates
representing the Shares to the SUBSCRIBER promptly after acceptance of the
subscription, and send to the SUBSCRIBER a copy of this agreement countersigned
by the ISSUER.

                  Wired funds should be sent to the following:

                  Wells Fargo Bank
                  15760 Ventura Blvd., 1st Floor
                  Encino, California 91436
                  ABA #121000248
                  Account #1810286201
                  FBO: Pride Business Development Group, Inc.

            c. Irrevocable Subscription. This subscription by the SUBSCRIBER is
irrevocable and may not be assigned, hypothecated or transferred. The Shares and
warrants subject to this Subscription Agreement may not be assigned,
hypothecated, transferred, sold or optioned prior to receipt of a warrant
agreement and stock certificate representing the Shares, and then only in
accordance with this Subscription Agreement and the applicable Federal and state
securities laws.

        2. Subscriber Representations.

            a. Transactional Representations. SUBSCRIBER represents, warrants to
and agrees with ISSUER as follows:

                  (i) SUBSCRIBER is purchasing the Units for its own account for
investment purposes and not with a view toward distribution.

<PAGE>

                  (ii) SUBSCRIBER understands that the Units, including the
Shares and warrants (and underlying Shares), have not been registered under the
Securities Act and that such securities are "restricted securities" as defined
in Rule 144 promulgated under the Securities Act. SUBSCRIBER further understands
that the Units, including the Shares and warrants (and underlying Shares), may
not be offered, resold, pledged or otherwise transferred by such SUBSCRIBER
except: A) (1) pursuant to an effective registration statement under the
Securities Act, or (2) pursuant to an available exemption from the registration
requirements of the Securities Act; and B) in accordance with all applicable
securities laws of the states of the United States and other jurisdictions;

                  (iii) SUBSCRIBER understands that the purchase of the Units,
including the Shares and warrants (and underlying Shares), involves a high
degree of risk, including entire loss of the investment and further acknowledges
that it can bear the economic risk of the purchase of the securities, including
the total loss of its investment and the risk that the ISSUER may not sell all
the Units offered and only raise a small portion of the funds sought;

                  (iv) SUBSCRIBER understands that the Units, including the
Shares and warrants (and underlying Shares), are being offered and sold to it in
reliance on specific exemptions from the registration requirements of federal
and state securities laws and that the ISSUER is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments and
understandings of SUBSCRIBER set forth herein in order to determine the
applicability of such exemptions and the suitability of SUBSCRIBER to acquire
the securities;

                  (v) SUBSCRIBER, and its independent advisors, are sufficiently
experienced in financial and business matters to be capable of evaluating the
merits and risks of its investment in the Units, including the Shares and
warrants (and underlying Shares), and to make an informed decision relating
thereto; and

                  (vi) In evaluating its investment in the Units, including the
Shares and warrants (and underlying Shares), SUBSCRIBER has consulted its own
investment and/or legal and/or tax advisors and has determined, independent of
the ISSUER, including its agents and representatives, that the investment being
subscribed for by SUBSCRIBER is suitable for SUBSCRIBER. (vii) The SUBSCRIBER is
not subscribing for Units, including the Shares and warrants (and underlying
Shares), as a result of, or subsequent to, any advertisement, article, notice,
or other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio or presented at any seminar or meeting.

                  (viii) The SUBSCRIBER shall indemnify and hold harmless the
ISSUER, and any officer, director, or control person of the ISSUER, who is or
may be a party to, or is or may be threatened to be made a party to, any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, by reason of, or arising from, any
actual or alleged misrepresentation or misstatement of facts or omission to
represent or state facts made or alleged to have been made by the SUBSCRIBER to
the ISSUER (or any agent or representative of the ISSUER) or omitted or alleged
to have been omitted by the SUBSCRIBER, concerning the SUBSCRIBER or the
SUBSCRIBER's authority to invest or financial position in connection with this
offering, including, without limitation, any such (ii)

<PAGE>

misrepresentation, misstatement, or omission contained in the Questionnaire or
any other document submitted by the SUBSCRIBER, against losses, liabilities, and
expenses for which the ISSUER, or any officer, director, or control person of
the ISSUER has not otherwise been reimbursed (including attorneys' fees,
judgments, fines, and amounts paid in settlement) actually and reasonably
incurred by the ISSUER, or such officer, director, or control person in
connection with such action, suit, or proceeding.

                  (ix) The SUBSCRIBER has been furnished with, and has carefully
read this Subscription Agreement and is familiar with, and understands, the
terms of the Offering. With respect to individual or partnership tax and other
economic considerations involved in this investment, the undersigned is not
relying on the ISSUER or any agent or representative of any of the ISSUER. The
SUBSCRIBER has carefully considered and has, to the extent the SUBSCRIBER
believes such discussion necessary, discussed with the SUBSCRIBER's professional
legal, tax, accounting, and financial advisors the suitability of an investment
in the Units, including the Shares and warrants (and underlying Shares), for the
SUBSCRIBER's particular tax and financial situation and has determined that the
Units, including the Shares and warrants (and underlying Shares), being
subscribed for by the SUBSCRIBER are a suitable investment for the SUBSCRIBER.

                  (x) The SUBSCRIBER or the SUBSCRIBER's purchaser
representative, as the case may be, has such knowledge and experience in
financial, tax, and business matters so as to enable the SUBSCRIBER to utilize
the information made available to the SUBSCRIBER in connection with the Offering
to evaluate the merits and risks of an investment in the Units, including the
Shares and warrants, and to make an informed investment decision with respect
thereto. (xi) ISSUER represents, warrants to and agrees with SUBSCRIBER that it
understands that the Confidential Executive Summary of Pride Business
Development Holdings, Inc., contains references to future and prospective events
which may or may not occur in the future as a result of matters both within and
outside the control of the ISSUER and that SUBSCRIBER is not relying upon the
Confidential Executive Summary of Pride Business Development Holdings, Inc.,
including any of its contents, in making its decision to invest in the Offering
and the Units.

                  (xii) IN MAKING AN INVESTMENT DECISION PURCHASERS, WHICH
INCLUDES SUBSCRIBERS, MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE
TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE UNITS,
INCLUDING THE SHARES AND WARRANTS (AND UNDERLYING SHARES), HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THE DISCLOSURE MATERIALS OR THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

            b. Current Public Information. SUBSCRIBER acknowledges that
SUBSCRIBER has been furnished with or has otherwise acquired copies of the
ISSUER's

<PAGE>

Annual Report on Form 10-KSB for the year ended December 31, 2003 and the Forms
10-QSB for the quarters ended March 31, 2003, June 30, 2004, and September 30,
2004 and the Form 8-K Current Report for an event date of August 24, 2004 and
such other public information, all as filed with the Securities and Exchange
Commission (the "SEC"). The public information includes information about the
ISSUER's wholly owned subsidiary, Pride Business Development Group.

            c. Independent Investigation; Access. SUBSCRIBER acknowledges that,
in making its decision to purchase the Units subscribed for, it has relied on
the publicly available information about the ISSUER only and upon independent
investigations made by it and its representatives, if any. SUBSCRIBER and such
representatives, if any, prior to the sale to it of the securities offered
hereby, have been given access to, and the opportunity to examine, all material
books and records of the ISSUER, all material contracts and documents relating
to the ISSUER and this offering and an opportunity to ask questions of, and to
receive answers from, executive officers of ISSUER concerning the ISSUER and the
terms and conditions of this offering. SUBSCRIBER and its advisors, if any,
acknowledge that they have received answers to any such inquiries and copies of
documentary information requested.

            d. No Government Recommendation or Approval. SUBSCRIBER understands
that no federal or state agency has passed on or made any finding or
determination relating to the fairness of an investment in the Units, including
the Shares and warrants, or has passed or made, or will pass on or make, any
recommendation or endorsement of the Units, including the Shares and Warrants.

        3. Issuer Representations.

            a. Authority; Corporate Action. ISSUER has all necessary corporate
power and authority to enter into this Subscription Agreement and to consummate
the transactions contemplated hereby and thereby. All corporate action necessary
to be taken by ISSUER to authorize the execution, delivery and performance of
this Subscription Agreement, and all other agreements and instruments delivered
by ISSUER in connection with the transactions contemplated hereby and thereby
has been duly and validly taken and this Subscription Agreement have been duly
executed and delivered by ISSUER. Subject to the terms and conditions of this
Subscription Agreement, it constitutes the valid, binding and enforceable
obligation of ISSUER, enforceable in accordance with its terms, except as
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general
application now or hereafter in effect affecting the rights and remedies of
creditors and by general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity); and (ii) the applicability of
the federal and state securities laws and public policy as to the enforceability
of the indemnification provisions of Section 4 hereof. The sale by the ISSUER of
the Units, including the Shares and warrants, does not conflict with the
certificate of incorporation or by-laws of the ISSUER, or any material contract
by which the ISSUER or its property is bound, or any federal or state laws or
regulations or decree, ruling or judgment of any United States or state court
applicable to the ISSUER or its property.

            b. Issuer Shares to Subscriber. The Units, including the Shares and
warrants (and underlying Shares), issued to SUBSCRIBER pursuant to this
Subscription Agreement will be duly authorized, validly issued, fully paid and
non-assessable.

<PAGE>

            c. General Document Representation. To the best of ISSUER's
knowledge, the written materials of the ISSUER previously delivered to
SUBSCRIBER in connection with this Subscription Agreement, at the time they were
given to SUBSCRIBER, were true and accurate in all material respects. SUBSCRIBER
represents and warrants that the Confidential Executive Summary of Pride
Business Development Holdings, Inc., contains references to future and
prospective events which may or may not occur in the future as a result of
matters both within and outside the control of the ISSUER.

        4. Representations and Warranties Made at Closing; Indemnification. Each
party making the representations and warranties contained in Sections 2 and 3
also represents and warrants that they shall be true and accurate as of the
closing. If either party has knowledge, prior to the closing that any such
representations and warranties made by it shall not be true and accurate in any
respect, such party will give written notice of such fact to the other party
specifying which representations and warranties are not true and accurate and
the reasons therefor. The representations and warranties of each party shall
survive the purchase and sale of the Units.

      Each party to this Subscription Agreement agrees to fully indemnify,
defend and hold harmless the other party, its officers, directors, employees,
agents and attorneys from and against any and all losses, claims, damages,
liabilities and expenses, including reasonable attorneys' fees and expenses,
which may result from a breach of such party's representations, warranties and
covenants contained herein.

        5. Legend. SUBSCRIBER understands that the ISSUER will instruct its
transfer agent to place a stop transfer order with respect to the certificates
representing the Shares and on the warrant agreement and that such certificates
and agreements will bear the following legend or substantially similar: "The
securities represented by this certificate have been acquired for investment and
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"). Transfer of these securities is prohibited except pursuant to
registration under the Securities Act or pursuant to an available exemption from
registration."

        6. Placement Agent. The ISSUER has engaged, consented to and authorized
a Placement Agent to act as agent of the ISSUER in connection with the
transactions contemplated by this Subscription Agreement. The ISSUER will pay
the Placement Agent a commission in the form of both cash and shares and will
reimburse the Placement Agent's reasonable out-ofpocket expenses incurred in
connection with the Offering, and the ISSUER agrees to indemnify and hold
harmless the SUBSCRIBERS from and against all fees, commissions or other
payments owing by the ISSUER to the Placement Agent or any other person or firm
acting on behalf of the ISSUER hereunder.

        7. Closing. The ISSUER will accept the subscriptions of all subscribers
on a rolling basis, as it determines from time to time. The ISSUER may reject
subscriptions in whole or in part. Funds of a SUBSCRIBER not applied to the
Purchase Price will be returned to the SUBSCRIBER without interest. Each
subscription is irrevocable by the SUBSCRIBER.

        8. Disclosure. Neither the ISSUER nor the SUBSCRIBER will disclose the
terms of this Subscription Agreement without the written consent of the other
party hereto, unless required by law or regulation or judicial action. In
addition, SUBSCRIBER acknowledges that the information contained in the
Executive Summary of Pride Business Development Holdings Inc. is confidential

<PAGE>

and non-public, and SUBSCRIBER agrees that all such information will be kept in
confidence by the SUBSCRIBER and not used for its personal benefit or disclosed
to any third party for any reason: provided that this obligation will not apply
to any information that (i) is part of the public knowledge or literature and
readily accessible at the date hereof, (ii) becomes part of the public knowledge
or literature and readily accessible by publication, except as a result of a
breach of this provision, or (iii) is received from third parties, except third
parties who disclose such information in violation of any confidentiality
agreements or obligations, including without limitation, any subscription
agreement of even tenor entered into with the ISSUER.

        9. Governing Law. This Subscription Agreement shall be governed by and
interpreted in accordance with the rulings of the laws of the State of
California without regard to conflicts of law. The ISSUER and SUBSCRIBER each
hereby agrees that any action, proceeding or claim against it arising out of, or
relating in any way to this agreement shall be brought and enforced in the
courts of the State of California or of the United States of America sitting in
the State of California and irrevocably submits to such jurisdiction, which
jurisdiction shall be exclusive. The ISSUER and SUBSCRIBER hereby waives any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum. Any process or summons to be served upon the ISSUER and
SUBSCRIBER may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to it at
its address set forth herein. Such mailing shall be deemed personal service and
shall be legal and binding upon the ISSUER and SUBSCRIBER in any action,
proceeding or claim. The ISSUER and SUBSCRIBER agrees that the prevailing
party(ies) in any such action shall be entitled to recover from the other
party(ies) all of its reasonable attorneys' fees and expenses relating to such
action or proceeding and/or incurred in connection with the preparation
therefor. SUBSCRIBER agrees that if it seeks to commence a suit in any other
jurisdiction, it will reimburse ISSUER for the costs to enforce this provision
and to remove to an appropriate California court all actions that have been
commenced and are related thereto and terminate the action in the jurisdiction
other than California.

        10. Entire Agreement. This Subscription Agreement, together with the
questionnaires, constitutes the entire agreement among the parties hereof with
respect to the subject matter hereof and supersedes any and all prior or
contemporaneous representations, warrants, agreements and understandings in
connection therewith. This Subscription Agreement may be amended only by a
writing executed by all parties hereto.

        11. Notices. Any notice or other document required or permitted to be
given or delivered to the parties to this Subscription Agreement shall be
personally delivered or sent by facsimile or other form of electronic
transmission to the party at the address or addresses or telecopier number on
the signature page hereto. Unless otherwise specified in this agreement, all
notices and other documents given under this agreement shall be deemed to have
been duly given when delivered, if personally delivered, and when transmitted if
sent by facsimile or other form of electronic transmission.

        12. Notice for Florida Residents. Pursuant to Section 517.016(11)(a) of
the Florida Securities Act, if there are in excess of five persons with a
residence in Florida, then all Florida Subscribers have a right to rescind their
subscription agreements within three business days after the delivery of any
consideration for the securities offered by the ISSUER. To withdraw the
subscription, you must send, in writing, a statement of rescission to Mr. Ari L.
Markow, Pride Business Development Holdings, Inc. 15760 Ventura Boulevard, Suit
1020, Encino, California 91436.

                            [SIGNATURE PAGES FOLLOW]

<PAGE>

SIGNATURE PAGE FOR INDIVIDUAL SUBSCRIBER - COMPLETE ALL INFORMATION

Name:______________________Name of Joint Subscriber (if any):____________

Residence Address:_______________________________________________________

Telephone: (H)______________(W)___________________Fax____________________

Occupation:_______________Employer:______________________________________

Business Address:________________________________________________________

Send communications to: [ ] Home [ ] Office [ ] E-Mail:

Age:____________________________________________

Social Security Number:_________________________

Check manner in which securities are to be held:

[ ] Individual Ownership     [ ]  Tenants in Common     [ ]  Joint Tenants with
                                                             Right of
                                                             Survivorship (both
                                                             parties must sign)

[ ] Community Property                                  [ ]  Other (please
    indicate)

Amount of Investment:
--------------------

Number of Units:___________

Corresponding dollar amount (US$100,000.00 multiplied by number of Units):
$_____________________________

Accredited Investor Status For Individuals. (SUBSCRIBERS THAT ARE CORPORATIONS,
LIMITED LIABILITY COMPANIES, PARTNERSHIPS, REVOCABLE TRUSTS, IRREVOCABLE TRUSTS,
EMPLOYEE BENEFIT PLAN TRUSTS AND INDIVIDUAL RETIREMENT ACCOUNTS SHOULD IGNORE
THE FOLLOWING QUESTIONS AND PROCEED TO THE ENTITY SIGNATURE PAGE).

                  (i) I am an accredited investor within the meaning of Section
2(15) of the Securities Act and Rule 501 promulgated thereunder because (check
any boxes that apply):

[ ] My individual annual income during each of the two most recent years
    exceeded $200,000 and I expect my annual income during the current year will
    exceed $200,000.

[ ] If I am married, my joint annual income with my spouse during each of the
    two most recent years exceeded $300,000 and I expect my joint annual income
    with my spouse during the current year will exceed $300,000.

    My individual or joint (together with my spouse) net worth (including my 10
[ ] home, home furnishings and automobiles) exceeds $1,000,000.

        (ii) The aggregate value of my assets is approximately $_______________.

        (iii) My aggregate liabilities are approximately $__________________.

        (iv) My current and expected income is:

 YEAR                       INCOME

 2004 (Estimated)           $

 2003 (Actual)              $

 2002 (Actual)              $

      By initialing below, SUBSCRIBER acknowledges that, in making its decision
to purchase the Units subscribed for, it has relied on the publicly available
information about the ISSUER only and upon independent investigations made by it
and its representatives, if any. SUBSCRIBER and such representatives, if any,
prior to the sale to it of the securities offered hereby, have been given access
to, and the opportunity to examine, all material books and records of the
ISSUER, all material contracts and documents relating to the ISSUER and this
offering and an opportunity to ask questions of, and to receive answers from,
executive officers of ISSUER concerning the ISSUER and the terms and conditions
of this offering. SUBSCRIBER and its advisors, if any, acknowledge that they
have received answers to any such inquiries and copies of documentary
information requested. Initials of SUBSCRIBER:
---------------------------------

      I hereby confirm the information set forth above is true and correct in
all respects as of the date hereof and will be on the date of the purchase of
the Units, including the Shares and warrants.

SUBSCRIBER:                        The foregoing subscription is accepted and
                                   the ISSUER hereby agrees to be bound by its
                                   terms

___________________________        PRIDE BUSINESS DEVELOPMENT HOLDINGS, INC.
Signature of Authorized
Signatory

Name:______________________        By:______________________________________
Title:_____________________        Name:____________________________________
Date:______________________        Title:___________________________________
                                   Date:____________________________________

SIGNATURE PAGE FOR ENTITY SUBSCRIBERS - COMPLETE ALL INFORMATION

Name of Entity:_______________________________________________________

Address of Principal Office:__________________________________________

Telephone:_____________________________ Fax:__________________________

Taxpayer Identification Number:_______________________________________

Check type of Entity:
  [] Employee Benefit [] Limited     [] General     []Individual
                         Partnership    Partnership   Retirement
                                                      Account

  []    Limited Liability []Revocable Trust []Corporation []Other Company
        Company                                            (please indicate)

  []    Irrevocable Trust (If the Investor is an Irrevocable Trust, a
        supplemental questionnaire must be completed by the person directing the
        decision for the trust to determine by accredited investor status.
        Please contact the ISSUER for a copy of such supplemental
        questionnaire.)

Amount of Investment:
--------------------

Number of Units:_____________________________________________

Corresponding dollar amount (US$100,000.00 multiplied by number of Units):
$_______________________

Date of Formation or incorporation:State of Formation:_____________________

Describe the business of the Entity:_______________________________________

---------------------------------------------------------------------------

List the names and positions of the executive officers, managing members,
partners or trustees authorized to act with respect to investments by the Entity
generally and specify who has the authority to act with respect to this
investment.

Name                     Position                 Authority for this investment
                                                  (yes) (no)

<PAGE>

Accredited Investor Status for Entities.

(a) check all boxes which apply (IRA Entities can skip this question and go to
(b)):

[]     The Entity was not formed for the specific purpose of investing in the
       ISSUER
[]     The Entity has total assets in excess of $5 million dollars

[]     For Employee Benefit Plan Trusts Only: The decision to invest in the
       ISSUER, was made by a plan fiduciary, as defined in Section 3(21) of
       ERISA, who is either a bank, insurance company or registered investment
       advisor.

(b) If you did not check the first two of the three boxes in Question (a) or if
the Entity is an Individual Retirement Account, a Self-directed Employee Benefit
Plan Trust or an Irrevocable Trust, list the name of each person who:

        (i) owns an equity interest in the Entity (i.e., each shareholder if the
Entity is a corporation, each member if the Entity is a limited liability
company and each partner if the Entity is a partnership); or

        (ii) is a grantor for the revocable trust or Individual Retirement
Account; or

        (iii) is the person making the investment decision for a self-directed
Employee Benefit Plan Trust; or

        (iv) is the person making the investment decisions for an Irrevocable
Trust.

      By initialing below, SUBSCRIBER acknowledges that, in making its decision
to purchase the Units subscribed for, it has relied on the publicly available
information about the ISSUER only and upon independent investigations made by it
and its representatives, if any. SUBSCRIBER and such representatives, if any,
prior to the sale to it of the securities offered hereby, have been given access
to, and the opportunity to examine, all material books and records of the
ISSUER, all material contracts and documents relating to the ISSUER and this
offering and an opportunity to ask questions of, and to receive answers from,
executive officers of ISSUER concerning the ISSUER and the terms and conditions
of this offering. SUBSCRIBER and its advisors, if any, acknowledge that they
have received answers to any such inquiries and copies of documentary
information requested. Initials of SUBSCRIBER:___________

EACH PERSON LISTED ABOVE MUST SEPARATELY COMPLETE AND SUBMIT TO THE ISSUER THE
ANSWERS TO THE QUESTIONS FOLLOWING THE SIGNATURE BOX BELOW AND SIGN THE WRITTEN
CONFIRMATION IMMEDIATELY FOLLOWING.

SUBSCRIBER:                        The foregoing subscription is accepted and
                                   the ISSUER hereby agrees to be bound by its
                                      terms

___________________________        PRIDE BUSINESS DEVELOPMENT HOLDINGS, INC.
Signature of Authorized
Signatory

Name:______________________        By:______________________________________
Title:_____________________        Name:____________________________________
Date:______________________        Title:___________________________________
                                   Date:____________________________________

<PAGE>

Accredited Investor Questions for Entity equity owners and investment decision
-------------------------------------------------------------------------------
makers

(a) I am an accredited investor within the meaning of Section 2(15) of the
Securities Act and Rule 501 promulgated thereunder because (check any boxes that
apply):

        []  My individual annual income during each of the two most recent years
            exceeded $200,000 and I expect my annual income during the current
            year will exceed $200,000.

        [] If I am married, my joint annual income with my spouse during each of
           the two most recent years exceeded $300,000 and I expect my joint
           annual income with my spouse during the current year will exceed
           $300,000.
        [] My individual or joint (together with my spouse) net worth (including
           my home, home furnishings and automobiles) exceeds $1,000,000.

        [] The aggregate value of my assets is approximately $ .

(b) My aggregate liabilities are approximately $ .

(c) My current and expected income is:

                  YEAR                       INCOME
                 -------------------------------------------------
                  2004 (Estimated)           $

                 -------------------------------------------------
                  2003 (Actual)              $

                 -------------------------------------------------
                  2002 (Actual)              $

                 -------------------------------------------------

I hereby confirm the information set forth above is true and correct in all
respects as of the date hereof and will be on the date of the purchase of
Shares.

Date:________________________  Name:________________________________

<PAGE>

                   PRIDE BUSINESS DEVELOPMENT HOLDINGS, INC.
                               NASD QUESTIONNAIRE
                                  INSTRUCTIONS

IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING. SIGNIFICANT REPRESENTATIONS
ARE CONTAINED IN THIS QUESTIONNAIRE.

1.           READ ALL DEFINITIONS ON PAGES 16 AND 17 BEFORE ANSWERING ANY
             QUESTIONS.

2.           EVERY PERSON MUST ANSWER QUESTIONS 1 THROUGH 7 AND SIGN ON PAGE 20.

If you have any questions regarding this questionnaire, please call Ari L.
Markow, Esq., at (866) 868-0461.

<PAGE>

                       DEFINITIONS FOR NASD QUESTIONNAIRE

Affiliate:  An Affiliate of any person (for purposes hereof a "person" includes
            a partnership, corporation or other legal entity such as a trust or
            estate) is a person that controls, is controlled by or is under
            common control with such person. For purposes of this definition:

                (i) a person should be presumed to control a Member of the NASD
        if the person beneficially owns 10% or more of the outstanding voting
        securities of a Member of the NASD which is a corporation, or
        beneficially owns a partnership interest in 10% or more of the
        distributable profits or losses of a Member of the NASD which is a
        partnership;

                (ii) a Member of the NASD should be presumed to control a person
        if the Member of the NASD and Persons Associated with a Member of the
        NASD beneficially own 10% or more of the outstanding voting securities
        of a person which is a corporation, or beneficially own a partnership
        interest in 10% or more of the distributable profits or losses of a
        person which is a partnership; and

                (iii) a person should be presumed to be under common control
        with a Member of the NASD if:

                        (1) the same person controls both the Member of the NASD
                and such person by beneficially owning 10% or more of the
                outstanding voting securities of the Member of the NASD and
                other such person which is a corporation, or by beneficially
                owning a partnership interest in 10% or more of the
                distributable profits or losses of the Member of the NASD and
                other such person which is a partnership; or

                        (2) a person having the power to direct or cause the
                direction of the management or policies of the Member of the
                NASD also has the power to direct or cause the direction of the
                management or policies of the other entity in question.

Immediate
Family:     The "Immediate Family" of any person, including an employee of or
            Person Associated with a Member of the NASD, includes the parents,
            mother-in-law, father-in-law, husband or wife, brother or sister,
            brother-in-law or sister-in-law, son-in-law or daughter-in-law, and
            children of such person or any other individual who is supported,
            directly or indirectly, to a material extent by such person.

Member of
the NASD:   A "Member of the NASD" is any broker or dealer admitted to
            membership in the NASD.

NASD:       The National Association of Securities Dealers, Inc.

<PAGE>

Person
Associated
with a
Member of
the NASD:   A "Person Associated with a Member of the NASD" is every
            sole proprietor, partner, officer, director or branch manager of any
            Member of the NASD, or any natural person occupying a similar status
            or performing similar functions, or any natural person engaged in
            the investment banking or securities business who is directly or
            indirectly controlling or controlled by such Member of the NASD (for
            example, any employee), whether or not any such person is registered
            or exempt from registration with the NASD.

<PAGE>

Print Name:

  1. State whether you or any of your Affiliates or any members of your
Immediate Family are

      (a) a Member of the NASD;

           []  Yes     []  No

      (b) a Person Associated with a Member of the NASD; or

           []  Yes     []  No

      (c) an Affiliate of a Member of the NASD.

           []  Yes     []  No

  2.  State whether you or any of your Affiliates own stock or other securities
      of any Member of the NASD or an Affiliate of a Member of the NASD.

           []  Yes     []  No

  3.  State whether you or any of your Affiliates have made a subordinated loan
      to any Member of the NASD.

           []  Yes     []  No

 4.   If you marked "Yes" to any of the questions above, please briefly describe
      the facts below, giving the names of the Members of the NASD to which your
      answer refers (including, for example, percentage of ownership, amount of
      loan and interest payable, applicable dates, names of Affiliates,
      immediate family, etc.).

      -----------------------------------------------------------------------

      -----------------------------------------------------------------------

      -----------------------------------------------------------------------

      -----------------------------------------------------------------------

State whether you are an Immediate Family member of a partner of Graubard
Miller, counsel to Pride Business Development Holdings, Inc.

           []  Yes     []  No

<PAGE>

6.         (a) State whether you provided an consulting or other services to the
           Company.

           []  Yes     []  No

      If you marked "Yes", please briefly describe such services, including cash
      and non-cash compensation received and attach copies of written agreements
      or correspondence describing such services.

      -----------------------------------------------------------------------

      -----------------------------------------------------------------------

      -----------------------------------------------------------------------

      -----------------------------------------------------------------------

     (b)   Please identify any of the following relationships you have with the
           Underwriter or any other Member of the NASD.

                  None                                               [ ]
                  Advisor                                            [ ]
                  Officer                                            [ ]
                  Director                                           [ ]
                  Trustee                                            [ ]
                  Founder                                            [ ]
                  Registered Representative 5% Stockholder Employee  [ ]
                  Immediate Family Broker/Dealer                     [ ]
                  Promoter                                           [ ]
                  Consultant                                         [ ]
                  Finder                                             [ ]
                  Bridge Lender                                      [ ]
                  General Partner                                    [ ]
                  Limited Partner                                    [ ]
                  Equity Investor                                    [ ]
                  Client or Customer Subordinated Debt Holder Other  [ ]

<PAGE>

      Please describe the nature of any relationship identified above. For
      example, if you are an advisor, promoter, consultant or finder, describe
      the compensation you received; if you are an equity investor, state the
      class of securities and percentage interest you hold; and if you are an
      Immediate Family Member, describe the exact relationship, including the
      name of the person to whom you are related and the position such person
      holds with Underwriter or such other Member of the NASD. Identify the
      Member of the NASD:

      -----------------------------------------------------------------------

      -----------------------------------------------------------------------

      -----------------------------------------------------------------------

      -----------------------------------------------------------------------

7.    State whether you have any oral and/or written agreements with any Member
      of the NASD or Person Associated With a Member of the NASD concerning the
      disposition of your securities of the Company.

           []  Yes     []  No

      If you marked "Yes", please briefly describe such agreement and attach
      copies of written agreements or correspondence describing such
      arrangement.

      I hereby affirm that the answers to the above NASD Questionnaire are true
and correct as of the date set forth below.

Date:___________________ ________________________ ________________________
                         (Sign Name)              (Print Name)

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