Unassociated Document


    
      
        ASSET PURCHASE
          AGREEMENT

        


        


        THIS
          ASSET PURCHASE
          AGREEMENT
          (the
"Agreement")
          is made
          and entered into as of the 12th
          day of
          May 2006 by and between Coroware Technologies Inc., (“Buyer”)
          a
          Florida corporation, and a wholly owned subsidiary of Innova
          Holdings, Inc.,
          (“Buyer’s
          Parent”)
          a
          Delaware corporation with its business address at 17105 San Carlos Blvd.,
          Suite
          A6151, Fort Myers Beach, Florida 33931 and CoroWare, Inc.,
          a
          Washington corporation, (“Seller”)
          with a
          business address at 677 120th Avenue NE, #153, Bellevue, WA 
98005.

        


        WHEREAS,
          Seller
          is
          engaged in the business of providing innovative
          systems integration with particular expertise in the area of mobile service
          robotics and through its wholly owned subsidiary is a robotic standards
          conformance organization and is the sole commercial developer of test services
          and products for JAUS compliance (the
          “Business”).

         

        WHEREAS,
          Buyer
          desires to purchase from Seller, and Seller desires to sell to Buyer all
          of
          Seller's right, title and interest in and to all of Seller's tangible and
          intangible assets used in the operation of the Business, on the terms and
          conditions set forth herein.

        


        NOW, THEREFORE,
          in
          consideration of the mutual promises contained herein, Buyer and Seller
          hereby
          agree as follows:

        


        ARTICLE
          1

        DEFINITIONS

        


        
          	
                  1.1

                	
                  Definitions.
                    As
                    used in this Agreement, the following terns shall have the meanings
                    indicated
                    below:

                


        

        


        "Assets"
          has the
          meaning ascribed to it in Section 2.1

        


        "Assumed
          Liabilities"
          has the
          meaning ascribed to it in Section 2.3(a).

        


        "Bill
          of Sale"
          means
          the Bill of Sale for the Assets, in the form attached hereto as Exhibit
          A,
          to be
          delivered at the Closing.

        


        "Business"
          means
          all products and Services provided by Seller.

        


        "Buyer"
          has the
          meaning ascribed to it in the forepart of this Agreement.


        
          
            
            

          

          
            -1-

            
              

            

          

          
            
            

          

        

        


        "Buyer
          Ancillary Agreements"
          has the
          meaning ascribed to it in Section 7.2.

        


        "Buyer
          MAE"
          means
          an effect materially and adversely affecting the ability of Buyer or Buyer’s
          Parent to conduct the critical aspects of their businesses substantially
          as
          conducted on the date hereof.

        


        "Cash
          Purchase Price"
          has the
          meaning ascribed to it in Section 3.2(b)(i).

        


        "Closing"
          has the
          meaning ascribed to it in Section 4.1.

        


        "Closing
          Date"
          has the
          meaning ascribed to it in Section 4.1.

        


        "Code"
          means
          the Internal Revenue Code of 1986, as amended.

        


        "Contracts"
          means
          all written and oral contracts, agreements, employment agreements, consulting
          agreements and service agreements (excluding Real Property Leases), in
          each case
          including all amendments thereto.

        


        "Employee
          Benefit Plans"
          means
          all retirement, disability, sick leave, medical, dental and
          other
          health insurance, life insurance, severance, stock options, deferred
          compensation and
          vacation
          and all other employee benefit plans within the meaning of Section 3(3)
          of
          ERISA.

        


        "Employees"
          has the
          meaning ascribed to it in Section 6.12.

        


        "Encumbrances"
          means
          all liabilities, obligations, pledges, security interests, liens,
          claims,
          encumbrances or charges.

        


        "Environmental
          Law"
          has the
          meaning ascribed to it in Section 6.14(c).

        


        "ERISA"
          means
          the Employee Retirement Income Security Act of 1974, as amended.

        


        "ERISA
          Plans"
          has the
          meaning ascribed to it in Section 6.15(a).

        


        "Excluded
          Assets"
          has the
          meaning ascribed to it in Section 2.2.

        


        "Financial
          Statements"
          means
          the audited financial statements of Seller for the years ended December
          31, 2004
          and 2005.

        


        "GAAP"
          means
          generally accepted accounting principles, consistently applied throughout
          the
          specified period and in the immediately prior comparable
          period.


        
          
            
            

          

          
            -2-

            
              

            

          

          
            
            

          

        

        


        "Hazardous
          Material"
          has the
          meaning ascribed to it in Section 6.14(c).

        


        "Intellectual
          Property"
          means
          all patents and patent rights, trademarks and trademark rights, inventions,
          service marks, designations, logos, copyrights and copyright rights, software
          including source code, customer lists, drawings and designs and lists of
          contacts in the software and technology systems engineering and military
          industries.

        


        “JAUS”
shall
          mean the Joint
          Architecture for Unmanned Ground Systems (JAUS) standards committee for
          which
          Coroware Test Labs, a wholly owned subsidiary of Seller is the
          first
          robotic standards conformance organization and is the sole commercial developer
          of test services and products for JAUS compliance.” 

        


        “Lawsuit”
          shall mean that certain lawsuit brought by Manor Systems, LLC. Against
          Lloyd
          Spencer and Seller.

        


        "Litigation"
          means
          any litigation, judicial, administrative or arbitral action, proceeding
          or
          claim.

        


        "Permits"
          means
          all permits, licenses, franchises, certificates of authority and
          other
          governmental authorizations, approvals and consents.

        


        "Retained
          Liabilities"
          has the
          meaning ascribed to it in Section 2.3(b).

         

        "Seller"
          has the
          meaning ascribed to it in the forepart of this Agreement.

        


        "Seller
          Ancillary Agreements"
          has the
          meaning ascribed to it in Section 6.2.

        


        "Seller
          ERISA Affiliate"
          has the
          meaning ascribed to it in Section 6.15(b).

        


        "Seller
          MAE"
          means
          an effect materially and adversely affecting the ability of Seller to conduct
          the critical aspects of the Business substantially as conducted on the
          date
          hereof.

        


        "Tangible
          Personal Property"
          means
          all machinery, mobile or otherwise, equipment
          (including computer hardware and communications equipment), equipment including
          research and development equipment, testing equipment and robotic equipment,
          vehicles, tools, fixtures, furniture and furnishings and other personal
          property.

        


        "Taxes"
          means
          all taxes, assessments, fees, interest penalties and governmental
          charges.

        


        "Third
          Party Claims"
          has the
          meaning ascribed to it in Section 10.4.



        
          
            
            

          

          
            -3-

            
              

            

          

          
            
            

          

        

         

        
          	
                  1.2

                	
                  Interpretation.
                    In
                    this Agreement, unless the context otherwise requires, the singular
                    shall
                    include
                    the plural, the masculine shall include the feminine, and vice
                    versa. The
                    term "includes" or
                    "including" shall mean "including without limitation." References
                    to a
                    Section, Article, Exhibit
                    or
                    Schedule shall mean a Section, Article, Exhibit or Schedule of
                    this
                    Agreement.

                


        

        


        ARTICLE
          II

        PURCHASE
          AND SALE OF ASSETS

        


        2.1       
           Purchase
          and Sale of Assets.
          Upon
          the
          terms and conditions herein set forth, Seller hereby agrees to sell, convey,
          transfer, assign, grant and deliver to Buyer, and Buyer hereby agrees to
          purchase, acquire and accept from Seller at the Closing, all of Seller’s right,
          title and interest in and to all of Seller's, tangible and intangible assets
          relating to or used in connection with the Business,
          including, without limitation, those specifically listed below (collectively,
          the "Assets")
          free
          and
          clear of all Encumbrances:

        


        
          	 	
                  (a)

                	
                  All
                    tangible assets of every kind and description wherever located,
                    including,
                    without limitation, all hardware, software, machinery, equipment
leasehold
                    improvements,
                    all robotic equipment, research and development equipment, and
                    testing
                    equipment, hardware, fixtures, shelving, furniture, furnishings,
                    telephone
                    systems, files, records and other items of similar character
                    relating to
                    the Business, wherever located (collectively the “Equipment”),
                    specifically including the items listed on Schedule
                    2.1(a).

                


        

        


        
          	 	
                  (b)

                	
                  All
                    inventories relating to the Business, wherever located (the “Inventory”),
                    and described by individual part on a list to be attached as
Schedule
                    2.1(b;

                


        

        


        
          	 	
                  (c)

                	
                  All
                    spare parts, supplies, packaging materials, consumable materials
                    and other
                    items of similar character used in the operation of the
                    Business;

                


        

        


        
          	 	
                  (d)

                	
                  All
                    books, records, manuals and other materials of the Business,
                    including,
                    without limitation, all sales records, customer lists and records,
                    personnel and payroll records, accounting records, purchase and
                    sale
                    records, price lists, correspondence, and quality control records,
                    manuals
                    and procedures wherever
                    located;

                


        

        


        
          	 	
                  (e)

                	
                  All
                    intangible assets including without limitation all employee relations,
                    customer contacts in the military and homeland security markets,
                    contacts
                    with Microsoft, all other customer contacts, all purchased and
                    developed
                    software and related source code which includes all software
                    and related
                    source code for JAUS,

                


        


        
          
            
            

          

          
            -4-

            
              

            

          

          
            
            

          

        

        


        
          	 	
                  (f)

                	
                  All
                    other intellectual property, specifically including without limitation
                    all
                    logos, and all other similar interests relating to the operation
                    of the
                    Business to which the Seller has any right of ownership, use
                    or otherwise
                    (the “Intellectual Property”). Except for trade names listed in (g),
                    below, Schedule
                    2.1(f)
                    designates all Intellectual Property for which a filing or registration
                    has occurred; 

                


        

        


        
          	 	
                  (g)

                	
                  All
                    of the Seller’s right, title and interest in and to the name “CoroWare,”
                    and “CoroWare Test Labs” and any derivatives thereof employed in the
                    Business, and any other names used by Seller, including those
                    for which a
                    filing or registration has occurred and which are listed on Schedule
                    2.1(f).

                


        

        


        
          	 	
                  (h)

                	
                  The
                    goodwill and going concern value of the
                    Business;

                


        

        


        
          	 	
                  (i)

                	
                  All
                    Permits used in the Business, which Permits are listed on Schedule
                    2.1(i);

                


        

        


        
          	 	
                  (j)

                	
                  All
                    of the Seller’s right, title and interest in, to and under all
                    distributor, vendor or customer contracts or licenses, purchase
                    orders,
                    sales orders, leases, license agreements, non-disclosure agreements,
                    supply agreements and other agreements of the Business, including
                    those
                    set forth in Schedule
                    2.1(j) attached
                    hereto (which schedule shall be separated by categories, including
                    a
                    category for Supply Agreements), which Buyer chooses to assume
                    and as so
                    indicated as assumed on Schedule
                    2.1(j)
                    (the “Assumed Contracts”), provided, however, that Seller shall remain
                    solely responsible for any breach of an Assumed Contract occurring
                    prior
                    to Closing, or any act or omission of Seller regarding an Assumed
                    Contract
                    which occurs prior to Closing;

                


        

        


        
          	 	
                  (k)

                	
                  The
                    current listings and right to use the telephone and fax numbers
                    and e-mail
                    addresses currently being used by the Business, including but
                    not limited
                    to the numbers listed on Schedule
                    2.1(k);

                


        

        


        
          	 	
                  (l)

                	
                  The
                    URL sites described on Schedule
                    2.1(l);
                    and

                


        

        


        	(m)  	
                       
                  All claims of the Seller against third parties relating to the
                  Assets,
                  whether choate or inchoate, known or unknown, contingent or
                  noncontingent.

              


        


        
          	
                	(n)	
                  All
                    accounts receivable of every kind including Accounts Receivable
                    billed and
                    uncollected as of the closing date, and all unbilled services
                    up through
                    the end of business on the day preceding the closing of this
                    Agreement, as
                    well as all amounts due from
                    employees.

                


        


        
          
            
            

          

          
            -5-

            
              

            

          

          
            
            

          

        

        


        	(o)  	
                All
                  available cash as of the end of business on the date immediately
                  preceding
                  the closing date as further discussed in Section 2.3 (a) (ii).
                  Additionally, all cash received by Seller after the Closing from
                  sources
                  which are part of or related to the assets purchased and the assumed
                  liabilities in this Agreement shall promptly be paid to Buyer via
                  bank
                  wire transfer.

              


        


        	(p)  	
                All
                  of Seller’s interest in Seller’s subsidiary CoroWare Test Labs, Inc.
                  (CTL), a Pennsylvania corporation, comprising 100 out of 100 issued
                  shares
                  of common stock, representing 100% ownership of CTL and any other
                  subsidiaries owned by Seller.

              


         

        All
          of
          the assets being purchased by the Buyer listed in this Paragraph 1.1 are
          hereinafter referred to as the “Assets.” Notwithstanding the foregoing, the
          transfer of the Assets pursuant to this Agreement shall not include the
          assumption of any liability related to the Assets unless Buyer expressly
          assumes
          that liability pursuant to Section 2.3(a).

        


        
          	
                  2.2

                	
                  Excluded
                    Assets.
                    Notwithstanding
                    anything to the contrary contained in Section 2.1 or elsewhere
                    in this
                    Agreement, the following assets of Seller (collectively, the
“Excluded
                    Assets”) are not part of the sale and purchase contemplated hereunder,
                    are
                    excluded from the Assets and shall remain the property of Seller
                    after the
                    Closing:

                


        

        


        
          	 	
                  (a)

                	
                  all
                    minute books, stock Records and corporate
                    seals;

                


        

        


        
          	 	
                  (b)

                	
                  the
                    shares of capital stock of Seller held in
                    treasury;

                


        

        


        
          	 	
                  (c)

                	
                  all
                    rights of Seller under this Agreement, the Bill of Sale, and
                    the
                    Promissory Note.

                


        

        


        
          	
                  2.3

                	
                  Assumption
                    of Liabilities.

                


        

        


        
          	 	
                  (a)

                	
                  On
                    the Closing Date, Buyer shall assume and agree to discharge only
                    the
                    following Liabilities of Seller (the "Assumed
                    Liabilities"):

                


        

        


        
          	 	
                  (i)

                	
                  all
                    liabilities and obligations of Seller arising on or after the
                    Closing
                    Date
                    under the Assumed Contracts listed on Schedule
                    2.3;

                


        

        
          	 	 	 


          	 	
                  (ii)
                    

                	
                  all
                    liability listed on Schedule 2.3 attached hereto and made a part
                    hereof,
                    which shall include accounts payable incurred through the Closing
                    Date in
                    the normal course of business, bank credit card debt up to an
                    amount of
                    $98,168.33, and a loan payable to Lloyd Spencer in the amount
                    of
                    $5,279.13. All cash received by Seller up to and including the
                    close of
                    business on the day immediately preceding the closing date shall
                    be used
                    exclusively for the purposes of paying all business related accounts
                    payable, bank credit card debt and/or payroll. Any remaining
                    cash
                    available as of the close of business on the date immediately
                    preceding
                    the closing date shall be transferred to the Buyer. In no event,
                    however,
                    shall the amount of liabilities assumed in excess of the bank
                    credit card
                    debt of up to an amount of $98,168.33 assumed as determined by
                    this
                    Section 2.3 (a) (ii) of this Agreement be greater than $100,000
                    of the
                    total of the Acccounts Receivable assets purchased as determined
                    in
                    Section 2.1 (n) of this Agreement and the Cash assets purchased
                    as
                    determined in Section 2.1(o) of this Agreement.


                


        

         

        
          
            
            

          

          
            -6-

            
              

            

          

          
            
            

          

        

        


        
          	 	
                  (b)

                	
                  All
                    other Liabilities of Seller (the
                    "Retained
                    Liabilities")
                    shall remain the liability of Seller after
                    closing.

                


        

        


        ARTICLE
          III

        PAYMENT
          TO SELLER

        


        
          	3.1	
                  Consideration
                    for the Assets.

                


        

         

        
          	 	
                  (a)

                	
                  The
                    consideration for the Assets (the “Purchase
                    Price”)
                    subject to adjustment as set forth in (b) below shall be (i).
                    up to
                    $450,000 in cash (“Cash Portion”) of which $100,000 is guaranteed ; (ii).
                    up to $1,200,000 million in the restricted common stock of Buyer’s Parent
                    , (“Stock
                    Portion”)
                    and (iii). stock options for 12.0 million shares, exercisable
                    at $.018
                    (“Option
                    Portion”)
                    to be allocated to employees of Seller each as more fully described
                    below.
                    At the Closing, and thereafter, the Purchase Price shall be delivered
                    by
                    Buyer to Seller as set forth in Sections 3.2 and 3.3,
                    below:

                


        

        


        
          	
                	(b)	
                  In
                    the event Buyer is required to pay by law, any of Seller’s or Seller’s
                    wholly owned subsidiaries liabilities, in excess of the amount
                    of the
                    Assumed Liabilities, then the purchase price shall be reduced
                    by the
                    amount paid by Buyer with respect to such Retained Liabilities.
                    Such
                    amounts shall first reduce the cash portion of the purchase price
                    and the
                    balance, if any, shall reduce the number of shares of stock to
                    be paid by
                    Buyer to Seller.

                


        

        


        
          	3.2	
                  Cash
                    Portion of the Purchase Price.

                


        

        


        
          	 	
                  (a)
                    

                	
                  Guaranteed
                    Payment.
                    Buyer shall pay to Seller (i) on Closing in immediately available
                    funds
                    the amount of $30,000; (ii) on or prior to the date which is
                    one month
                    after closing, the amount of $20,000; and (iii) $10,000 in each
                    month for
                    five months beginning on the date which is six months after closing
                    for an
                    aggregate guaranteed amount of $100,000.


                


        


        
          
            
            

          

          
            -7-

            
              

            

          

          
            
            

          

        

        


        	(b)  	
                Performance
                  Payment.
                  (i) If during any of the first four quarters after closing, Buyer
                  sales
                  reach $300,000 or more for such quarter, Buyer shall pay Seller
                  an
                  additional $25,000 for each quarter sales reached $300,000 or more
                  (maximum $100,000) and gross profit percentage, as defined in paragraph
                  3
                  below, is no less than 40%. Additionally, if during the first four
                  quarters following closing, Buyer has sales of at least One and
                  One-half
                  Million Dollars ($1,500,000) and the gross profit percentage is
                  no less
                  than 40%, Buyer shall pay Seller an additional $125,000 and if
                  Buyer has
                  sales of at least Two Million Dollars and the gross profit percentage
                  is
                  no less than 40% the total amount paid shall be increased by an
                  additional
                  $125,000 or a total of $250,000. 

              


        


        An
          adjustment will be made to the cash to be paid in accordance with this
          Section
          3.2 (b) - Performance Payment by the net amounts of the totals from Section
          2.1
          (n), Section 2.1 (o) reduced by the total of Section 2.3 (a) (ii); all
          Sections
          refer to this Agreement. If the net amount of the adjustment is positive,
          the
          cash Performance Payments will be increased proportionally to include the
          net
          increase. If the net amount of the adjustment is negative, then up to $98,168.33
          of the negative adjustment will be applied against Valuation Share payments
          at
          the then prevailing stock price, based upon the closing stock price of
          Buyer’s
          Parent on the date immediately before such payment. Amounts of negative
          adjustment greater than $98,168 will be applied against the cash Performance
          Payments proportionally, such that the cash Performance Payments will be
          reduced
          on a dollar for dollar basis up to the amount of the total negative adjustment
          less $98,168.33.

        


        If
          the
          gross profit percentage in any of these quarters is less than 40% but at
          least
          25%, then the Buyer shall pay Seller a portion of the indicated cash Performance
          Payments for each quarter in accordance with the following
          schedule:

        


        
          	
                  Gross
                    Profit %

                	 	
                  Payout
                    %

                
	
                  Less
                    than 25%

                	 	
                  -0-%

                
	
                  25%

                	 	
                  50%

                
	
                  25%
                    to 40%

                	 	
                  Prorated
                    from 50% to 100%

                
	
                  40%

                	 	
                  100%

                


        

         

        
          	3.3	
                  Stock
                    Portion of the Purchase Price.

                


        

         

        	(a)  	
                Definitions.
                  

              


        


        	(i)  	
                “Valuation
                  Shares” shall mean Thirty Million Shares (30,000,000) of the Buyer’s
                  Parents restricted common stock.

              



        
          
            
            

          

          
            -8-

            
              

            

          

          
            
            

          

        

        


        	(ii)  	
                “Escrow
                  Shares” shall mean Twelve Million Five Hundred Thousand shares
                  (12,500,000) of the Buyer’s Parents restricted common
                  stock.

              


        


        	(iii)  	
                “Adjusted
                  Valuation Shares” shall mean Seventeen Million Five Hundred Thousand
                  shares (17,500,000) of the Buyer’s Parents restricted common stock and
                  following final disposition of the Lawsuit shall be increased by
                  the
                  Escrow Shares returned to Buyer for the purpose of increasing the
                  Adjusted
                  Valuation Shares in accordance with the terms of the Escrow Agreement
                  attached hereto as Exhibit E.

              


        


        


        	(b)  	
                Payment
                  of Escrow Shares. The Escrow Shares shall be held in Escrow and
                  released
                  to increase the Adjusted Valuation Shares upon final resolution
                  of the
                  Lawsuit in accordance with the terms of the Escrow Agreement attached
                  hereto as Exhibit E. That percentage of Adjusted Valuation Shares
                  which
                  has been paid to Seller will be paid to Seller on the shares released
                  to
                  increase the Adjusted Valuation Shares.

              


        


          (c) Payment
          of Adjusted Valuation Shares.The
          Adjusted Valuation Shares will be paid to Seller in accordance with the
          following number of shares and subject to the terms set forth
          below:

          

        (a)
          Shares
          Payable in First Twelve Months Following Closing:

        


        (i)
          Buyer
          shall pay and deliver 5,000,000 shares of Buyer’s Parent’s restricted common
          stock to the Seller on Closing. Such shares shall vest equally over a three
          year
          period with one-third vesting on the first anniversary date following closing
          and one-third on each of the next two subsequent anniversary dates. Such
          shares
          shall include a legend which prohibits sale or transfer of shares until
          vested
          and which will be removed upon vesting. 

          

        (ii)
          If
          after closing total sales of Buyer in the twelve month period following
          closing
          reach 1.1 Million Dollars ($1,100,000) and the gross profit percentage
          as
          defined below is no less than forty percent (40%), then Buyer shall pay
          and
          deliver an additional 416,667 shares of Buyer’s Parent’s common stock to Seller
          for an aggregate of 5,416,667 shares at the end of the first twelve month
          period.

        


        (iii)
          If
          Buyer’s total sales in the twelve month period following closing reach 1.5
          Million Dollars ($1,500,000) and the gross profit percentage is no less
          than
          forty percent (40%), then Buyer shall pay and deliver an additional 416,667
          shares of Buyer’s Parent’s common stock to Seller for an aggregate of 5,833,334
          shares at the end of the first twelve month period.


        
          
            
            

          

          
            -9-

            
              

            

          

          
            
            

          

        


        


        (b)
          Shares Payable in Second Twelve Months Following Closing:

        


        (i)
          If
          Buyer’s total sales in the second twelve month period following closing reach
          1.2 Million Dollars ($1,200,000) and the gross profit percentage as defined
          below is no less than forty percent (40%), then Buyer shall pay and deliver
          an
          additional 2,916,667 shares of Buyer’s Parent’s common stock to Seller at the
          end of the second twelve month period.

        


        (ii)
          If
          Buyer’s total sales in the second twelve month period following closing reach
          Two Million Dollars ($2,000,000) and the gross profit percentage as defined
          below is no less than forty percent (40%), then Buyer shall pay and deliver
          an
          additional 1,458,333 shares of Buyer’s Parent’s common stock to Seller at the
          end of the second twelve month period for an aggregate of 4,375,000
          shares.

        


        (iii)
          If
          Buyer’s total sales in the second twelve month period following closing reach
          Two and One-half Million Dollars ($2,500,000) and the gross profit percentage
          as
          defined below is no less than forty percent (40%), then Buyer shall pay
          and
          deliver an additional 1,458,333 shares of Buyer’s Parent’s common stock to
          Seller at the end of the second twelve month period for an aggregate of
          5,833,333 shares.

        


        (c)
          Shares Payable in Third Twelve Months Following Closing:

        


        (i)
          If
          Buyer’s total sales in the third twelve month period following closing reach
          2
          Million Dollars ($2,000,000) and the gross profit percentage as defined
          below is
          no less than forty percent (40%), then Buyer shall pay and deliver an additional
          2,916,667 shares of Buyer’s Parent’s common stock to Seller at the end of the
          third twelve month period.

         

        (ii)
          If
          Buyer’s total sales in the third twelve month period following closing reach
          Two
          and One Half Million Dollars ($2,500,000) and the gross profit percentage
          is no
          less than forty percent (40%), then Buyer shall pay and deliver an additional
          1,458,333 shares of Buyer’s Parent’s common stock to Seller at the end of the
          third twelve month period for an aggregate of 4,375,000 shares.

        


        (iii)
          If
          Buyer’s total sales in the third twelve month period following closing reach
          Three and One-half Million Dollars ($3,500,000) and the gross profit percentage
          is no less than forty percent (40%), then Buyer shall pay and deliver an
          additional 1,458,333 shares of Buyer’s Parent’s common stock to Seller at the
          end of the third twelve month period for an aggregate of 5,833,333
          shares.

        


        (d)
          If
          the gross profit percentage in any of these twelve month periods is less
          than
          40% but at least 25%, then the Buyer shall pay Seller a portion of the
          indicated
          Stock Portion for each twelve month period in accordance with the following
          schedule:

        


        
          	
                  Gross
                    Profit %

                	 	
                  Payout
                    %

                
	
                  Less
                    than 25%

                	 	
                  -0-%

                
	
                  25%

                	 	
                  50%

                
	
                  25%
                    to 40%

                	 	
                  Prorated
                    from 50% to 100%

                
	
                  40%

                	 	
                  100%

                


        

         

        
          
            
            

          

          
            -10-

            
              

            

          

          
            
            

          

        

        


        For
          all
          purposes of Sections 3.2 and 3.3, Gross Profit shall mean reported Revenues,
          as
          included in the audited financial statements of Buyer less all compensation
          costs, including employee benefits and subcontractor costs, plus direct
          materials of Buyer.
          The
          calculation of compensation costs shall include 50% of the compensation
          costs
          for David Hyams and 80% of the compensation costs for Lloyd Spencer regardless
          of the legal entity within Buyer or Buyer’s Parent that pays the compensation
          costs for Messrs. Hyams and Spencer. Gross Profit percentage shall mean
          Gross
          Profit divided by Total Revenues.

        


        As
          further discussed in Section 3.2 (b) of this Agreement, an adjustment will
          be
          made to the payment of the Valuation Shares if the net amount of the adjustment
          as determined in Section 3.2 (b) of this Agreement is negative. Up to $98,168.33
          of such negative adjustment will be applied against shares paid at the
          then
          prevailing stock price, based upon the closing stock price of Buyer’s Parent on
          the date immediately before such payment. 

        


        Notwithstanding
          the schedule shown above, in the event that Buyer’s Parent enters a binding
          agreement to sell all or substantially all of its stock or its assets or
          all or
          substantially all of the stock of Buyer or the assets acquired from Seller
          prior
          to receipt of all of the stock portion of the purchase price to be paid
          hereunder, then the remaining portion of the stock purchase price including
          both
          the guaranteed shares and the contingent shares based on Sales and Gross
          Profit
          performance shall be delivered to the Seller immediately prior to the
          sale.

        


        3.4  
             Allocation.
          The
          Purchase Price shall be allocated in accordance with Schedule
          3.4.
          After
          the Closing, the parties shall make consistent use of the allocation specified
          in Schedule
          3.4
          for all
          Tax purposes and in all filings, declarations and reports with the IRS
          in
          respect thereof, including the reports required to be filed under Section
          1060
          of the Code. Buyer shall prepare and deliver IRS Form 8594 to Seller within
          one
          hundred fifty (150) days after the Closing Date to be filed with the IRS.
          In any
          proceeding relating to the determination of any Tax, neither Buyer nor
          Seller
          nor any of Seller’s shareholders shall contend or represent that such allocation
          is not a correct allocation.

        


        
          	3.4	
                  Sales
                    Tax on Transaction.
                    Seller shall be liable for any sales tax payable on the sale
                    of the
                    Assets. If Buyer is assessed any sales or use tax, and related
                    interest
                    and penalties on the purchase of the Assets by any taxing authority,
                    Seller shall reimburse Buyer for the full amount of the assessment
                    within
                    30 days of the buyer notifying Seller of the
                    assessment.

                


        


        
          
            
            

          

          
            -11-

            
              

            

          

          
            
            

          

        

        


        
          	3.5	
                  If
                    the Buyer’s Parent, at any time while this Agreement is in place and
                    through the term of the payment of the Stock Portion of the Purchase
                    Price
                    as described in Section 3.3 of the Agreement, shall (a) pay a stock
                    dividend or otherwise make a distribution or distributions on
                    shares of
                    its Common Stock (b) subdivide outstanding shares of Common Stock
                    into a
                    larger number of shares, (c) combine (including by way of reverse
                    stock
                    split) outstanding shares of Common Stock into a smaller number
                    of shares,
                    then the amount of the Valuation Shares to be paid shall be adjusted
                    on a
                    direct basis so that the amount of the Valuation Shares increase
                    or
                    decrease in accordance with such
                    actions.

                


        

        
 

        ARTICLE
          IV 

        THE
          CLOSING

        


        4.1        
           Closing. The
          closing of the purchase and sale of the Assets hereunder (the "Closing")
          shall
          take
          place on
          May 15, 2006 (the “Closing
          Date”).
          The
          Closing shall take place at the offices of Buyer in Fort Myers, Florida.
          The
          Closing shall be effective as of the close of business on the Closing Date.
          

        


        
          	
                  4.2

                	
                  Delivery
                    of Items by Seller. Seller
                    shall deliver to Buyer at the Closing the items listed
                    below:

                


        

         

        
          	 	
                  (a)

                	
                  a
                    copy, certified by the Secretary of Seller, of resolutions duly
                    adopted by
                    the Board of Directors
                    of Seller and by the shareholders of Seller authorizing the execution,
                    delivery and
                    performance of this Agreement and the transactions contemplated
                    hereby;

                


        

         

        
          	 	
                  (b)

                	
                  a
                    certificate, duly executed by an authorized officer of Seller,
                    certifying
                    as to the matters set forth in Section
                    9.1(a);

                


        

         

        
          	 	
                  (c)

                	
                  the
                    Bill of Sale, duly executed by
                    Seller;

                


        

         

        
          	 	
                  (d)

                	
                  physical
                    possession of the Assets where
                    located;

                


        

         

        
          	 	
                  (e)

                	
                  assignment
                    of the Assumed Contracts, duly executed by Seller;
                    

                


        

         

        
          	 	
                  (f)

                	
                  assignment
                    of all other intangibles; 

                


        

         

        
          	 	
                  (g)
                    

                	
                  assignment
                    of all developed software and source codes for all developed
                    software,
                    and

                


        


        
          
            
            

          

          
            -12-

            
              

            

          

          
            
            

          

        

         

        
          	 	
                  (h)

                	
                  such
                    other documents, instruments or certificates as Buyer may reasonably
                    request.

                


        

        


        
          	
                  4.3

                	
                  Delivery
                    of Items by Buyer. Buyer
                    shall deliver to Seller at the Closing the items listed
                    below:

                


        

        


        
          	 	
                  (a)

                	
                  a
                    copy of resolutions duly adopted by Buyer authorizing the execution,
                    delivery and performance of this Agreement and the transactions
                    contemplated hereby;

                


        

        


        
          	 	
                  (b)

                	
                  a
                    certificate duly executed by Buyer, certifying as to the matters
                    set forth
                    in Section 9.2(a);

                


        

        


        
          	 	
                  (c)

                	
                  assignment
                    of the Assumed Contracts, duly executed by
                    Buyer;

                


        

        


        
          	 	
                  (d)

                	
                  a
                    wire transfer or check to the Seller in the amount of Thirty
                    Thousand
                    Dollars ($30,000);

                


        

        


        
          	 	
                  (e)

                	
                  a
                    Promissory Note in the amount of Seventy Thousand Dollars
                    ($70,000);

                


        

        


        
          	 	
                  (f)

                	
                  a
                    contingent performance promissory note for an amount up to $350,000;
                    and

                


        

        


        	(g)  	
                       
                  such other documents, instruments or certificates as Seller may
                  reasonably
                  request.

              


        


        	(h)  	
                        a
                  corporate guaranty executed by Innova Holdings, Inc.
                  

              


        


        	 (i)  	
                        satisfactory
                  employment agreements between Buyer and Seller’s key
                  employees.

              


        


        


        ARTICLE
          V

        PRORATIONS
          AND ACCRUALS

        


        
          	
                  5.1

                	
                  2005
                    Personal Property Taxes.
                    Personal property taxes, if any, applicable to the Assets for
                    2006 shall
                    be prorated as of the Closing based upon 105% of the personal
                    property
                    taxes assessed for the year 2005. 

                


        

        


        
          	
                  5.2

                	
                  Utilities.
                    Utility charges for the billing periods in which the Closing
                    occurs will
                    be apportioned between Buyer and Seller based on actual meter
                    readings as
                    of the Closing.

                


        


        
          
            
            

          

          
            -13-

            
              

            

          

          
            
            

          

        

        


        
          	
                  5.3

                	
                  Credit
                    for Employee Vacation and Sick Pay.
                    Buyer shall be entitled to a credit against the Purchase Price
                    for the
                    amount of all accrued but unpaid employee vacation and sick pay
                    due as of
                    the Closing Date (the “Employee Accrual”) to the Employees, as shown on
                    Schedule
                    5.4.
                    

                


        

        


        
          	
                  5.4

                	
                  Costs
                    Under Assumed Contract.
                    All costs, charges or prepayments paid or payable by or to Seller
                    under
                    any Assumed Contracts will be prorated as of the Closing Date,
                    as shown on
                    Schedule
                    5.4.

                


        

        


         

        ARTICLE
          VI

        REPRESENTATIONS
          AND WARRANTIES OF SELLER

        


        Seller
          hereby makes the following representations and warranties to Buyer:

        


        
          	
                  6.1

                	
                  Organization
                    and Good Standing of Seller.
                    Seller
                    is a corporation duly organized, validly existing and in good
                    standing
                    under the laws of the State of Washington and has all corporate
                    power and
                    authority to own, operate and lease its properties and carry
                    on its
                    businesses as now conducted, including, without limitation, the
                    Business.
                    Other than Washington, there are no jurisdictions in which the
                    nature of
                    the Business or the ownership, leasing or holding of the Assets
                    makes
                    qualification as a foreign corporation necessary, except for
                    jurisdictions
                    where the failure to do so as a foreign corporation necessary,
                    except for
                    jurisdictions where the failure to be so qualified or licensed
                    will not
                    have, individually, a material adverse effect on the
                    Business.

                


        

        


        


        
          	
                  6.2

                	
                  Powers: Execution.
                    Seller
                    has all requisite corporate power and authority (i) to own and
                    operate the
                    Assets; (ii) to conduct the Business; and (iii) to execute, deliver
                    and
                    perform this Agreement and all other agreements and documents
                    to be
                    executed and delivered by Seller pursuant to this Agreement (such
                    other
                    agreements and documents, the "Seller
                    Ancillary Agreements").
                    The execution and delivery by Seller of this Agreement and the
                    Seller
                    Ancillary Agreements have been duly and validly authorized by
                    all
                    necessary corporate action on the part of Seller. This Agreement
                    is, and
                    this Agreement and the Seller Ancillary Agreements will be as
                    of the
                    Closing, the valid and binding obligations of Seller, enforceable
                    against
                    Seller in accordance with their respective terms, except to the
                    extent
                    that such enforcement is limited by bankruptcy, insolvency, fraudulent
                    transfer, reorganization, moratorium or other laws affecting
                    the rights of
                    creditors generally and general equity
                    principles.

                


        

        


        
          	
                  6.3

                	
                  Breach
                    of Statute or Contract.

                


        

        


        
          	 	
                  (a)

                	
                  Neither
                    the execution and delivery of this Agreement by Seller nor compliance
                    by
                    Seller with
                    the terms and provisions of this Agreement (a) will, except as
                    set forth
                    on Schedule
                    6.3(a),
                    (i) conflict with, (ii) result in a breach of any of the terms,
                    conditions
                    or provisions
                    of, (iii) constitute a default under, or (iv) require Seller
                    to obtain any
                    consent,
                    approval or action of, make any filing with or give any notice
                    to any
                    third party under the terms of any material Contract or other
                    instrument
                    to which Seller is a party or by which Seller is bound; (b) will
                    result in
                    the creation or imposition of any Encumbrance upon or give to
                    others any
                    interest or rights in or with respect to any of the Assets; or
                    (c) will
                    violate any law, or any statute or regulation of any governmental
                    authority as such law, statute or regulation relates to Seller,
                    the Assets
                    or the Business.

                


        


        
          
            
            

          

          
            -14-

            
              

            

          

          
            
            

          

        

        


        
          	 	
                  (b)

                	
                  No
                    declaration, filing or registration with, or notice to, or authorization,
                    consent or approval
                    of any governmental or regulatory body or authority is necessary
                    for
                    the
                    consummation by Seller of the transactions contemplated
                    hereby.

                


        

         

        
          	
                  6.4

                	
                  No
                    Litigation.
                    Except
                    as set forth on Schedule
                    6.4,
                    there is no pending or, to the knowledge of Seller, threatened
                    Litigation
                    (or, to the knowledge of Seller, any inquiry or investigation
                    of
                    any
                    governmental authority) involving Seller or that questions the
                    validity of
                    this Agreement, or
                    any action taken, or to be taken, by Seller in connection with
                    this
                    Agreement or that otherwise relates to the Assets or the Business.
                    There
                    is no judgment, order, injunction, decree or award outstanding
                    (whether
                    rendered by a court, administrative agency or arbitrator), against
                    Seller,
                    or by which Seller or any of the Assets is or may be bound which
                    relates
                    to the transactions contemplated by this Agreement, the Assets
                    or the
                    Business.

                


        

         

        
          	
                  6.5

                	
                  Legal
                    Compliance.
                    Seller
                    is not in any material violation of any provision of its
                    organizational
                    documents or of any other instrument, permit, decree, or order.
                    Seller has
                    operated and is currently operating the Business and has maintained
                    the
                    Assets in material conformity with all applicable laws, ordinances,
                    regulations and directives (including, without limitation, those
                    pertaining
                    to public health or worker safety, but excluding those pertaining
                    to the
                    environment
                    or
                    the management of pollution or hazardous materials, which are
                    governed by
                    Section 6.14). Seller has in force all Permits (including environmental
                    Permits) necessary to conduct the
                    Business.

                


        

         

        
          	
                  6.6

                	
                  Financial
                    Statements.

                


        

         

        
          	 	
                  (a)

                	
                  Seller
                    has delivered to Buyer copies of the Financial Statements. The
                    Financial
                    Statements are true and complete in all material respects and
                    were
                    prepared in accordance with GAAP consistently applied throughout
                    the
                    periods indicated. The Financial
                    Statements fairly set forth the results of operations and financial
                    position of the
                    Business, for the period or as of the date indicated, as
                    applicable.

                


        


        
          
            
            

          

          
            -15-

            
              

            

          

          
            
            

          

        


         

        
          	 	
                  (b)

                	
                  Since
                    the date of the Financial Statements, except as set forth on
Schedule
                    6.6(b),
                    Seller (i) has not incurred any material obligation or liability
                    (absolute, accrued, contingent or otherwise) whether due or to
                    become due,
                    other than in the ordinary course of business consistent in nature
                    and
                    amount with those incurred in comparable prior periods; (ii)
                    has not
                    mortgaged, pledged or subjected to lien, charge, security interest
                    or any other encumbrance or restriction any material portion
                    of the
                    Assets; (iii)
                    has not discharged, satisfied or paid any material lien, charge,
                    encumbrance or other obligation
                    other than those then required to be discharged, satisfied or
                    paid; (iv)
                    has not
                    sold, transferred, leased to others or otherwise disposed of
                    any material
                    portion of its assets other than in the ordinary course of business;
                    (v)
                    has not canceled or compromised any debt or claim owed to Seller
                    or
                    released any right of Seller of material value; and (vi) has
                    not received
                    any notice of termination or non-renewal of any material Assumed
                    Contract
                    or Permit of Seller.

                


        

         

        6.7        
           Title
          to and Condition of the Assets.

         

        
          	 	
                  (a)

                	
                  The
                    Assets (in the case of leased assets, Seller’s leasehold interest therein)
                    are free and clear of all security interests, encumbrances, liens,
                    mortgages, pledges, charges, conditional sale or title retention
                    agreements and restrictions, except liens for property taxes
                    not yet due
                    and payable, and those security interests described on Schedule
                    6.7(a)
                    for which full and complete releases will be obtained by Seller
                    at or
                    prior to the Closing. Except as set forth on Schedule
                    6.7(a),
                    there are no currently effective Uniform Commercial Code financing
                    statements of record covering any of the
                    Assets.

                


        

         

        
          	 	
                  (b)

                	
                  Schedule
                    2.1(a)
                    is
                    a complete and correct list of all Tangible Personal Property
                    of Seller
                    related to or used in connection with the Business. Each item
                    listed on
                    Schedule
                    2.1(a)
                    is
                    in good condition and repair (subject to ordinary course wear
                    and tear,
                    maintenance and repairs) and all such items are sufficient in
                    the
                    aggregate to operate the Business in the ordinary
                    course.

                


        

        


        
          	
                  6.8

                	
                  Contracts.
                    The
                    items listed on Schedule
                    6.8
                    include all Contracts to which Seller is a party or by which
                    Seller is
                    bound, which relate to the conduct of the Business or Seller's
                    ownership
                    or operation of the Assets. All of the Assumed Contracts are
                    in full force
                    and effect, and neither Seller, nor, to the knowledge of Seller,
                    any other
                    party thereto, is in default in respect of any of the terms or
                    provisions
                    thereof. Except as listed on Schedule
                    6.8,
                    there are no disputes or disagreements pending or, to the knowledge
                    of
                    Seller, threatened among Seller, and any other party under any
                    of the
                    Assumed Contracts, and, to the knowledge of Seller, there is
                    no basis for
                    any such dispute or disagreement. True and correct copies of
                    the written
                    Assumed Contracts have been delivered or made available to Buyer
                    prior to
                    the date hereof.

                


        


        
          
            
            

          

          
            -16-

            
              

            

          

          
            
            

          

        

        


        
          	
                  6.9

                	
                  Intellectual
                    Property.
                    Except
                    for Intellectual Property licensed from a third party under
                    any
                    of
                    the Assumed Contracts, the Intellectual Property listed on Schedule
                    6.9
                    (i) includes all of the Intellectual Property necessary to conduct
                    the
                    Business substantially as conducted on the date hereof and (ii)
                    is owned
                    by Seller. Except as indicated on Schedule
                    6.9,
                    Seller has not granted, licensed, sublicensed, assigned, transferred
                    or
                    otherwise conveyed any right, title or interest in or to any
                    of its
                    Intellectual Property to any other person, and, to the knowledge
                    of
                    Seller, no person or entity other than Seller has any right to
                    use,
                    license, sublicense or operate under any of its Intellectual
                    Property.
                    None of Seller's Intellectual Property is subject to any pending
                    or, to
                    the knowledge of Seller, threatened challenge or reversion. To
                    the
                    knowledge of Seller, the use of its Intellectual Property by
                    Seller does
                    not infringe on any proprietary right, trademark, trade name
                    or service
                    mark of any other party, nor has Seller received any written
                    notice of any
                    allegation thereof

                


        

        


        
          	
                  6.10

                	
                  Insurance.
                    Except
                    as set forth on Schedule
                    6.10,
                    there are no claims which relate to the Business or the Assets
                    currently
                    pending under any of Seller's insurance policies and, to the
                    knowledge of
                    Seller, there is no basis for any such claims. Copies of all
                    of Seller's
                    insurance policies which relate to the Business or the Assets
                    have been
                    provided to Buyer.

                


        

        


        
          	
                  6.11

                	
                  Related
                    Party Transactions.
                    Except
                    as set forth on Schedule
                    6.11,
                    none of the Assumed Contracts is between or among Seller, on
                    the one hand,
                    and any shareholder of Seller or any party in any way affiliated
                    with any
                    shareholder of Seller or Seller, on the other
                    hand.

                


        

        


        
          	
                  6.12

                	
                  Employees
                    and Agents.
                    Schedule
                    6.12
                    is
                    a complete and correct list of all current employees of Seller
                    as of the
                    date hereof (the "Employees").
                    Except as set forth on Schedule
                    6.12
                    and except as may be otherwise construed by law, all of the Employees
                    are
                    employed by Seller on an at-will basis. Schedule
                    6.12
                    indicates, as to each Employee as of the date hereof, (i) full
                    or part
                    time status; (ii) job title and function; and (iii) date of hire
                    by
                    Seller. Except as set forth in Schedule
                    6.12,
                    none of the Employees has notified Seller as of the date hereof
                    that such
                    Employee intends to terminate his or her employment with the
                    Business.

                


        

        


        
          	
                  6.13

                	
                  Tax
                    Returns and Payments.
                    Except
                    as set forth on Schedule
                    6.13,
                    all tax returns and reports of Seller required to be filed on
                    or before
                    the date hereof have been duly prepared and timely
                    filed on or before such date, and all Taxes with respect to such
                    returns
                    and reports have
                    been timely paid. All tax returns and reports of Seller required
                    to be
                    filed after the date hereof in respect of any period prior to
                    or through
                    the Closing Date will be duly prepared and timely filed, and
                    all Taxes
                    with respect to such returns and reports will be timely paid
                    by Seller.
                    Seller has fully accrued on its books and has established adequate
                    reserves for all Taxes payable but not yet due. Except as set
                    forth on
                    Schedule
                    6.13,
                    there are no tax liens on any of the Assets, and there is no
                    basis for the
                    assertion of any such tax liens. Except as set forth on Schedule
                    6.13,
                    there are no actions or proceedings currently pending or, to
                    the knowledge
                    of Seller, proposed or threatened by any taxing authority against
                    Seller.

                


        


        
          
            
            

          

          
            -17-

            
              

            

          

          
            
            

          

        

        


        
          	
                  6.14

                	
                  Environmental
                    Matters.

                


        

        


        
          	 	
                  (a)

                	
                  Seller
                    is in compliance in all material respects with all applicable
                    Environmental Laws in respect of the Business and the
                    Assets.

                


        

        


        
          	 	
                  (b)

                	
                  Seller
                    has not received notice or indication advising that Seller is
                    or may be
                    responsible for any investigation or response costs with respect
                    to a
                    release, threatened release or cleanup
                    of any Hazardous Materials arising from current or past activities
                    or
                    operations
                    of
                    Seller in connection with the
                    Business.

                


        

        


        
          	 	
                  (c)

                	
                  For
                    purposes of this Agreement, "Environmental
                    Law"
                    means any law, statute, ordinance,
                    rule, regulation or order relating to human health, safety or
                    protection
                    of the
                    environment or to emissions, discharges, releases or threatened
                    releases
                    of pollutants, contaminants
                    or Hazardous Materials in the environment (including, without
                    limitation,
                    ambient air, surface water, ground water, land surface or subsurface
                    strata), or otherwise relating to the treatment, storage, disposal,
                    transport or handling of Hazardous Material. "Hazardous
                    Material"
                    means (a) any petroleum or petroleum products, radioactive materials,
                    asbestos in any form that is or could become friable, urea formaldehyde
                    foam insulation and transformers or other equipment that contain
                    dielectric fluid containing levels of polychlorinated biphenyl
                    (PCBs); (b)
                    any chemicals, materials, substances or wastes which are now
                    or hereafter
                    become defined or included in
                    the definition of "hazardous substances," "hazardous wastes,"
                    "hazardous
                    materials,"
                    "extremely hazardous wastes," "restricted hazardous wastes,"
                    "toxic
                    substances," "toxic pollutants," or words of similar import,
                    under any
                    Environmental Law; and (c) any
                    other chemical, material, substance or waste, exposure to which
                    is now or
                    hereafter
                    prohibited, limited or regulated by any governmental or regulatory
                    authority.

                


        

        


        6.15 Employee
          Benefit Plans.

        


        
          	 	
                  (a)

                	
                  Schedule
                    6.15
                    contains a list identifying each Employee Benefit Plan which
                    is an
                    "employee benefit plan" (as defined in Section 3(3) of ERISA),
                    which is
                    maintained or contributed to by Seller and covers any Employee
                    or former
                    employee of Seller or under which Seller has any liability (the
                    "ERISA
                    Plans").
                    Copies of the ERISA Plans, including any amendments (and, if
                    applicable,
                    related trust agreements and insurance contracts) have been made
                    available
                    to Buyer together with the summary plan description,
                    the most recent determination letter, the most recent annual
                    report
                    (Form
                    5500 including, if applicable, Schedule B thereto) and the most
                    recent
                    actuarial valuation report prepared in connection with any such
                    plan.

                


        


        
          
            
            

          

          
            -18-

            
              

            

          

          
            
            

          

        

        


        
          	 	
                  (b)

                	
                  No
                    "accumulated funding deficiency" (as defined in Section 412 of
                    the Code)
                    has been incurred with respect to any ERISA Plan subject to Title
                    IV of
                    ERISA, whether or not waived. No "reportable event" (within the
                    meaning of
                    Section 4043 of ERISA) and no event described in Section 4041,
                    4042, 4062
                    or 4063 of ERISA has occurred in connection
                    with any ERISA Plan other than any event which would not, individually
                    or
                    in
                    the aggregate, be reasonably expected to have a Seller MAE. No
                    condition
                    exists and
                    no event has occurred that could constitute grounds for involuntary
                    termination by
                    the Pension Benefit Guaranty Corporation of any ERISA Plan. Seller
                    has
                    never had, and
                    will not have as of the Closing Date, any obligation to contribute
                    to a
                    multiemployer
                    pension plan covered under Title IV of ERISA. Neither Seller
                    nor any
                    Seller ERISA Affiliate
                    has any material unsatisfied liability under Title IV of ERISA.
                    For
                    purposes of
                    this Section, "Seller
                    ERISA Affiliate"
                    means any other person which, together with Seller, would be
                    treated as a
                    single employer under Section 414 of the
                    Code.

                


        

        


        
          	 	
                  (c)

                	
                  Each
                    ERISA Plan that is intended to be qualified under Section 401(a)
                    of the
                    Code has received a determination letter from the Internal Revenue
                    Service
                    that it is so qualified and that the related trust is exempt
                    from tax
                    under Section 501(a) of the Code, and to the knowledge of Seller,
                    is so
                    qualified and exempt.

                


        

        


        
          	
                  6.16

                	
                  Computer
                    Software.
                    Except for the software listed in Schedule
                    6.16 being acquired hereunder,
                    all computer programs and software material to the conduct of
                    the Business
                    (i) are regularly and commercially available without restriction
                    on an
                    “over-the-counter” or “off-the-shelf” basis and have been so acquired by
                    Seller and (ii) have not been written or designed or materially
                    modified
                    specifically for Seller. To the knowledge of Seller, all computer
                    software
                    used by Seller or installed on any computers owned or used by
                    Seller in
                    connection with the Business is either (i) owned by Seller or
                    (ii) used
                    pursuant to valid and effective licenses from the owners thereof.
                    To the
                    knowledge of Seller, Seller is not in breach or default under
                    any of such
                    licenses, and has not received any written notice suggesting
                    or alleging
                    that any such breach or default has occurred or that Seller is
                    using or
                    has used any computer software without an appropriate license
                    therefrom.

                


        

        


        
          	
                  6.17

                	
                  Reliance.
                    The
                    foregoing representations and warranties are made by Seller with
                    the
                    knowledge
                    and expectation that Buyer is relying thereon in entering into,
                    and
                    performing its
                    obligations under, this Agreement.

                


        

        


        
          	
                  6.18

                	
                  No
                    Undisclosed Liabilities.
                    Except
                    as and to the extent reflected in or reserved against in the
                    Financial
                    Statements or as set forth on the schedules hereto, and except
                    for
                    liabilities or obligations incurred in the ordinary course of
                    business
                    consistent with past practice which would not, individually or
                    in the
                    aggregate, give rise to a Seller MAE, Seller does not have any
                    liability
                    or obligation, secured or unsecured, whether accrued, absolute,
                    contingent, unasserted or otherwise, affecting the Assets or
                    the Business
                    which would be required to be reflected in or reserved against
                    on a
                    consolidated balance sheet, or in the notes thereto, of the Company
                    prepared in accordance with
                    GAAP.

                


        


        
          
            
            

          

          
            -19-

            
              

            

          

          
            
            

          

        

        


        ARTICLE
          VII

        REPRESENTATIONS
          AND WARRANTIES OF BUYER AND BUYER’S PARENT

        


        Each
          of
          Buyer and Buyer’s Parent hereby makes the following representations and
          warranties to Seller:

        


        
          	
                  7.1

                	
                  Organization
                    and Good Standing of Buyer.
                    Buyer
                    is a corporation
                    duly organized, validly existing and in good standing under the
                    laws of
                    the State of Florida. Buyer’s
                    Parent is a corporation
                    duly organized, validly existing and in good standing under the
                    laws of
                    the State of Delaware.

                


        

        


        


        
          	
                  7.2

                	
                  Powers;
                    Execution.
                    (a)
                    Buyer has all requisite power and authority (i) to own and operate
                    its
                    assets; (ii) to conduct its business; and (iii) to execute, deliver
                    and
                    perform this Agreement and all other agreements to be executed
                    and
                    delivered by Buyer pursuant to this Agreement (such other agreements,
                    the
                    “Buyer
                    Ancillary Agreements").
                    The execution and delivery of this Agreement and the Buyer Ancillary
                    Agreements have been duly and validly authorized by all necessary
                    corporate action on the part of Buyer. This Agreement is, and
                    this
                    Agreement and the Buyer Ancillary Agreements will be as of Closing,
                    the
                    valid and binding obligations of Buyer, enforceable against Buyer
                    in
                    accordance with their respective terms, except to the extent
                    that such
                    enforcement is limited by bankruptcy, insolvency, fraudulent
                    transfer,
                    reorganization,
                    moratorium or other laws affecting the rights of creditors generally
                    and
                    general
                    equity principles.

                


        

        


        
          	
                  7.3

                	
                  Breach
                    of Statute or
                    Contract.

                


        

        


        
          	 	
                  (a)

                	
                  Neither
                    the execution and delivery of this Agreement by Buyer nor compliance
                    by
                    Buyer
                    with the terms and provisions of this Agreement (a) will conflict
                    with or
                    result in a breach
                    of any of the terms, conditions or provisions of any contract
                    or other
                    instrument
                    to
                    which Buyer or Buyer’s Parent is a party or by which Buyer is or may be
                    bound or constitute a default thereunder, or (b) will violate
                    any law, or
                    any statute or regulation of any governmental authority as such
                    law,
                    statute or regulation relates to
                    Buyer.

                


        


        
          
            
            

          

          
            -20-

            
              

            

          

          
            
            

          

        

        


        
          	 	
                  (b)

                	
                  No
                    declaration, filing or registration with, or notice to, or authorization,
                    consent or approval of any governmental or regulatory body or
                    authority is
                    necessary for the consummation by Buyer or Buyer’s Parent of the
                    transactions contemplated hereby. Except as set forth on Schedule
                    7.3(b),
                    the transactions contemplated hereby will not require Buyer to
                    obtain
                    any consent, approval or action of, make any filing with or give
                    any
                    notice to any
                    third party under the terms of any Contract or other instrument
                    to which
                    Buyer is a party or by which Buyer is
                    bound.

                


        

        


        
          	
                  7.4

                	
                  No
                    Litigation.
                    There
                    is no pending or, to the knowledge of Buyer or Buyer’s Parent, threatened
                    Litigation involving Buyer or Buyer’s Parent that questions the validity
                    of this Agreement, or any action taken, or to be taken,
                    by Buyer or
                    Buyer’s Parent
                    in
                    connection with this Agreement. There is no judgment, order,
                    injunction,
                    decree or award outstanding (whether rendered by a court, administrative
                    agency or arbitrator), against Buyer or Buyer’s Parent or by which Buyer
                    or Buyer’s Parent is or may be bound which relates to the transactions
                    contemplated by this Agreement.

                


        

        


        


        ARTICLE
          VIII

        CONDUCT
          OF THE BUSINESS

        


        
          	
                  8.1

                	
                  Conduct
                    of Business.
                    Seller
                    covenants and agrees with Buyer that between the date of this
                    Agreement
                    and the Closing Date, except as provided on Schedule
                    8.1:

                


        

        


        
          	 	
                  (a)

                	
                  The
                    Business will be conducted by Seller in the ordinary course and
                    in the
                    same manner as heretofore conducted, subject to matters beyond
                    Seller's
                    reasonable control.

                


        

        


        
          	 	
                  (b)

                	
                  Seller
                    will maintain, or cause to be maintained, insurance on the Assets
                    and the
                    Business substantially as heretofore in
                    effect.

                


        

        


        
          	 	
                  (c)

                	
                  Without
                    Buyer's prior written approval, no increase in either the base
                    pay,
                    commission rate, bonus or other compensation to any of the Employees
                    will
                    be announced, instituted
                    or paid (except for normal increases and earned bonuses given
                    in the
                    ordinary
                    course of business).

                


        

        


        
          	 	
                  (d)

                	
                  (i)
                    Without prior notification to Buyer, no material contract or
                    commitment
                    related to the Business or the Assets will be entered into by
                    Seller; and
                    (ii) without Buyer's prior written
                    approval, no contract or commitment related to the Business or
                    the Assets
                    will
                    be
                    entered into by Seller outside of the ordinary course of
                    business.

                


        

        


        
          	 	
                  (e)

                	
                  (i)
                    Without prior notification to Buyer, none of the Assumed Contracts
                    will be
                    terminated,
                    extended or amended by Seller in any material respect; and (ii)
                    without Buyer's
                    prior written approval, none of the Assumed Contracts will be
                    terminated,
                    extended or amended by Seller in any respect outside of the ordinary
                    course of business.

                


        


        
          
            
            

          

          
            -21-

            
              

            

          

          
            
            

          

        


        
          	 	
                  (f)

                	
                  Seller
                    will notify Buyer of the withdrawal of any shareholder of Seller
                    or the
                    termination of
                    any such membership by the board of directors of
                    Seller.

                


        

        


        
          	 	
                  (g)

                	
                  Seller
                    will use commercially reasonable efforts to maintain the existing
                    good
                    condition
                    and repair of the Assets.

                


        

        


        
          	 	
                  (h)

                	
                  Seller
                    will not sell, transfer, license, otherwise dispose of (other
                    than in the
                    ordinary course
                    of business), or create or permit to become effective any Encumbrance
                    on,
                    any of
                    the Assets (other than the Permitted Encumbrances), nor will
                    Seller agree
                    or commit
                    to
                    do any of the foregoing.

                


        

        


        
          	 	
                  (i)

                	
                  Upon
                    receipt of actual knowledge thereof, Seller will promptly advise
                    Buyer of
                    the commencement
                    or threat against Seller of any material Litigation relating
                    to or
                    affecting
                    Seller, the Business or the Assets.

                


        

        


        
          	 	
                  (j)

                	
                  Neither
                    Seller nor any of its representatives will, directly or indirectly,
                    solicit, review, discuss, negotiate or otherwise consider or
                    accept any
                    inquiry or proposal relating to the sale of any of the Assets
                    or the
                    Business.

                


        

        


        For
          purposes of this Section 8.1 only, "outside of the ordinary course of business"
          means (i) not reflected
          in the operating budget of Seller, and (ii) not required by any governmental
          or
          regulatory
          authority.

        


        
          	
                  8.2

                	
                  Access
                    to Information.
                    From
                    the date of this Agreement to the Closing Date, Seller shall
                    provide Buyer
                    and its representatives with reasonable access, during normal
                    business
                    hours and upon advance notice, to the Employees, books and records
                    and
                    operations of the Business for Buyer's
                    continuing review of the Business and the preparation of an integration
                    and transition plan
                    for the Business and the Employees of Seller hired by
                    Buyer.

                


        

        


        
          	
                  8.3

                	
                  Best
                    Efforts.
                    From
                    the date of this Agreement to the Closing Date, Buyer and Seller
                    shall use
                    their respective best efforts to take, or cause to be taken,
                    all actions
                    and to do, or cause to be done, all things reasonably necessary
                    under
                    applicable laws and regulations to consummate the transactions
                    contemplated by this Agreement, including, in the case of Buyer,
                    furnishing necessary security
                    deposits and other customary financial information to third parties
                    in
                    connection with the
                    assignment of any of the Assumed Contracts (other than those
                    security
                    deposits that were previously paid by Seller under such Assumed
                    Contracts
                    and that are included in the Assets)
                    .

                


        


        
          
            
            

          

          
            -22-

            
              

            

          

          
            
            

          

        

        


        
          	
                  8.4

                	
                  Public
                    Statements.
                    Prior
                    to the Closing Date, no party hereto shall issue any public announcement,
                    statement or other disclosure with respect to this Agreement
                    or the
                    transactions contemplated
                    hereby without the prior written consent of the other party hereto,
                    which
                    consent
                    shall not be unreasonably withheld or delayed, except as may
                    be required
                    by law.

                


        

        


        
          	
                  8.5

                	
                  Litigation.
                    Between
                    the date hereof and the Closing Date, upon receipt of actual
                    knowledge
                    thereof,
                    each party hereto will promptly advise the other party hereto
                    of the
                    commencement or threat
                    of any Litigation relating to or affecting the transaction contemplated
                    by
                    this Agreement.

                


        

        


        ARTICLE
          IX

        CONDITIONS
          TO CLOSING; TERMINATION

        


        
          	
                  9.1

                	
                  Conditions
                    to the Obligations of Buyer to Close.
                    The
                    obligation of Buyer to close hereunder shall be subject to satisfaction
                    or
                    waiver by Buyer of the following conditions at or prior to the
                    Closing:

                


        

        


        
          	 	
                  (a)

                	
                  Each
                    of the representations and warranties of Seller made in or pursuant
                    to
                    this Agreement shall be true and correct as of the Closing Date,
                    except
                    that such representations and warranties expressly made as of
                    a
                    specific
                    date need only be true as of such specified date, and each of
                    the
                    covenants and
                    agreements of Seller to be performed on or prior to the Closing
                    Date shall
                    have been duly performed in all respects;


                


        

        


        
          	 	
                  (b)

                	
                  Seller
                    shall not be experiencing a Seller
                    MAE.

                


        

        


        
          	 	
                  (c)

                	
                  No
                    provision of any applicable law or regulation and no judgment,
                    injunction,
                    order or
                    decree shall prohibit the consummation of the
                    Closing.

                


        

        


        
          	 	
                  (d)

                	
                  Seller
                    shall have obtained the third-party consents described on Schedule
                    9.1(d).

                


        

         

        
          	
                  9.2

                	
                  Conditions
                    to the Obligations of Seller to Close.
                    The
                    obligations of Seller to close hereunder shall be subject to
                    satisfaction
                    or waiver by Seller of the following conditions at or prior to
                    the
                    Closing:

                


        

        


        
          	 	
                  (a)

                	
                  Each
                    of the representations and warranties of Buyer made in or pursuant
                    to this
                    Agreement shall be true and correct in all material respects
                    as of the
                    Closing Date, except that such representations and warranties
                    expressly
                    made as of a specific date need
                    only be true as of such specified date, and each of the covenants
                    and
                    agreements of
                    Buyer to be performed on or prior to Closing shall have been
                    duly
                    performed in all
                    material respects.

                


        


        
          
            
            

          

          
            -23-

            
              

            

          

          
            
            

          

        

        


        
          	 	
                  (b)

                	
                  No
                    provision of any applicable law or regulation and no judgment,
                    injunction,
                    order or decree shall prohibit the consummation of the
                    Closing.

                


        

        


        
          	 	
                  (c)

                	
                  Buyer
                    shall have delivered, or caused to be delivered, to Seller at
                    the Closing,
                    duly executed
                    copies of the Assignment and Assumption, and the
                    other Closing deliveries contemplated by Section
                    4.3.

                


        

        


        
          	 	
                  (d)

                	
                  Buyer
                    or Buyer’s Parent shall not be experiencing a Buyer’s
                    MAE.

                


        

        


        9.3        
           Termination.
          This
          Agreement may be terminated at any time prior to the Closing:

        


        (a)         
           by
          the
          mutual written consent of Buyer and Seller; 

        


        
          	 	
                  (b)

                	
                  by
                    either Buyer or Seller if any court or governmental body or agency
                    thereof
                    shall have enacted,
                    promulgated or issued any statute, rule, regulation, ruling,
                    writ or
                    injunction, or
                    taken any other action, (i) restraining, (ii) enjoining, (iii)
                    prohibiting
                    or (iv) otherwise preventing
                    the parties from the practical realization of the benefits contemplated
                    by
                    this Agreement
                    and all appeals and means of appeal therefrom have been exhausted,
                    and,
                    in
                    the case of clause (iv), Buyer and Seller have used their respective
                    best
                    efforts to negotiate a mutually-satisfactory alternative, but
                    have failed
                    to reach an agreement on any such
                    alternative.

                


        

        


        
          	
                  9.4

                	
                  Effect
                    of Termination.
                    If
                    this Agreement is terminated pursuant to Section 9.3(a) hereof,
                    this
                    Agreement
                    shall forthwith become null and void and there shall be no liability
                    on
                    the part of any
                    party hereto. In the event of any other termination, the parties
                    shall
                    retain any and all rights, claims
                    or causes of action in existence at the time of such termination
                    which are
                    based upon, or
                    arose incidental to a breach of any covenant, representation
                    or warranty
                    made hereunder.

                


        

        


        


        ARTICLE
          X

        INDEMNITEES

        


        
          	
                  10.1

                	
                  Survival.
                    All
                    of the representations, warranties, agreements and covenants
                    contained in
                    this Agreement
                    shall be continuing and shall survive the Closing; provided
                    that the representations
                    and warranties of Seller contained in Article VI and of Buyer
                    contained in
                    Article VII shall survive the Closing until the date that is
                    thirty-six(36) months after the Closing Date. Notwithstanding
                    the preceding sentence, the expiration of any representation
                    or warranty
                    shall
                    not be applicable to any claim as to which specific, written
                    notice has
                    been delivered to the other party prior to the applicable expiration
                    date
                    pursuant to Section 10.4.

                


        


        
          
            
            

          

          
            -24-

            
              

            

          

          
            
            

          

        


        
          	
                  10.2

                	
                  General
                    Indemnification by Seller.
                    Seller
                    agrees, subject to the other provisions of this Article X, to
                    protect,
                    defend, indemnify and hold harmless Buyer, its employees, representatives
                    and affiliates and their respective successors and assigns, from,
                    against
                    and in respect of any and all losses, costs, damages, charges
                    or expenses
                    of any nature (including reasonable attorney's fees) resulting
                    from or
                    relating to (a) the Retained Liabilities; or (b) any breach
                    of any representation or warranty or nonfulfillment of any agreement
                    or
                    covenant on the
                    part of Seller contained in this
                    Agreement.

                


        

        


        
          	
                  10.3

                	
                  General
                    Indemnification by Buyer.
                    Buyer
                    agrees, subject to the other provisions of this Article X, to
                    protect,
                    defend, indemnify and hold harmless Seller, its employees, representatives
                    and affiliates, and their respective successors and assigns,
                    from, against
                    and in
                    respect of any and all losses, costs, damages, charges or expenses
                    of any
                    nature (including reasonable
                    attorney's fees) resulting from or relating to (a) the Business
                    or the
                    Assumed
                    Liabilities; or (b) any breach of any representation or warranty
                    or
                    nonfulfillment of any agreement or covenant on the part of Buyer
                    contained
                    in this Agreement.

                


        

        


        
          	
                  10.4

                	
                  Notification
                    of Claims.
                    The
                    parties hereto shall provide each other with (a) written notice
                    of
                    all third party actions, suits, proceedings, claims, demands
                    or
                    assessments subject to the indemnification provisions of this
                    Article X
                    (collectively, 'Third
                    Party Claims")
                    brought at any time following the Closing Date within 30 days
                    of the date
                    such Third Party Claim arises, and (b) prompt written notice
                    of all other
                    claims or demands for indemnification pursuant to the provisions
                    of this
                    Article IX; provided, however,
                    that the failure to provide timely notice shall not
                    affect the indemnification obligations of any party except to
                    the extent
                    such party shall have
                    been materially prejudiced as a result of such failure. The party
                    against
                    whom a Third Party Claim
                    is brought shall make available to the indemnifying party all
                    relevant
                    information material
                    to
                    the defense of such claim. The indemnifying party shall have
                    the right to
                    control the defense of all Third Party Claims with counsel of
                    its choice,
                    subject to the indemnified party's right to participate in the
                    defense.
                    The indemnified party shall have the right to elect to join or
                    participate
                    in the defense of any Third Party Claim at its sole expense,
                    and no claim
                    shall be settled
                    or compromised without the consent of the indemnified party,
                    which consent
                    shall not be
                    unreasonably withheld or delayed; provided, however,
                    that in the event consent is so withheld, the indemnifying party
                    shall
                    have no liability in excess of the settlement amount for which
                    consent was
                    sought.

                


        

        


        
          	
                  10.5

                	
                  Mitigation,
                    Etc.
                    Any
                    party seeking indemnification for any damages for which it is
                    entitled to
                    seek indemnification shall use its best efforts to mitigate its
                    damages in
                    connection with such indemnity claim. The indemnification obligation
                    of
                    any party shall be adjusted so as to give credit to such party
                    for (i) any
                    tax benefits, to the party seeking indemnification, calculated
                    at the
                    marginal U.S. federal and state corporate tax rates, resulting
                    from the
                    claim for indemnification, except that tax benefits relating
                    to timing
                    differences shall be valued at net present
                    value with a discount rate equal to the indemnified party's average
                    cost
                    of capital for the
                    previous year, or (ii) any other recovery available to the party
                    being
                    indemnified, including, without limitation, insurance, net of
                    any
                    retro-premium adjustment or similar program or plan, and contractual
                    or
                    other rights to indemnification available from third
                    parties.

                


        


        
          
            
            

          

          
            -25-

            
              

            

          

          
            
            

          

        

        


        ARTICLE
          XI

        COVENANT
          NOT TO COMPETE

        


        
          	
                  11.1

                	
                  Non-Competition.
                    CoroWare, Inc.. agrees that at no time for a period of four (4)
                    years
                    after the date hereof shall such parties, directly or indirectly,
                    whether
                    as owner, employee, consultant, representative, trustee, member,
                    partner,
                    proprietor or otherwise:

                


        

        


        
          	 	
                  (a)

                	
                  Acquire
                    an ownership interest in, work for, render advice or assistance
                    to or
                    otherwise engage in or enter into any aspects of the business
                    of any
                    “Competitor” (as defined below); or

                


        

        


        
          	 	
                  (b)

                	
                  Contact,
                    solicit or entice, or attempt to contact, solicit or entice,
                    any
                    “Customer” or “Supplier” of the Business so as to cause, or attempt to
                    cause, any of said Customers or Suppliers not to do business
                    with the
                    Buyer or to purchase products or services sold by the Buyer from
                    any
                    source other than the Buyer; 

                


        

        


        
          	 	
                  (c)

                	
                  Induce,
                    or attempt to induce, any person who is then currently an employee
                    of the
                    Buyer to accept employment with the Seller, any affiliate of the Seller or
                    a Competitor, or hire any person who is then currently an employee
                    of the
                    Buyer; or

                


        

        


        
          	 	
                  (d)

                	
                  Use
                    or disclose directly or indirectly to any person outside of the
                    Buyer any
                    information of a secret or confidential nature (but this restriction
                    shall
                    not apply to general “know-how” acquired in the conduct of the Buyer’s
                    business). For the purposes of this Agreement, the term “information of a
                    secret or confidential nature” shall mean information of any nature and in
                    any form:

                


        

        


        (i)           Which
          is
          the property of the Buyer;

        


        
          	 	
                  (ii)

                	
                  Which
                    at the time or times concerned is not generally known to other
                    persons
                    engaged in business similar to those conducted by the
                    Buyer;

                


        

        


        
          	 	
                  (iii)

                	
                  Which
                    relates to any one or more of the aspects of the Buyer’s business;
                    and,

                


        


        
          
            
            

          

          
            -26-

            
              

            

          

          
            
            

          

        

        


        
          	 	
                  (iv)

                	
                  Which
                    confers, or tends to confer, a business advantage upon a party
                    possessing
                    such information.

                


        

        


        Information
          of a secret or confidential nature may include, without limitation, proprietary
          trade secrets, customer lists, supplier lists, software and software source
          codes, internal price lists, manufacturing methods and financial
          data.

        


        
          	
                  11.2

                	
                  Definition. For
                    purposes of this Article XI, the term “Competitor” shall mean any
                    business, incorporated or otherwise, which sells products or
                    provides
                    services competitive with those sold or provided by the Business
                    as of the
                    date hereof, and the terms “Customer” and “Supplier” shall mean those
                    persons or entities to whom or from which Seller sold or purchased
                    or
                    attempted to sell or to purchase assets used in or sold by the
                    Business
                    during the last twenty-four (24) months prior to the Closing
                    Date.
                    Notwithstanding the foregoing, nothing in this Article XI shall
                    be
                    construed to prohibit Seller from doing business with any Competitor
                    or
                    Customer to the extent such matters are not competitive with
                    the Business,
                    as currently conducted.

                


        

        


        
          	
                  11.3

                	
                  Covenants
                    Reasonable.
                    Seller acknowledges that it and its affiliates possess valuable
                    and unique
                    information and experiences concerning the business of the Buyer
                    and that
                    any activities in violation of the provisions of this Article
                    XI would
                    have a material and adverse effect upon the Buyer. Accordingly,
                    Seller
                    acknowledges that the scope and substance of the covenants contained
                    herein are fair and reasonable, have been bargained for in arms’ length
                    dealings, and do not deprive it or its affiliates of an opportunity
                    to
                    earn a livelihood.

                


        

        


        
          	
                  11.4

                	
                  Enforcement.
                    In
                    addition to all other legal remedies available to the Buyer for
                    the
                    enforcement of the covenants of this Article XI, Seller acknowledges
                    and
                    agrees that Buyer shall be entitled to an injunction by any court
                    of
                    competent jurisdiction to prevent or restrain any breach or threatened
                    breach hereof. Seller further agrees that if any of the covenants
                    set
                    forth herein shall at any time be rendered invalid to any extent
                    by any
                    court of competent jurisdiction, such covenant shall be deemed
                    modified to
                    the extent necessary to render it
                    enforceable.

                


        

        


        ARTICLE
          XII

        FURTHER
          COVENANTS 

        


        
          	
                  12.1

                	
                  Mail
                    and Communications.
                    Seller
                    shall promptly remit to Buyer any checks, cash, payments, mail
                    or other
                    communications relating to the Assets or the Business which are
                    received
                    by Seller after the Closing Date. Buyer shall promptly remit
                    to Seller any
                    checks, cash,
                    payments, mail or other communications relating to the Excluded
                    Assets or
                    the Retained
                    Liabilities which are received by Buyer after the Closing
                    Date.

                


        


        
          
            
            

          

          
            -27-

            
              

            

          

          
            
            

          

        

        


        
          	
                  12.2

                	
                  Taxes.
                    All
                    tax returns and reports of Seller required to be filed after
                    the Closing
                    Date in respect
                    to any period prior to or through the Closing Date will be duly
                    and timely
                    filed, and all
                    Taxes upon Seller, the Assets or the Business which are due and
                    payable in
                    respect to such periods, will be paid by Seller. Buyer shall
                    pay when due
                    any sales, transfer, excise, value added or other Taxes which
                    may be
                    imposed by any state or governmental agency in connection with
                    the sale
                    and transfer of the Assets to
                    Buyer.

                


        

        


        
          	
                  12.3

                	
                  Access
                    to Records.
                    After
                    the Closing Date, (a) Buyer shall give to Seller such access
                    to the
                    available books and records of the Business included in the Assets
                    during
                    normal business hours upon reasonable advance notice as may be
                    reasonably
                    required by Seller for tax, audit or other business purposes,
                    and (b)
                    Seller shall give to Buyer such access to any available books
                    and records
                    (including, without limitation, audit workpapers, and other records)
                    of
                    Seller relating to the Business during normal business hours
                    upon
                    reasonable advance notice as may be reasonably required by Buyer
                    for
                    securities reporting, tax, audit or other business purposes.
                    Buyer shall
                    maintain all such books and records for a period of seven (7)
                    years after
                    the Closing Date.

                


        

        


        
          	
                  12.4

                	
                  Further
                    Assurances.
                    Upon
                    the request and at the expense of Buyer, but without further
                    consideration, Seller shall do, execute, acknowledge, deliver
                    and file, or
                    shall cause to be done, executed, acknowledged, delivered and
                    filed, all
                    such further acts, deeds, transfers, conveyances, assignments
                    or
                    assurances as may be reasonably required for the efficient transferring,
                    conveying and assigning to Buyer, or for aiding and assisting
                    in the
                    reducing to possession by Buyer, of any of the
                    Assets.

                


        

        


        
          	
                  12.5

                	
                  Expenses
                    and Finder's Fees.
                    Seller,
                    on the one hand, and Buyer, on the other hand, shall each bear
                    their own
                    expenses incurred in connection with the negotiation, execution
                    and
                    performance of this Agreement. The parties each represent and
                    warrant that
                    they have not engaged or dealt with any broker, investment banker,
                    finder,
                    or agent so as to create or incur any
                    obligation for any brokerage fees, finder's fees or other commissions
                    in
                    connection with this
                    Agreement or the consummation of the transaction contemplated
                    hereby.

                


        

        


        
          	
                  12.6

                	
                  Bulk
                    Sales Laws.
                    Buyer
                    hereby waives compliance by Seller with the provisions of any
                    bulk sales,
                    bulk transfer or similar laws applicable to the transfer of the
                    Assets
                    pursuant to this Agreement, and Seller hereby agrees to pay and
                    discharge
                    when due all claims of creditors which could be asserted against
                    Buyer by
                    reason of such non-compliance to the extent that such liabilities
                    do not
                    constitute Assumed Liabilities.

                


        

        


        
          	
                  12.7

                	
                  Insurance.
                    Seller
                    shall cause Buyer to be added as a named insured to each of Seller's
                    insurance
                    policies, to the extent permitted by such policies, effective
                    as of the
                    Closing Date.

                


        


        
          
            
            

          

          
            -28-

            
              

            

          

          
            
            

          

        

        


        
          	
                  12.8

                	
                  Change
                    of Name.
                    On
                    or before the Closing Date, Seller shall (a) amend its governing
                    documents
                    and take all other actions necessary to change its name to one
                    sufficiently dissimilar to Seller’s present name, in Buyer’s judgment, to
                    avoid confusion and (b) take all actions requested by Buyer to
                    enable
                    Buyer to change its name to CoroWare,
                    Inc.

                


        

        


        
          	
                  12.9

                	
                  Unemployment
                    Insurance Account.
                    If
                    Buyer elects, Seller shall take all steps necessary to transfer
                    its
                    unemployment insurance reserve account with the State of Washington
                    to the
                    Buyer to the extent allowed by law.

                


        

        


        ARTICLE
          XIII

        GENERAL

        


        
          	
                  13.1

                	
                  Waiver.
                    Any
                    failure of any of the parties hereto to comply with any of its
                    obligations
                    or agreements
                    or to fulfill any conditions herein contained may be waived only
                    by a
                    written waiver
                    from the other party. No failure by any party hereto to exercise,
                    and no
                    delay in exercising, any right hereunder shall operate as a waiver
                    thereof, nor shall any single or partial exercise of any right
                    hereunder
                    by such party preclude any other or future exercise of that right
                    or any
                    other right hereunder by that
                    party.

                


        

        


        
          	
                  13.2

                	
                  Notices.
                    All notices, requests or other communications required or permitted
                    hereunder shall be given in writing by hand delivery, registered
                    mail,
                    certified mail or overnight courier, return receipt requested,
                    postage
                    prepaid, to the party to receive the same at its respective address
                    set
                    forth below, or at such other address as may from time to time
                    be
                    designated by such party
                    to
                    the other in accordance with this Section
                    13.2:

                


        

        


        
          	
                  If
                    to Seller, to:

                	
                  CoroWare,
                    Inc

                  677
                    120th Ave. NE, #153

                  Bellevue,
                    WA 98005

                  ATTENTION:
                    Lloyd T. Spencer

                
	 	 
	
                  If
                    to Buyer, to:

                	
                  Innova
                    Holdings, Inc

                  17105
                    San Carlos Blvd

                  Suite
                    A6151

                  Fort
                    Myers Beach, Florida 33931

                  ATTENTION:
                    Walter K. Weisel

                
	 	 
	
                  with
                    a copy to:

                	
                  Linda
                    Robison

                  2659
                    West Gulf Drive, Unit B-102

                  Sanibel,
                    FL 33948

                


        

         

        
          
            
            

          

          
            -29-

            
              

            

          

          
            
            

          

        


        All
          such
          notices and communications hereunder shall be deemed given when received,
          as
          evidenced by the acknowledgment of receipt issued with respect thereto
          by the
          applicable postal
          authorities or the signed acknowledgment of receipt of the person to whom
          such
          notice
          or
          communication shall have been addressed.

        


        
          	
                  13.3

                	
                  No
                    Third Party Beneficiaries.
                    Neither
                    this Agreement nor any provision hereof, nor any Schedule
                    hereto or document executed or delivered herewith, shall create
                    any right
                    in favor of
                    or
                    impose any obligation upon any person or entity other than the
                    parties
                    hereto and their respective successors and permitted
                    assigns.

                


        

        


        
          	
                  13.4

                	
                  Headings.
                    Captions
                    and paragraph headings used herein are for convenience only,
                    are not a
                    part of this Agreement and shall not be used in construing
                    it.

                


        

        


        
          	
                  13.5

                	
                  Entire
                    Agreement.
                    The
                    making, execution and delivery of this Agreement by the parties
                    has been
                    induced by no representations, statements, warranties or agreements
                    other
                    than those herein expressed. This Agreement, together with the
                    Schedules
                    and the other agreements and documents
                    referred to herein, embodies the entire understanding of the
                    parties
                    hereto and there are
                    no other agreements or understandings, written or oral, in effect
                    between
                    the parties relating
                    to
                    the subject matter hereof; except as specifically referenced
                    herein. This
                    Agreement may be amended or modified only by a written instrument
                    signed
                    by the parties. This Agreement supersedes
                    and terminates all prior discussions, negotiations, understandings,
                    arrangements and
                    agreements between the parties relating to the subject matter
                    hereof.

                


        

        


        
          	
                  13.6

                	
                  Counterparts.
                    This
                    Agreement may be executed in any number of duplicate counterparts,
                    each
                    of which shall be deemed an original and all of which together
                    shall
                    constitute one and the
                    same instrument.

                


        

        


        
          	
                  13.7

                	
                  Assignability.
                    None
                    of the parties hereto may assign this Agreement without the prior
                    written
                    consent of the other, which consent will not be unreasonably
                    withheld or
                    delayed. Any impermissible
                    attempted assignment of this Agreement without such prior written
                    consent
                    shall
                    be
                    void. 

                


        

        


        
          	
                  13.8

                	
                  Successors
                    and Assigns.
                    This
                    Agreement and the provisions hereof shall be binding upon and
                    inure to the benefit of the respective successors and permitted
                    assigns of
                    the parties hereto.

                


        

        


        
          	
                  13.9

                	
                  Knowledge.
                    Except
                    as otherwise expressly provided for herein, the term "Seller's
                    knowledge,"
                    or words to that effect shall mean the knowledge of Lloyd Spencer
                    and
                    David Hyams, and the term "Buyer's knowledge," or words to that
                    effect
                    shall mean the knowledge of Walter Weisel and Eugene Gartlan,
                    in each case
                    following reasonable inquiry.

                


        


        
          
            
            

          

          
            -30-

            
              

            

          

          
            
            

          

        


        
          	
                  13.10

                	
                  Remedies.
                    The
                    parties acknowledge that either party's breach of any provision
                    of this
                    Agreement will cause substantial, irreparable harm to the other
                    party,
                    which cannot be adequately compensated by monetary damages alone.
                    In the
                    event of either party's violation or threatened violation of
                    any provision
                    of this Agreement, such party agrees that the other party, without
                    limiting any other legal or equitable remedies available to it,
                    shall be
                    entitled to equitable
                    relief by injunction or otherwise from any court of competent
                    jurisdiction.

                


        

        


        
          	
                  13.11

                	
                  Governing
                    Law.
                    The parties hereto have agreed that the validity, construction,
                    operation
                    and effect of any and all of the terms and provisions of this
                    Agreement
                    shall be determined and enforced
                    in accordance with the substantive laws of the State of Florida
                    without
                    giving effect
                    to
                    principles of conflicts of law
                    thereunder.

                


        

        


        
          	
                  13.12

                	
                  Construction.
                    The
                    parties hereto agree that this Agreement is the product of negotiation
                    between sophisticated parties and individuals, all of which were
                    represented by counsel, and each
                    of whom had an opportunity to participate in and did participate
                    in, the
                    drafting of each
                    provision hereof. Accordingly, ambiguities in this Agreement,
                    if any,
                    shall not be construed strictly
                    or in favor of or against any party hereto but rather shall be
                    given a
                    fair and reasonable
                    construction without regard to the rule of contra
                    proferentum.

                


        

        


        IN
          WITNESS WHEREOF, the
          parties have duly signed this Agreement the day and year first written
          above.

         

        
          	CoroWare,
                  Inc.	 	 	CoroWare
                  Technologies, Inc.
	 	 	 	 
	BY:
                  /s/
                  Lloyd T. Spencer	 	 	BY: /s/
                  Walter K. Weisel
	
                  
                    
                
                    President

                	 	 	
                  
                    
         
Walter
                    K. Weisel, President

                
	
                	 	 	
                


        

         

         

        Innova
          Holdings, Inc. hereby guarantees all obligations of CoroWare Technologies,
          Inc.
          , including without limitation all payment and performance
          obligations.

        


        
          	 	 	 
	 	Innova
                  Holdings, Inc.
	 
 	 
 	 
 
	 	By:  	/s/ Walter
                  K.
                  Weisel
	
                   

                   

                	
                  

                
	
                   Its: 
                    

                	Chairman
                  & CEO



          
            
              
              

            

            
              -31-

              
                

              

            

            
              
              

            

          

        

         

        EXHIBITS

         

        A
          - Bill
          of Sale

         

        B
          -
          Promissory Note

         

        C
          - Executive Employment Agreement

         

        D
          - General Employment Agreement

         

        E.  
          EscrowAgreement


        
          
            
            

          

          
            -32-

            
              

            

          

          
            
            

          

        


        SCHEDULES

        


        
          	
                  2.1(a)

                	
                  Tangible
                    Personal Property relating to the Business

                
	
                  2.1(b)

                	
                  Inventory

                
	
                  2.1(e)

                	
                  All
                    Intangible Assets with Filing or Registration

                
	
                  2.1(f)

                	
                  Logos
                    and Other Intellectual Property 

                
	
                  2.1(g)

                	
                  Registered
                    Names

                
	
                  2.1(i)

                	
                  Permits
                    relating to the Business

                
	
                  2.1(j)

                	
                  Assumed
                    Contracts

                
	
                  2.1(k)

                	
                  Telephone
                    and Fax Numbers and E-Mail Addresses

                
	
                  2.1(l)

                	
                  URL
                    Sites

                
	
                  2.1(m)

                	
                  Claims
                    Against Seller

                
	
                  2.1(n)

                	
                  Accounts
                    Receivable

                
	
                  3.2(a)

                	
                  Wire
                    Transfer Instructions for Seller

                
	
                  3.4

                	
                  Allocation
                    of the Purchase Price

                
	
                  5.3

                	
                  Employee
                    Accrual

                
	
                  5.4

                	
                  Costs
                    Under Assumed Contracts

                
	
                  6.3(a)

                	
                  Breach
                    of Contract

                
	
                  6.4

                	
                  Litigation

                
	
                  6.6(b)

                	
                  Financial
                    Statements

                
	
                  6.7(a)

                	
                  Exceptions
                    to Title to Tangible Personal Assets

                
	
                  6.8

                	
                  Contracts

                
	
                  6.9

                	
                  Intellectual
                    Property

                
	
                  6.10

                	
                  Insurance
                    Claims

                
	
                  6.11

                	
                  Related
                    Party Transactions

                
	
                  6.12

                	
                  Employees

                
	
                  6.13

                	
                  Tax
                    Returns and Payments

                
	
                  6.15

                	
                  ERISA
                    Plans

                
	
                  6.16

                	
                  Computer
                    Software

                
	
                  6.17

                	
                  Knowledge
                    Concerning Condition of Premises

                
	
                  7.3
                    (b)

                	
                  Buyer's
                    Third-Party Consents

                
	
                  8.1

                	
                  Conduct
                    of Business

                
	
                  9.1(d)

                	
                  Seller’s
                    Third-Party Consents

                


        

         

        
          
            
            

          

          
            -33-

            
              

            

          

          
            
            

          

        


        EXHIBIT
          A

        BILL
          OF SALE

        


        Know
          All
          Men, by this Bill of Sale, made this 12 day of May 2006, CoroWare, Inc.,
          a
          Washington corporation (the “Seller”), for good and valuable consideration to
          this day paid by CoroWare Technologies, Inc., a Florida corporation (the
          “Buyer”), receipt and sufficiency of which consideration is hereby acknowledged
          by Seller, does hereby bargain, grant, sell, convey, assign, transfer and
          deliver to Buyer, and its successors and assigns pursuant to the terms
          and
          provisions of that certain Asset Purchase Agreement dated on even date
          herewith
          by and between Seller and Buyer (the “Asset Purchase Agreement”), all of the
          right, title and interest of the Seller in and to the Assets.

        


        To
          have
          and to hold, the property conveyed hereby unto Buyer, its successors and
          assigns, absolutely and unconditionally, and Seller does hereby bind itself,
          its
          successors and assigns, to warrant and forever defend the title to such
          property
          to Buyer and its successors and assigns against every person lawfully making
          any
          claim thereto. Seller further hereby agrees that it will at any time and
          from
          time to time with the request of Buyer execute and deliver to Buyer any
          and all
          such instruments as Buyer may reasonably request for the purpose of vesting
          in
          Buyer the full right, title and interest of Seller in and to any of the
          Assets
          intended to be transferred, assigned, conveyed or delivered by the Asset
          Purchase Agreement or to enable Buyer to enjoy the Assets or to carry out
          the
          intent and purposes hereof.

        


        Seller
          warrants that it is the owner of the Purchased Assets, has full power and
          authority to sell the Purchased Assets and that the Purchased Assets are
          free
          from all liens and encumbrances.

        


        The
          provisions of this Bill of Sale are subject, in all respects, to the terms
          and
          conditions of the Asset Purchase Agreement and all of the representations,
          warranties, covenants and agreements of the parties contained therein,
          all of
          which are incorporated herein by reference and all of which shall survive
          the
          execution and delivery of this Bill of Sale to the extent set forth in
          the Asset
          Purchase Agreement. All capitalized terms not otherwise defined herein
          shall
          have the meaning set forth for them in the Asset Purchase
          Agreement.

        


        IN
          WITNESS WHEREOF, the Seller has executed this Bill of Sale to be effective
          as of
          the date first above written.

         

        
          	 	 	 
	 	
                  Seller:

                  CoroWare,
                    Inc.

                
	 	By:  	 
	 	
                  

                  President

                


        

        


        
          	 	 	 
	 	By:  	 
	 	
                  
__________________,
                  Secretary
	 	 


        

        


        
          
            
            

          

          
            -34-

            
              

            

          

          
            
            

          

        

         

        EXHIBIT
          B

        


        PROMISSORY
          NOTE

        (On
          behalf of CoroWare Technologies, Inc regarding the asset purchase agreement
          entered into between CoroWare Technologies, Inc., Innova Holdings, Inc.
          and
          CoroWare Inc.)

        


        


        
          	
                  $70,000.00

                	
                  Fort
                    Myers, Florida

                
	 	
                  May
                    15, 2005

                


        

        


        


        FOR
          VALUE
          RECEIVED, Innova Holdings, Inc. ("Maker")
          whose
          address is 17105 San Carlos Blvd, Suite A6151, Fort Myers, Florida promises
          to
          pay to CoroWare, Inc (“Payee”),
          whose
          address is 677 120th
          Ave NE,
          # 153, Bellevue, Washington the sum of Seventy Thousand Dollars ($70,000.00),
          without interest, payable as follows: on or prior to the date which is
          one month
          after the date hereof, the amount of Twenty Thousand Dollars ($20,000)
          and Ten
          Thousand Dollars ($10,000) in each month for five months beginning on the
          date
          which is six months after the date hereof. 

        


        1. Prepayment.
          This
          Note may be prepaid at any time, in whole or in part, without premium or
          penalty, but with accrued interest to the date of prepayment. All payments
          hereon shall be applied first to the payment of accrued interest and the
          balance
          shall be applied to principal.

        


        3. Payment.
          Payment
          of principal and interest hereon shall be made at the address of Payee,
          or at
          any other place Payee designates in writing from time to time, and shall
          be in
          lawful money of the United States of America.

        


        4. Acceleration
          of Payment.
          The
          entire principal amount hereof, together with all accrued interest, shall
          immediately become due and payable (without demand for payment, notice
          of
          nonpayment, presentment, notice of dishonor, protest, notice of protest,
          or any
          other notice or demand, all of which Maker hereby waives) if:

        


        a. Maker
          fails to pay when due any installment of interest or principal on this
          Promissory Note and such failure continues for a period of fifteen (15)
          days;

        


        b. Maker
          defaults in the performance of, or compliance with, any other term, provision,
          covenant, or condition of this Promissory Note, or of any other agreement
          with
          Payee, and the default or noncompliance is not remedied to Payee's satisfaction
          within thirty (30) days after Payee gives Maker written notice of the default
          or
          noncompliance;

        


        c. Maker
          suspends payment of its obligations, or admits in writing to his inability
          to
          pay its debts generally as they become due;

        


        d. Maker
          makes an assignment for the benefit of creditors, or a trustee or receiver
          of
          Maker or of a substantial portion of its assets is appointed, and the trustee
          or
          receiver is not discharged within sixty (60) days;


        
          
            
            

          

          
            -35-

            
              

            

          

          
            
            

          

        

        


        e. Any
          proceeding involving Maker is voluntarily commenced by Maker under any
          bankruptcy, reorganization, insolvency, readjustment of debt, marshalling
          of
          assets and liabilities, dissolution, or liquidation law or statute of the
          United
          States or of any state, or a proceeding of this nature is involuntarily
          instituted against Maker, and Maker by any action indicates its approval
          of, or
          consent to, or acquiescence in, the proceeding, or the proceeding remains
          undismissed for sixty (60) days; or

        


        f. A
          final
          judgment for the payment of money is rendered against Maker, and Maker
          does not
          discharge the judgment or procure a stay of the execution thereof within
          thirty
          (30) days after the date of entry and service of a copy of the judgment,
          or
          cause execution of the judgment to be stayed during an appeal.


        


        5. Costs
          of Collection.
          If Maker
          fails to make timely the payments required hereby, Maker shall pay all
          cost of
          collection when incurred including, without limitation, actual attorneys'
          fees
          and expenses and court costs. Such costs will be added to the balance of
          principal and interest then due.

        


        6. Failure
          or Delay Non-Waiver.
          Failure
          of the holder hereof to assert any right contained herein, or delay in
          asserting
          any such right, shall not be deemed a waiver of that right.

        


        7. Waiver
          of Procedural Defenses.
          Maker
          waives demand for payment, notice of nonpayment, presentment, notice of
          dishonor, protest, notice of protest, or any other notice or demand in
          connection with this Promissory Note.

        


        8. Modifications.
          This
          Note may not be changed, modified or amended, or terminated, nor may any
          of its
          provisions be waived, except by an agreement in writing signed by the party
          against whom enforcement thereof is sought.

        


        9. Choice
          of Law.
          This
          Note shall be governed by and construed in accordance with the laws of
          the State
          of Florida.

         

        10. Promises
          Binding.
          This
          Note shall be binding upon Maker and Maker's successors, and
          assigns.

        


        
          	 	 	 
	 	Innova
                  Holdings, Inc.
	 
 	 
 	 
 
	 	By:  	 
	 	
                  

                
	
                   Its:
                    

                	 
                  
                  

                



          
            
              
              

            

            
              -36-

              
                

              

            

            
              
              

            

          

CONTINGENT
          PROMISSORY NOTE

        (On
          behalf of CoroWare Technologies, Inc regarding the asset purchase agreement
          entered into between CoroWare Technologies, Inc. Innova Holdings, Inc.
          and
          CoroWare Inc.)

        


        


        
          	
                  $350,000.00

                	
                  Fort
                    Myers, Florida

                
	 	
                  May
                    16, 2006

                


        

        


        


        FOR
          VALUE
          RECEIVED, Innova Holdings, Inc. ("Maker")
          whose
          address is 17105 San Carlos Blvd, Suite A6151, Fort Myers, Florida promises
          to
          pay to CoroWare, Inc (“Payee”),
          whose
          address is 677 120th
          Ave NE,
          #153, Bellevue, Washington 98005, the sum of up to Three Hundred Fifty
          Thousand
          Dollars ($350,000.00), without interest, subject to the contingencies set
          forth
          in that certain Asset Purchase Agreement dated May 12, 2006 by and between
          CoroWare Technologies, Inc and CoroWare, Inc. payable on the date which
          is
          thirty days following the date which is one year after the date hereof
          except
          for the contingent payment of $25,000 each quarter for the first twelve
          months
          from May 16, 2006, which amounts will be payable thirty days following
          the end
          of each quarter. All defined terms, not otherwise defined herein shall
          have the
          meaning set forth in the Asset Purchase Agreement.

         

        1. Prepayment.
          This
          Note may be prepaid at any time, in whole or in part, without premium or
          penalty, but with accrued interest to the date of prepayment. All payments
          hereon shall be applied first to the payment of accrued interest and the
          balance
          shall be applied to principal.

        


        3. Payment.
          Payment
          of principal and interest hereon shall be made at the address of Payee,
          or at
          any other place Payee designates in writing from time to time, and shall
          be in
          lawful money of the United States of America.

        


        4. Acceleration
          of Payment.
          The
          entire principal amount hereof, together with all accrued interest, shall
          immediately become due and payable (without demand for payment, notice
          of
          nonpayment, presentment, notice of dishonor, protest, notice of protest,
          or any
          other notice or demand, all of which Maker hereby waives) if:

        


        a. Maker
          fails to pay when due any installment of interest or principal on this
          Promissory Note and such failure continues for a period of fifteen (15)
          days;

        


        b. Maker
          defaults in the performance of, or compliance with, any other term, provision,
          covenant, or condition of this Promissory Note, or of any other agreement
          with
          Payee, and the default or noncompliance is not remedied to Payee's satisfaction
          within thirty (30) days after Payee gives Maker written notice of the default
          or
          noncompliance;

        


        c. Maker
          suspends payment of its obligations, or admits in writing to his inability
          to
          pay its debts generally as they become due;

        


        d. Maker
          makes an assignment for the benefit of creditors, or a trustee or receiver
          of
          Maker or of a substantial portion of its assets is appointed, and the trustee
          or
          receiver is not discharged within sixty (60) days;


        
          
            
            

          

          
            -37-

            
              

            

          

          
            
            

          

        

        


        e. Any
          proceeding involving Maker is voluntarily commenced by Maker under any
          bankruptcy, reorganization, insolvency, readjustment of debt, marshalling
          of
          assets and liabilities, dissolution, or liquidation law or statute of the
          United
          States or of any state, or a proceeding of this nature is involuntarily
          instituted against Maker, and Maker by any action indicates its approval
          of, or
          consent to, or acquiescence in, the proceeding, or the proceeding remains
          undismissed for sixty (60) days; or

        


        f. A
          final
          judgment for the payment of money is rendered against Maker, and Maker
          does not
          discharge the judgment or procure a stay of the execution thereof within
          thirty
          (30) days after the date of entry and service of a copy of the judgment,
          or
          cause execution of the judgment to be stayed during an appeal.


        


        5. Costs
          of Collection.
          If Maker
          fails to make timely the payments required hereby, Maker shall pay all
          cost of
          collection when incurred including, without limitation, actual attorneys'
          fees
          and expenses and court costs. Such costs will be added to the balance of
          principal and interest then due.

        


        6. Failure
          or Delay Non-Waiver.
          Failure
          of the holder hereof to assert any right contained herein, or delay in
          asserting
          any such right, shall not be deemed a waiver of that right.

        


        7. Waiver
          of Procedural Defenses.
          Maker
          waives demand for payment, notice of nonpayment, presentment, notice of
          dishonor, protest, notice of protest, or any other notice or demand in
          connection with this Promissory Note.

        


        8. Modifications.
          This
          Note may not be changed, modified or amended, or terminated, nor may any
          of its
          provisions be waived, except by an agreement in writing signed by the party
          against whom enforcement thereof is sought.

        


        9. Choice
          of Law.
          This
          Note shall be governed by and construed in accordance with the laws of
          the State
          of Florida.

         

        10. Promises
          Binding.
          This
          Note shall be binding upon Maker and Maker's successors, and
          assigns.

         

        
          


          
            	 	 	 
	 	Innova
                    Holdings, Inc.
	 
 	 
 	 
 
	 	By:  	 
	 	
                    

                  
	
                     Its:
                      

                  	 
                    
                    

                  


          

        

        


        
          
            
            

          

          
            -38-