Document:

Unassociated Document

     

    REGISTRATION
      RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT
      (this
“Agreement”),
      dated
      as of October __, 2007, by and among INNOVA
      ROBOTICS AND AUTOMATION, INC.,
      a
      Delaware corporation (the “Company”),
      and
      the undersigned Buyers listed on Schedule I attached hereto (each, a
“Buyer”
and
      collectively, the “Buyers”).

     

    WHEREAS:

     

    A. In
      connection with the Securities Purchase Agreement by and among the parties
      hereto of even date herewith (the “Securities
      Purchase Agreement”),
      the
      Company has agreed, upon the terms and subject to the conditions of the
      Securities Purchase Agreement, to issue and sell to the Buyers (i) secured
      convertible debentures (the “Convertible
      Debentures”)
      which
      shall be convertible into shares of the Company’s common stock, par value $0.001
      per share (the “Common
      Stock,”
as
      converted, the “Conversion
      Shares”)
      in
      accordance with the terms of the Convertible Debentures. Capitalized terms
      not
      defined herein shall have the meaning ascribed to them in the Securities
      Purchase Agreement.

     

    B. To
      induce
      the Buyers to execute and deliver the Securities Purchase Agreement, the Company
      has agreed to provide certain registration rights under the Securities Act
      of
      1933, as amended, and the rules and regulations thereunder, or any similar
      successor statute (collectively, the “Securities
      Act”),
      and
      applicable state securities laws.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and the Buyers hereby agree as
      follows:

     

    
      	
            	1.	
              DEFINITIONS.

            

    

     

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

     

    (a) “Effectiveness
      Deadline”
means,
      with respect to the initial Registration Statement required to be filed
      hereunder, the 120th calendar day following a written demand from the Buyers
      requesting the filing of such Registration Statement and, provided, however,
      in
      the event the Company is notified by the U.S. Securities and Exchange Commission
      (“SEC”)
      that
      one of the above Registration Statements will not be reviewed or is no longer
      subject to further review and comments, the Effectiveness Date as to such
      Registration Statement shall be the fifth Trading Day following the date on
      which the Company is so notified if such date precedes the dates required
      above.

     

    (b) “Filing
      Deadline”
means,
      with respect to the initial Registration Statement required hereunder, the
      30th
      calendar day following a written demand from the Buyers requesting the filing
      of
      such Registration Statement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) “Person”
means
      a
      corporation, a limited liability company, an association, a partnership, an
      organization, a business, an individual, a governmental or political subdivision
      thereof or a governmental agency.

     

    (d) “Prospectus”
means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by a Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

     

    (e) “Registrable
      Securities”
means
      all of (i) the Conversion Shares issuable upon conversion of the Convertible
      Debentures, (ii) any additional shares issuable in connection with any
      anti-dilution provisions or the Convertible Debentures (without giving effect
      to
      any limitations on exercise set forth in the Convertible Debentures) and (iv)
      any shares of Common Stock issued or issuable with respect to the Conversion
      Shares, the Convertible Debentures, or as a result of any stock split, dividend
      or other distribution, recapitalization or similar event or otherwise, without
      regard to any limitations on the conversion of the Convertible
      Debentures.

     

    (f) “Registration
      Statement”
means
      the registration statements required to be filed hereunder and any additional
      registration statements contemplated by Section 3(c), including (in each case)
      the Prospectus, amendments and supplements to such registration statement or
      Prospectus, including pre- and post-effective amendments, all exhibits thereto,
      and all material incorporated by reference or deemed to be incorporated by
      reference in such registration statement.

     

    (g) “Required
      Registration Amount”
      means (i)
      with
      respect to the initial Registration Statement shares of Common Stock issued
      or
      to be issued upon conversion of the Convertible Debentures in an amount no
      less
      than thirty-three percent (33%) of the number of outstanding shares of the
      Company held by non-affiliates of the Company on the date the registration
      statement is filed with the SEC and (ii) with respect to subsequent Registration
      Statements all remaining Registrable Securities to be filed, in each case
      subject to any cutback set forth in Section 3(c).

     

    (h) “Rule
      415”
means
      Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule
      may
      be amended from time to time, or any similar rule or regulation hereafter
      adopted by the SEC having substantially the same purpose and effect as such
      Rule.

     

    
      
        
        

      

      
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            	2.	
              REGISTRATION.

            

    

     

    (a) On
      or
      prior to each Filing Deadline, the Company shall prepare and file with the
      SEC a
      Registration Statement on Form S-1 or SB-2 (or, if the Company is then eligible,
      on Form S-3) covering the resale of all of the Registrable Securities. The
      Registration Statement prepared pursuant hereto shall register for resale at
      least the number of shares of Common Stock equal to the Required Registration
      Amount as of date the Registration Statement is initially filed with the SEC.
      The Registration Statement shall contain the “Selling
      Stockholders”
and
      “Plan
      of Distribution”
      sections in substantially the form attached hereto as Exhibit
      A
      and
      contain all the required disclosures set forth on Exhibit
      B.
      The
      Company shall use its best efforts to have the Registration Statement declared
      effective by the SEC as soon as practicable, but in no event later than the
      Effectiveness Deadline. By 9:30 am on the date following the date of
      effectiveness, the Company shall file with the SEC in accordance with Rule
      424
      under the 1933 Act the final Prospectus to be used in connection with sales
      pursuant to such Registration Statement. The Company shall cause the
      Registration Statement to remain effective until all of the Registrable
      Securities have been sold or may be sold without volume restrictions pursuant
      to
      Rule 144(k), as determined by the counsel to the Company pursuant to a written
      opinion letter to such effect, addressed and acceptable to the Company’s
      transfer agent and the affected Holders (“Registration
      Period”).
      Prior
      to the filing of the Registration Statement with the SEC, the Company shall
      furnish a draft of the Registration Statement to the Buyers for their review
      and
      comment. The Buyers shall furnish comments on the Registration Statement to
      the
      Company within twenty-four (24) hours of the receipt thereof from the
      Company.

     

    (b) Failure
      to File or Obtain Effectiveness of the Registration Statement.
      If: (i)
      a Registration Statement is not filed on or prior to its Filing Date (if the
      Company files a Registration Statement without affording the Holders the
      opportunity to review and comment on the same as required by Section 3(a),
      the
      Company shall not be deemed to have satisfied this clause (i)), or (ii) the
      Company fails to file with the SEC a request for acceleration in accordance
      with
      Rule 461 promulgated under the Securities Act, within five Trading Days of
      the
      date that the Company is notified (orally or in writing, whichever is earlier)
      by the SEC that a Registration Statement will not be “reviewed,” or not subject
      to further review, or (iii) a Registration Statement filed or required to be
      filed hereunder is not declared effective by the SEC by its Effectiveness
      Deadline, or (iv) after the effectiveness, a Registration Statement ceases
      for
      any reason to remain continuously effective as to all Registrable Securities
      for
      which it is required to be effective, or the Holders are otherwise not permitted
      to utilize the Prospectus therein to resell such Registrable Securities for
      more
      than 30 consecutive calendar days or more than an aggregate of 40 calendar
      days
      during any 12-month period (which need not be consecutive calendar days) (any
      such failure or breach being referred to as an “Event”),
      then
      in addition to any other rights the holders of the Convertible Debentures may
      have hereunder or under applicable law, on each such Event date and on each
      monthly anniversary of each such Event date (if the applicable Event shall
      not
      have been cured by such date) until the applicable Event is cured, the Company
      shall pay to each holder of Convertible Debentures an amount in cash, as partial
      liquidated damages (“Liquidated
      Damages”)
      and
      not as a penalty, equal to 2.0% of the aggregate purchase price paid by such
      holder pursuant to the Securities Purchase Agreement for any Convertible
      Debentures then held by such holder. The parties agree that (1) the Company
      shall not be liable for Liquidated Damages under this Agreement with respect
      to
      any Warrants or Warrant Shares and (2) the maximum aggregate Liquidated Damages
      payable to a holder of Convertible Debentures under this Agreement shall be
      twenty-four percent (24%) of the aggregate Purchase Price paid by such holder
      pursuant to the Securities Purchase Agreement, provided however the Company
      shall not be liable for Liquidated Damages as a result of any delay in the
      effectiveness of a Registration Statement as a result of comments from the
      SEC
      with regard to Rule 415 provided the Company is responding to such comments
      within fourteen (14) calendar days from the date of such comment letter or
      the
      reduction in the amount of shares included in such Registration Statement as
      a
      result of comments from the SEC with regard to Rule 415. The partial Liquidated
      Damages pursuant to the terms hereof shall apply on a daily pro-rata basis
      for
      any portion of a month prior to the cure of an Event.

     

    
      
        
        

      

      
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    (c) Liquidated
      Damages.
      The
      Company and the Buyer hereto acknowledge and agree that the sums payable under
      subsection 2(b) above shall constitute liquidated damages and not penalties
      and
      are in addition to all other rights of the Buyer, including the right to call
      a
      default. The parties further acknowledge that (i) the amount of loss or damages
      likely to be incurred is incapable or is difficult to precisely estimate, (ii)
      the amounts specified in such subsections bear a reasonable relationship to,
      and
      are not plainly or grossly disproportionate to, the probable loss likely to
      be
      incurred in connection with any failure by the Company to obtain or maintain
      the
      effectiveness of a Registration Statement, (iii) one of the reasons for the
      Company and the Buyer reaching an agreement as to such amounts was the
      uncertainty and cost of litigation regarding the question of actual damages,
      and
      (iv) the Company and the Buyer are sophisticated business parties and have
      been
      represented by sophisticated and able legal counsel and negotiated this
      Agreement at arm’s length. 

     

    
      	
            	3.	
              RELATED
                OBLIGATIONS.

            

    

     

    (a) The
      Company shall, not less than three (3) Trading Days prior to the filing of
      each
      Registration Statement and not less than one (1) Trading Day prior to the filing
      of any related amendments and supplements to all Registration Statements (except
      for annual reports on Form 10-K or Form 10-KSB), furnish to each Buyer copies
      of
      all such documents proposed to be filed, which documents (other than those
      incorporated or deemed to be incorporated by reference) will be subject to
      the
      reasonable and prompt review of such Buyers, The Company shall not file a
      Registration Statement or any such Prospectus or any amendments or supplements
      thereto to which the Buyers shall reasonably object in good faith; provided
      that,
      the Company is notified of such objection in writing no later than two (2)
      Trading Days after the Buyers have been so furnished copies of a Registration
      Statement.

     

    (b) The
      Company shall (i) prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to a Registration Statement and
      the
      Prospectus used in connection with such Registration Statement, which prospectus
      is to be filed pursuant to Rule 424 promulgated under the Securities Act, as
      may
      be necessary to keep such Registration Statement effective at all times during
      the Registration Period, and prepare and file with the SEC such additional
      Registration Statements in order to register for resale under the Securities
      Act
      all of the Registrable Securities; (ii) cause the related Prospectus to be
      amended or supplemented by any required Prospectus supplement (subject to the
      terms of this Agreement), and as so supplemented or amended to be filed pursuant
      to Rule 424; (iii) respond as promptly as reasonably possible to any comments
      received from the SEC with respect to a Registration Statement or any amendment
      thereto and as promptly as reasonably possible provide the Buyers true and
      complete copies of all correspondence from and to the SEC relating to a
      Registration Statement (provided that the Company may excise any information
      contained therein which would constitute material non-public information as
      to
      any Buyer which has not executed a confidentiality agreement with the Company);
      and (iv) comply with the provisions of the Securities Act with respect to the
      disposition of all Registrable Securities of the Company covered by such
      Registration Statement until such time as all of such Registrable Securities
      shall have been disposed of in accordance with the intended methods of
      disposition by the seller or sellers thereof as set forth in such Registration
      Statement. In the case of amendments and supplements to a Registration Statement
      which are required to be filed pursuant to this Agreement (including pursuant
      to
      this Section 3(b)) by reason of the Company’s filing a report on Form 10-KSB,
      Form 10-QSB or Form 8-K or any analogous report under the Securities Exchange
      Act of 1934, as amended (the “Exchange
      Act”),
      the
      Company shall incorporate such report by reference into the Registration
      Statement, if applicable, or shall file such amendments or supplements with
      the
      SEC on the same day on which the Exchange Act report is filed which created
      the
      requirement for the Company to amend or supplement the Registration Statement.
      

     

    
      
        
        

      

      
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    (c) Reduction
      of Registrable Securities Included in a Registration Statement.
      Notwithstanding anything contained herein, in the event that the SEC requires
      the Company to reduce the number of Registrable Securities to be included in
      a
      Registration Statement in order to allow the Company to rely on Rule 415 with
      respect to a Registration Statement, then the Company shall be obligated to
      include in such Registration Statement (which may be a subsequent Registration
      Statement if the Company needs to withdraw the initial Registration Statement
      and refile a new Registration Statement in order to rely on Rule 415) only
      such
      limited portion of the Registrable Securities as the SEC shall permit. Any
      Registrable Securities that are excluded in accordance with the foregoing terms
      are hereinafter referred to as “Cut
      Back Securities.”
To
      the
      extent Cut Back Securities exist, as soon as may be permitted by the SEC, the
      Company shall be required to file a Registration Statement covering the resale
      of the Cut Back Securities and shall use best efforts to cause such Registration
      Statement to be declared effective as promptly as practicable
      thereafter.

     

    (d) The
      Company shall furnish to each Buyer whose Registrable Securities are included
      in
      any Registration Statement, without charge, (i) at least one (1) copy of such
      Registration Statement as declared effective by the SEC and any amendment(s)
      thereto, including financial statements and schedules, all documents
      incorporated therein by reference, all exhibits and each preliminary prospectus,
      (ii) ten (10) copies of the final prospectus included in such Registration
      Statement and all amendments and supplements thereto (or such other number
      of
      copies as such Buyer may reasonably request) and (iii) such other documents
      as
      such Buyer may reasonably request from time to time in order to facilitate
      the
      disposition of the Registrable Securities owned by such Buyer.

     

    (e) The
      Company shall use its best efforts to (i) register and qualify the Registrable
      Securities covered by a Registration Statement under such other securities
      or
“blue sky” laws of such jurisdictions in the United States as any Buyer
      reasonably requests, (ii) prepare and file in those jurisdictions, such
      amendments (including post-effective amendments) and supplements to such
      registrations and qualifications as may be necessary to maintain the
      effectiveness thereof during the Registration Period, (iii) take such other
      actions as may be necessary to maintain such registrations and qualifications
      in
      effect at all times during the Registration Period, and (iv) take all other
      actions reasonably necessary or advisable to qualify the Registrable Securities
      for sale in such jurisdictions; provided, however, that the Company shall not
      be
      required in connection therewith or as a condition thereto to (w) make any
      change to its articles of incorporation or by-laws, (x) qualify to do business
      in any jurisdiction where it would not otherwise be required to qualify but
      for
      this Section 3(d), (y) subject itself to general taxation in any such
      jurisdiction, or (z) file a general consent to service of process in any such
      jurisdiction. The Company shall promptly notify each Buyer who holds Registrable
      Securities of the receipt by the Company of any notification with respect to
      the
      suspension of the registration or qualification of any of the Registrable
      Securities for sale under the securities or “blue sky” laws of any jurisdiction
      in the United States or its receipt of actual notice of the initiation or threat
      of any proceeding for such purpose.

     

    
      
        
        

      

      
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    (f) As
      promptly as practicable after becoming aware of such event or development,
      the
      Company shall notify each Buyer in writing of the happening of any event as
      a
      result of which the Prospectus included in a Registration Statement, as then
      in
      effect, includes an untrue statement of a material fact or omission to state
      a
      material fact required to be stated therein or necessary to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading (provided that in no event shall such notice contain any material,
      nonpublic information), and promptly prepare a supplement or amendment to such
      Registration Statement to correct such untrue statement or omission, and deliver
      ten (10) copies of such supplement or amendment to each Buyer. The Company
      shall
      also promptly notify each Buyer in writing (i) when a Prospectus or any
      Prospectus supplement or post-effective amendment has been filed, and when
      a
      Registration Statement or any post-effective amendment has become effective
      (notification of such effectiveness shall be delivered to each Buyer by
      facsimile on the same day of such effectiveness), (ii) of any request by the
      SEC
      for amendments or supplements to a Registration Statement or related prospectus
      or related information, and (iii) of the Company’s reasonable determination
      that a post-effective amendment to a Registration Statement would be
      appropriate.

     

    (g) The
      Company shall use its best efforts to prevent the issuance of any stop order
      or
      other suspension of effectiveness of a Registration Statement, or the suspension
      of the qualification of any of the Registrable Securities for sale in any
      jurisdiction within the United States of America and, if such an order or
      suspension is issued, to obtain the withdrawal of such order or suspension
      at
      the earliest possible moment and to notify each Buyer who holds Registrable
      Securities being sold of the issuance of such order and the resolution thereof
      or its receipt of actual notice of the initiation or threat of any proceeding
      for such purpose.

     

    (h) If,
      after
      the execution of this Agreement, a Buyer believes, after consultation with
      its
      legal counsel, that it could reasonably be deemed to be an underwriter of
      Registrable Securities, at the request of any Buyer, the Company shall furnish
      to such Buyer, on the date of the effectiveness of the Registration Statement
      and thereafter from time to time on such dates as a Buyer may reasonably request
      (i) a letter, dated such date, from the Company’s independent certified public
      accountants in form and substance as is customarily given by independent
      certified public accountants to underwriters in an underwritten public offering,
      and (ii) an opinion, dated as of such date, of counsel representing the Company
      for purposes of such Registration Statement, in form, scope and substance as
      is
      customarily given in an underwritten public offering, addressed to the
      Buyers.

     

    
      
        
        

      

      
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    (i) If,
      after
      the execution of this Agreement, a Buyer believes, after consultation with
      its
      legal counsel, that it could reasonably be deemed to be an underwriter of
      Registrable Securities, at the request of any Buyer, the Company shall make
      available for inspection by (i) any Buyer and (ii) one (1) firm of
      accountants or other agents retained by the Buyers (collectively, the
“Inspectors”)
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the “Records”),
      as
      shall be reasonably deemed necessary by each Inspector, and cause the Company’s
      officers, directors and employees to supply all information which any Inspector
      may reasonably request; provided, however, that each Inspector shall agree,
      and
      each Buyer hereby agrees, to hold in strict confidence and shall not make any
      disclosure (except to a Buyer) or use any Record or other information which
      the
      Company determines in good faith to be confidential, and of which determination
      the Inspectors are so notified, unless (a) the disclosure of such Records is
      necessary to avoid or correct a misstatement or omission in any Registration
      Statement or is otherwise required under the Securities Act, (b) the release
      of
      such Records is ordered pursuant to a final, non-appealable subpoena or order
      from a court or government body of competent jurisdiction, or (c) the
      information in such Records has been made generally available to the public
      other than by disclosure in violation of this or any other agreement of which
      the Inspector and the Buyer has knowledge. Each Buyer agrees that it shall,
      upon
      learning that disclosure of such Records is sought in or by a court or
      governmental body of competent jurisdiction or through other means, give prompt
      notice to the Company and allow the Company, at its expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, the Records deemed confidential.

     

    (j) The
      Company shall hold in confidence and not make any disclosure of information
      concerning a Buyer provided to the Company unless (i) disclosure of such
      information is necessary to comply with federal or state securities laws, (ii)
      the disclosure of such information is necessary to avoid or correct a
      misstatement or omission in any Registration Statement, (iii) the release of
      such information is ordered pursuant to a subpoena or other final,
      non-appealable order from a court or governmental body of competent
      jurisdiction, or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this Agreement or any other
      agreement. The Company agrees that it shall, upon learning that disclosure
      of
      such information concerning a Buyer is sought in or by a court or governmental
      body of competent jurisdiction or through other means, give prompt written
      notice to such Buyer and allow such Buyer, at the Buyer’s expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, such information.

     

    (k) The
      Company shall use its best efforts either to cause all the Registrable
      Securities covered by a Registration Statement (i) to be listed on each
      securities exchange on which securities of the same class or series issued
      by
      the Company are then listed, if any, if the listing of such Registrable
      Securities is then permitted under the rules of such exchange or (ii) the
      inclusion for quotation on the National Association of Securities Dealers,
      Inc.
      OTC Bulletin Board for such Registrable Securities. The Company shall pay all
      fees and expenses in connection with satisfying its obligation under this
      Section 3(j).

     

    (l) The
      Company shall cooperate with each Buyer who holds Registrable Securities being
      offered and, to the extent applicable, to facilitate the timely preparation
      and
      delivery of certificates (not bearing any restrictive legend) representing
      the
      Registrable Securities to be offered pursuant to a Registration Statement and
      enable such certificates to be in such denominations or amounts, as the case
      may
      be, as the Buyers may reasonably request and registered in such names as the
      Buyers may request.

     

    (m) The
      Company shall use its best efforts to cause the Registrable Securities covered
      by the applicable Registration Statement to be registered with or approved
      by
      such other governmental agencies or authorities as may be necessary to
      consummate the disposition of such Registrable Securities.

     

    
      
        
        

      

      
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    (n) The
      Company shall make generally available to its security holders as soon as
      practical, but not later than one hundred five (105) days after the close of
      the
      period covered thereby, an earnings statement (in form complying with the
      provisions of Rule 158 under the Securities Act) covering a twelve (12) month
      period beginning not later than the first day of the Company’s fiscal quarter
      next following the effective date of the Registration Statement.

     

    (o) The
      Company shall otherwise use its best efforts to comply with all applicable
      rules
      and regulations of the SEC in connection with any registration
      hereunder.

     

    (p) Within
      two (2) business days after a Registration Statement which covers Registrable
      Securities is declared effective by the SEC, the Company shall deliver, and
      shall cause legal counsel for the Company to deliver, to the transfer agent
      for
      such Registrable Securities (with copies to the Buyer whose Registrable
      Securities are included in such Registration Statement) confirmation that such
      Registration Statement has been declared effective by the SEC in the form
      attached hereto as Exhibit
      C.

     

    (q) The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate disposition by each Buyer of Registrable Securities pursuant to
      a
      Registration Statement.

     

    
      	
            	4.	
              OBLIGATIONS
                OF THE BUYERS.

            

    

     

    (a) Each
      Buyer agrees that, upon receipt of any notice from the Company of the happening
      of any event of the kind described in Section 3(f) such Buyer will immediately
      discontinue disposition of Registrable Securities pursuant to any Registration
      Statement covering such Registrable Securities until such Buyer’s receipt of the
      copies of the supplemented or amended prospectus contemplated by Section 3(f)
      or
      receipt of notice that no supplement or amendment is required. Notwithstanding
      anything to the contrary, the Company shall cause its transfer agent to deliver
      unlegended certificates for shares of Common Stock to a transferee of a Buyer
      in
      accordance with the terms of the Securities Purchase Agreement in connection
      with any sale of Registrable Securities with respect to which a Buyer has
      entered into a contract for sale prior to the Buyer’s receipt of a notice from
      the Company of the happening of any event of the kind described in Section
      3(f)
      or the first sentence of 3(e) and for which the Buyer has not yet
      settled.

     

    (b) Each
      Buyer covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it or an exemption therefrom
      in connection with sales of Registrable
      Securities pursuant to the Registration Statement.

     

    
      	
            	5.	
              EXPENSES
                OF REGISTRATION.

            

    

     

    All
      expenses incurred in connection with registrations, filings or qualifications
      pursuant to Sections 2 and 3, including, without limitation, all registration,
      listing and qualifications fees, printers, legal and accounting fees shall
      be
      paid by the Company. 

     

    
      
        
        

      

      
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            	6.	
              INDEMNIFICATION.

            

    

     

    With
      respect to Registrable Securities which are included in a Registration Statement
      under this Agreement:

     

    (a) To
      the
      fullest extent permitted by law, the Company will, and hereby does, indemnify,
      hold harmless and defend each Buyer, the directors, officers, partners,
      employees, agents, representatives of, and each Person, if any, who controls
      any
      Buyer within the meaning of the Securities Act or the Exchange Act (each, an
      “Indemnified
      Person”),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
      expenses, joint or several (collectively, “Claims”)
      incurred in investigating, preparing or defending any action, claim, suit,
      inquiry, proceeding, investigation or appeal taken from the foregoing by or
      before any court or governmental, administrative or other regulatory agency,
      body or the SEC, whether pending or threatened, whether or not an indemnified
      party is or may be a party thereto (“Indemnified
      Damages”),
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon: (i) any untrue statement or alleged untrue statement of
      a
      material fact in a Registration Statement or any post-effective amendment
      thereto or in any filing made in connection with the qualification of the
      offering under the securities or other “blue sky” laws of any jurisdiction in
      which Registrable Securities are offered (“Blue
      Sky Filing”),
      or
      the omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading; (ii) any
      untrue statement or alleged untrue statement of a material fact contained in
      any
      final prospectus (as amended or supplemented, if the Company files any amendment
      thereof or supplement thereto with the SEC) or the omission or alleged omission
      to state therein any material fact necessary to make the statements made
      therein, in light of the circumstances under which the statements therein were
      made, not misleading; or (iii) any violation or alleged violation by the Company
      of the Securities Act, the Exchange Act, any other law, including, without
      limitation, any state securities law, or any rule or regulation there under
      relating to the offer or sale of the Registrable Securities pursuant to a
      Registration Statement (the matters in the foregoing clauses (i) through (iii)
      being, collectively, “Violations”).
      The
      Company shall reimburse the Buyers and each such controlling person promptly
      as
      such expenses are incurred and are due and payable, for any legal fees or
      disbursements or other reasonable expenses incurred by them in connection with
      investigating or defending any such Claim. Notwithstanding anything to the
      contrary contained herein, the indemnification agreement contained in this
      Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
      out of or based upon a Violation which occurs in reliance upon and in conformity
      with information furnished in writing to the Company by such Indemnified Person
      expressly for use in connection with the preparation of the Registration
      Statement or any such amendment thereof or supplement thereto; (y) shall not
      be
      available to the extent such Claim is based on a failure of the Buyer to deliver
      or to cause to be delivered the prospectus made available by the Company, if
      such prospectus was timely made available by the Company pursuant to Section
      3(c); and (z) shall not apply to amounts paid in settlement of any Claim if
      such settlement is effected without the prior written consent of the Company,
      which consent shall not be unreasonably withheld. Such indemnity shall remain
      in
      full force and effect regardless of any investigation made by or on behalf
      of
      the Indemnified Person and shall survive the transfer of the Registrable
      Securities by the Buyers pursuant to Section 9 hereof.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (b) In
      connection with a Registration Statement, each Buyer agrees to severally and
      not
      jointly indemnify, hold harmless and defend, to the same extent and in the
      same
      manner as is set forth in Section 6(a), the Company, each of its directors,
      each
      of its officers, employees, representatives, or agents and each Person, if
      any,
      who controls the Company within the meaning of the Securities Act or the
      Exchange Act (each an “Indemnified
      Party”),
      against any Claim or Indemnified Damages to which any of them may become
      subject, under the Securities Act, the Exchange Act or otherwise, insofar as
      such Claim or Indemnified Damages arise out of or is based upon any Violation,
      in each case to the extent, and only to the extent, that such Violation occurs
      in reliance upon and in conformity with written information furnished to the
      Company by such Buyer expressly for use in connection with such Registration
      Statement; and, subject to Section 6(d), such Buyer will reimburse any legal
      or
      other expenses reasonably incurred by them in connection with investigating
      or
      defending any such Claim; provided, however, that the indemnity agreement
      contained in this Section 6(b) and the agreement with respect to contribution
      contained in Section 7 shall not apply to amounts paid in settlement of any
      Claim if such settlement is effected without the prior written consent of such
      Buyer, which consent shall not be unreasonably withheld; provided, further,
      however, that the Buyer shall be liable under this Section 6(b) for only that
      amount of a Claim or Indemnified Damages as does not exceed the net proceeds
      to
      such Buyer as a result of the sale of Registrable Securities pursuant to such
      Registration Statement. Such indemnity shall remain in full force and effect
      regardless of any investigation made by or on behalf of such Indemnified Party
      and shall survive the transfer of the Registrable Securities by the Buyers
      pursuant to Section 9. Notwithstanding anything to the contrary contained
      herein, the indemnification agreement contained in this Section 6(b) with
      respect to any prospectus shall not inure to the benefit of any Indemnified
      Party if the untrue statement or omission of material fact contained in the
      prospectus was corrected and such new prospectus was delivered to each Buyer
      prior to such Buyer’s use of the prospectus to which the Claim
      relates.

     

    (c) Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually satisfactory to the
      indemnifying party and the Indemnified Person or the Indemnified Party, as
      the
      case may be; provided, however, that an Indemnified Person or Indemnified Party
      shall have the right to retain its own counsel with the fees and expenses of
      not
      more than one (1) counsel for such Indemnified Person or Indemnified Party
      to be
      paid by the indemnifying party, if, in the reasonable opinion of counsel
      retained by the indemnifying party, the representation by such counsel of the
      Indemnified Person or Indemnified Party and the indemnifying party would be
      inappropriate due to actual or potential differing interests between such
      Indemnified Person or Indemnified Party and any other party represented by
      such
      counsel in such proceeding. The Indemnified Party or Indemnified Person shall
      cooperate fully with the indemnifying party in connection with any negotiation
      or defense of any such action or claim by the indemnifying party and shall
      furnish to the indemnifying party all information reasonably available to the
      Indemnified Party or Indemnified Person which relates to such action or claim.
      The indemnifying party shall keep the Indemnified Party or Indemnified Person
      fully apprised at all times as to the status of the defense or any settlement
      negotiations with respect thereto. No indemnifying party shall be liable for
      any
      settlement of any action, claim or proceeding effected without its prior written
      consent; provided, however, that the indemnifying party shall not unreasonably
      withhold, delay or condition its consent. No indemnifying party shall, without
      the prior written consent of the Indemnified Party or Indemnified Person,
      consent to entry of any judgment or enter into any settlement or other
      compromise which does not include as an unconditional term thereof the giving
      by
      the claimant or plaintiff to such Indemnified Party or Indemnified Person of
      a
      release from all liability in respect to such claim or litigation. Following
      indemnification as provided for hereunder, the indemnifying party shall be
      subrogated to all rights of the Indemnified Party or Indemnified Person with
      respect to all third parties, firms or corporations relating to the matter
      for
      which indemnification has been made. The failure to deliver written notice
      to
      the indemnifying party within a reasonable time of the commencement of any
      such
      action shall not relieve such indemnifying party of any liability to the
      Indemnified Person or Indemnified Party under this Section 6, except to the
      extent that the indemnifying party is prejudiced in its ability to defend such
      action.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (d) The
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills are received or Indemnified Damages are incurred.

     

    (e) The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of action or similar right of the Indemnified Party or Indemnified Person
      against the indemnifying party or others, and (ii) any liabilities the
      indemnifying party may be subject to pursuant to the law.

     

    
      	
            	7.	
              CONTRIBUTION.

            

    

     

    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided, however, that: (i) no seller of
      Registrable Securities guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the Securities Act) shall be entitled to
      contribution from any seller of Registrable Securities who was not guilty of
      fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
      Securities shall be limited in amount to the net amount of proceeds received
      by
      such seller from the sale of such Registrable Securities.

     

    
      	
            	8.	
              REPORTS
                UNDER THE EXCHANGE ACT.

            

    

     

    With
      a
      view to making available to the Buyers the benefits of Rule 144 promulgated
      under the Securities Act or any similar rule or regulation of the SEC that
      may
      at any time permit the Buyers to sell securities of the Company to the public
      without registration (“Rule
      144”)
      the
      Company agrees to:

     

    (a) make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144;

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (b) file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the Securities Act and the Exchange Act so long as the Company
      remains subject to such requirements (it being understood that nothing herein
      shall limit the Company’s obligations under Section 4(c) of the Securities
      Purchase Agreement) and the filing of such reports and other documents as are
      required by the applicable provisions of Rule 144; and

     

    (c) furnish
      to each Buyer so long as such Buyer owns Registrable Securities, promptly upon
      request, (i) a written statement by the Company that it has complied with the
      reporting requirements of Rule 144, the Securities Act and the Exchange Act,
      (ii) a copy of the most recent annual or quarterly report of the Company and
      such other reports and documents so filed by the Company, and (iii) such other
      information as may be reasonably requested to permit the Buyers to sell such
      securities pursuant to Rule 144 without registration.

     

    
      	
            	9.	
              AMENDMENT
                OF REGISTRATION RIGHTS.

            

    

     

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and Buyers who
      then
      hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
      or
      waiver effected in accordance with this Section 9 shall be binding upon
      each Buyer and the Company. No such amendment shall be effective to the extent
      that it applies to fewer than all of the holders of the Registrable Securities.
      No consideration shall be offered or paid to any Person to amend or consent
      to a
      waiver or modification of any provision of any of this Agreement unless the
      same
      consideration also is offered to all of the parties to this
      Agreement.

     

    
      	
            	10.	
              MISCELLANEOUS.

            

    

     

    (a) A
      Person
      is deemed to be a holder of Registrable Securities whenever such Person owns
      or
      is deemed to own of record such Registrable Securities or owns the right to
      receive the Registrable Securities. If the Company receives conflicting
      instructions, notices or elections from two (2) or more Persons with respect
      to
      the same Registrable Securities, the Company shall act upon the basis of
      instructions, notice or election received from the registered owner of such
      Registrable Securities.

     

    (b) No
      Piggyback on Registrations.
      Except
      as set forth on Schedule
      10(b)
      attached
      hereto, neither the Company nor any of its security holders (other than the
      Buyers in such capacity pursuant hereto) may include securities of the Company
      in the initial Registration Statement other than the Registrable Securities.
      The
      Company shall not file any other registration statements until the initial
      Registration Statement required hereunder is declared effective by the SEC,
      provided that this Section 10(b) shall not prohibit the Company from filing
      amendments to registration statements already filed.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (c) Piggy-Back
      Registrations.
      If at
      any time during the Registration Period there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the SEC a registration statement relating
      to
      an offering for its own account or the account of others under the Securities
      Act of any of its equity securities, other than on Form S-4 or Form S-8 (each
      as
      promulgated under the Securities Act) or their then equivalents relating to
      equity securities to be issued solely in connection with any acquisition of
      any
      entity or business or equity securities issuable in connection with the stock
      option or other employee benefit plans, then the Company shall send to each
      Buyer a written notice of such determination and, if within fifteen (15) days
      after the date of such notice, any such Buyer shall so request in writing,
      the
      Company shall include in such registration statement all or any part of such
      Registrable Securities such Buyer requests to be registered; provided,
      however,
      that,
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 10(c) that are eligible for resale pursuant to Rule
      144(k) promulgated under the Securities Act or that are the subject of a then
      effective Registration Statement.

     

    (d) Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one (1) business day after deposit with a nationally recognized
      overnight delivery service, in each case properly addressed to the party to
      receive the same. The addresses and facsimile numbers for such communications
      shall be:

     

    
      
        	
                If
                  to the Company, to:

              	
                Innova
                  Robotics and Automation, Inc.

              
	 	
                15870
                  Pine Ridge Road

              
	 	
                Fort
                  Myers, FL 33980 

              
	 	
                Attention:

              	
                Eugene
                  Gartlan

              
	 	
                Telephone:

              	
                (239)
                  466-0488

              
	 	
                Facsimile:

              	
                (239)
                  466-7270

              
	 	 	 
	
                With
                  Copy to:

              	
                Sichenzia
                  Ross Friedman Ference LLP

              
	 	
                61
                  Broadway - 32nd
                  Floor

              
	 	
                New
                  York, NY 10006

              
	 	
                Attention:

              	
                Gregory
                  Sichenzia

              
	 	
                Telephone:

              	
                (212)
                  930-9700

              
	 	
                Facsimile:

              	
                (212)
                  930-9725

              

      

    

     

    If
      to an
      Buyer, to its address and facsimile number on the Schedule of Buyers attached
      hereto, with copies to such Buyer’s representatives as set forth on the Schedule
      of Buyers or to such other address and/or facsimile number and/or to the
      attention of such other person as the recipient party has specified by written
      notice given to each other party five (5) days prior to the effectiveness of
      such change. Written confirmation of receipt (A) given by the recipient of
      such
      notice, consent, waiver or other communication, (B) mechanically or
      electronically generated by the sender’s facsimile machine containing the time,
      date, recipient facsimile number and an image of the first page of such
      transmission or (C) provided by a courier or overnight courier service shall
      be
      rebuttable evidence of personal service, receipt by facsimile or receipt from
      a
      nationally recognized overnight delivery service in accordance with clause
      (i),
      (ii) or (iii) above, respectively.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (e) Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

     

    (f) The
      laws
      of the State of New Jersey shall govern all issues concerning the relative
      rights of the Company and the Buyers as its stockholders. All other questions
      concerning the construction, validity, enforcement and interpretation of this
      Agreement shall be governed by the internal laws of the State of New Jersey,
      without giving effect to any choice of law or conflict of law provision or
      rule
      (whether of the State of New Jersey or any other jurisdiction) that would cause
      the application of the laws of any jurisdiction other than the State of New
      Jersey. Each party hereby irrevocably submits to the non-exclusive jurisdiction
      of the Superior Courts of the State of New Jersey, sitting in Hudson County,
      New
      Jersey and federal courts for the District of New Jersey sitting Newark, New
      Jersey, for the adjudication of any dispute hereunder or in connection herewith
      or with any transaction contemplated hereby or discussed herein, and hereby
      irrevocably waives, and agrees not to assert in any suit, action or proceeding,
      any claim that it is not personally subject to the jurisdiction of any such
      court, that such suit, action or proceeding is brought in an inconvenient forum
      or that the venue of such suit, action or proceeding is improper. Each party
      hereby irrevocably waives personal service of process and consents to process
      being served in any such suit, action or proceeding by mailing a copy thereof
      to
      such party at the address for such notices to it under this Agreement and agrees
      that such service shall constitute good and sufficient service of process and
      notice thereof. Nothing contained herein shall be deemed to limit in any way
      any
      right to serve process in any manner permitted by law. If any provision of
      this
      Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
      or unenforceability shall not affect the validity or enforceability of the
      remainder of this Agreement in that jurisdiction or the validity or
      enforceability of any provision of this Agreement in any other jurisdiction.
      EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
      TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

     

    (g) This
      Agreement shall inure to the benefit of and be binding upon the permitted
      successors and assigns of each of the parties hereto.

     

    (h) The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    (i) This
      Agreement may be executed in identical counterparts, each of which shall be
      deemed an original but all of which shall constitute one and the same agreement.
      This Agreement, once executed by a party, may be delivered to the other party
      hereto by facsimile transmission of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

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

     

    (k) The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent and no rules of strict construction
      will
      be applied against any party.

     

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

     

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their signature page to this Registration
      Rights Agreement to be duly executed as of the date first above
      written.

     

    
      	
              COMPANY:

            
	
              INNOVA
                ROBOTICS AND AUTOMATION, INC.

            
	 	 
	
              By:

            	
              /s/
                Eugene
                Gartlan

            
	
              Name:

            	
              Eugene
                Gartlan

            
	
              Title: 

            	
              Chief
                Executive Officer

            

    

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their signature page to this Registration
      Rights Agreement to be duly executed as of the date first above
      written.

     

    
      	
              BUYER:

            
	
              YA
                GLOBAL INVESTMENTS, L.P.

            
	 	 
	
              By:

            	
              Yorkville
                Advisors, LLC

            
	
              Its:

            	
              Investment
                Manager

            
	 	 
	
              By:

            	
              /s/Mark
                Angelo

            
	
              Name:

            	
              Mark
                Angelo

            
	
              Title:

            	
              Portfolio
                Manager

            

    

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS

    

    
      	
              Buyer

            	 	
              Address/Facsimile
                

              Number of Buyer

            	 	
              Address/Facsimile
                

              Number of Buyer’s
                

              Representative

            
	 	 	 	 	 
	 	 	 	 	 
	
              YA
                Global Investments, L.P.

            	 	
              101
                Hudson Street – Suite 3700

            	 	
              101
                Hudson Street – Suite 3700

            
	 	 	
              Jersey
                City, NJ 07303

            	 	
              Jersey
                City, NJ 07303

            
	 	 	
              Facsimile: (201)
                985-8266

            	 	
              Facsimile: (201)
                985-8266

            
	 	 	 	 	
              Attention:
                David Gonzalez, Esq.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    SELLING
      STOCKHOLDERS 

     

    AND
      PLAN OF DISTRIBUTION

    

    Selling
      Stockholders

    

    The
      shares of Common Stock being offered by the selling stockholders are issuable
      upon conversion of the convertible debentures and upon exercise of the warrants.
      For additional information regarding the issuance of those convertible notes
      and
      warrants, see “Private Placement of Convertible Debentures and Warrants” above.
      We are registering the shares of Common Stock in order to permit the selling
      stockholders to offer the shares for resale from time to time. Except as
      otherwise notes and except for the ownership of the convertible Debentures
      and
      the warrants issued pursuant to the Securities Purchase Agreement, the selling
      stockholders have not had any material relationship with us within the past
      three years.

     

    The
      table
      below lists the selling stockholders and other information regarding the
      beneficial ownership of the shares of Common Stock by each of the selling
      stockholders. The second column lists the number of shares of Common Stock
      beneficially owned by each selling stockholder, based on its ownership of the
      convertible debentures and warrants, as of ________, 200_, assuming conversion
      of all convertible debentures and exercise of the warrants held by the selling
      stockholders on that date, without regard to any limitations on conversions
      or
      exercise.

     

    The
      third
      column lists the shares of Common Stock being offered by this prospectus by
      the
      selling stockholders.

     

    In
      accordance with the terms of a registration rights agreement with the selling
      stockholders, this prospectus generally covers the resale of at least (i) 300%
      of the number of Conversion Shares issued and issuable pursuant to the
      convertible debentures as of the trading day immediately preceding the date
      the
      registration statement is initially filed with the SEC, and (ii) 100% of the
      number of warrant shares issued and issuable pursuant to the warrants as of
      the
      trading day immediately preceding the date the registration statement is
      initially filed with the SEC.
      Because
      the conversion price of the convertible debentures and the exercise price of
      the
      warrants may be adjusted, the number of shares that will actually be issued
      may
      be more or less than the number of shares being offered by this prospectus.
      The
      fourth column assumes the sale of all of the shares offered by the selling
      stockholders pursuant to this prospectus.

     

    Under
      the
      terms of the convertible debentures and the warrants, a selling stockholder
      may
      not convert the convertible debentures or exercise the warrants to the extent
      such conversion or exercise would cause such selling stockholder, together
      with
      its affiliates, to beneficially own a number of shares of Common Stock which
      would exceed 4.99% of our then outstanding shares of Common Stock following
      such
      conversion or exercise, excluding for purposes of such determination shares
      of
      Common Stock issuable upon conversion of the convertible debentures which have
      not been converted and upon exercise of the warrants which have not been
      exercised. The number of shares in the second column does not reflect this
      limitation. The selling stockholders may sell all, some or none of their shares
      in this offering. See "Plan of Distribution."

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              Name
                of Selling Stockholder

            	 	
              Number of Shares Owned
                

              Prior to Offering

            	 	
              Maximum Number of Shares
                

              to be Sold Pursuant to this
                

                Prospectus

            	 	
              Number of Shares Owned
                

              After Offering

            
	
              YA
                Global Investments, L.P. (1)

            	 	 	 	 	 	 

    

    

     

    (1) YA
      Global
      Investments, L.P. is a Cayman Island exempt limited partnership. Cornell is
      managed by Yorkville Advisors, LLC. Investment decisions for Yorkville Advisors
      are made by Mark Angelo, its portfolio manager. 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Plan
      of Distribution

     

    Each
      Selling Stockholder (the “Selling
      Stockholders”)
      of the
      common stock and any of their pledgees, assignees and successors-in-interest
      may, from time to time, sell any or all of their shares of common stock on
      the
      __________ or any other stock exchange, market or trading facility on which
      the
      shares are traded or in private transactions. These sales may be at fixed or
      negotiated prices. A Selling Stockholder may use any one or more of the
      following methods when selling shares:

     

    
      	 	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	 	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	 	
              ·

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

     

    
      	 	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	 	
              ·

            	
              privately
                negotiated transactions;

            

    

     

    
      	 	
              ·

            	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	 	
              ·

            	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or otherwise;
                

            

    

     

    
      	 	
              ·

            	
              a
                combination of any such methods of sale;
                or

            

    

     

    
      	 	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities
      Act”),
      if
      available, rather than under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the Selling Stockholders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, but,
      except as set forth in a supplement to this Prospectus, in the case of an agency
      transaction not in excess of a customary brokerage commission in compliance
      with
      NASDR Rule 2440; and in the case of a principal transaction a markup or markdown
      in compliance with NASDR IM-2440. 

     

    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the Common
      Stock in the course of hedging the positions they assume. The Selling
      Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales. In such event, any commissions
      received by such broker-dealers or agents and any profit on the resale of the
      shares purchased by them may be deemed to be underwriting commissions or
      discounts under the Securities Act. Each Selling Stockholder has informed the
      Company that it does not have any written or oral agreement or understanding,
      directly or indirectly, with any person to distribute the Common Stock. In
      no
      event shall any broker-dealer receive fees, commissions and markups which,
      in
      the aggregate, would exceed eight percent (8%).

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares. The Company has agreed to indemnify
      the Selling Stockholders against certain losses, claims, damages and
      liabilities, including liabilities under the Securities Act. 

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder. In addition, any securities
      covered by this prospectus which qualify for sale pursuant to Rule 144 under
      the
      Securities Act may be sold under Rule 144 rather than under this prospectus.
      There is no underwriter or coordinating broker acting in connection with the
      proposed sale of the resale shares by the Selling Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume limitations by reason of Rule 144(k) under the
      Securities Act or any other rule of similar effect or (ii) all of the shares
      have been sold pursuant to this prospectus or Rule 144 under the Securities
      Act
      or any other rule of similar effect. The resale shares will be sold only through
      registered or licensed brokers or dealers if required under applicable state
      securities laws. In addition, in certain states, the resale shares may not
      be
      sold unless they have been registered or qualified for sale in the applicable
      state or an exemption from the registration or qualification requirement is
      available and is complied with.

     

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution. In addition, the Selling Stockholders will be subject to
      applicable provisions of the Exchange Act and the rules and regulations
      thereunder, including Regulation M, which may limit the timing of purchases
      and
      sales of shares of the common stock by the Selling Stockholders or any other
      person. We will make copies of this prospectus available to the Selling
      Stockholders and have informed them of the need to deliver a copy of this
      prospectus to each purchaser at or prior to the time of the sale (including
      by
      compliance with Rule 172 under the Securities Act).

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
EXHIBIT
      B

     

    OTHER
      DISCLOSURES 

    

    See
      attachment provided separately. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    Attention: 

    

    
      	 	
              Re:

            	
              INNOVA
                ROBOTICS AND AUTOMATION,
                INC.

            

    

    

    Ladies
      and Gentlemen:

    

    We
      are
      counsel to Innova Robotics and Automation, Inc., a Nevada corporation (the
      “Company”),
      and
      have represented the Company in connection with that certain Securities Purchase
      Agreement (the “Securities
      Purchase Agreement”)
      entered into by and among the Company and the Buyers named therein
      (collectively, the “Buyers”)
      pursuant to which the Company issued to the Buyers shares of its Common Stock,
      par value $0.001 per share (the “Common
      Stock”).
      Pursuant to the Purchase Agreement, the Company also has entered into a
      Registration Rights Agreement with the Buyers (the “Registration
      Rights Agreement”)
      pursuant to which the Company agreed, among other things, to register the
      Registrable Securities (as defined in the Registration Rights Agreement) under
      the Securities Act of 1933, as amended (the “Securities
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on ____________ ____, the Company filed a Registration Statement
      on
      Form ________ (File No. 333-_____________) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “SEC”)
      relating to the Registrable Securities which names each of the Buyers as a
      selling stockholder there under.

     

    In
      connection with the foregoing, we advise you that a member of the SEC’s staff
      has advised us by telephone that the SEC has entered an order declaring the
      Registration Statement effective under the Securities Act at [ENTER
      TIME OF EFFECTIVENESS]
      on
[ENTER
      DATE OF EFFECTIVENESS]
      and we
      have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
      any stop order suspending its effectiveness has been issued or that any
      proceedings for that purpose are pending before, or threatened by, the SEC
      and
      the Registrable Securities are available for resale under the Securities Act
      pursuant to the Registration Statement.

     

    
      	
              Very
                truly yours,

            
	 	 
	
              [Law Firm]

            
	 	 
	
              By:

            	 
              

    

    

    
      	cc:	
              [LIST
                NAMES OF BUYERS]

            

    

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Disclosure
      Schedules

     

    to

    Registration
      Rights Agreement

    

    Schedule
      10(b): Registration Rights of Others

    

    Martyn
      Calsyn, 250,000 shares

    

    Jerry
      Horne, 15,000,000 shares

    

    
      
        
        

      

      
        8SECURITY
      AGREEMENT

     

    THIS
      SECURITY AGREEMENT
      (the
“Agreement”), is
      entered into and made effective as of October ___, 2007, by and between
INNOVA
      ROBOTICS AND AUTOMATIONS, INC., a
      Delaware corporation with its principal place of business located at 15870
      Pine
      Ridge Road, Fort Myers, FL 33908 (the “Parent”),
      and
      each subsidiary of the Parent listed on Schedule I attached hereto (each a
      “Subsidiary,”
and
      collectively and together with the Parent, the “Company”),
      in
      favor of the BUYER(S)
      (the
“Secured
      Party”)
      listed
      on Schedule I attached to the Securities Purchase Agreement (the “Securities
      Purchase Agreement”)
      dated
      the date hereof between the Company and the Secured Party.

     

    WHEREAS,
      The
      Parent shall issue and sell to the Secured Party, as provided in the Securities
      Purchase Agreement, and the Secured Party shall purchase Six Hundred Thousand
      Dollars ($600,000) of secured convertible debentures (the “Convertible
      Debentures”),
      which
      shall be convertible into shares of the Parent’s common stock, par value $0.001,
      in the respective amounts set forth opposite each Buyer(s) name on
      Schedule I attached to the Securities Purchase Agreement;

     

    WHEREAS,
      to
      induce
      the Secured Party to enter into the transaction contemplated by the Securities
      Purchase Agreement, the Convertible Debentures, the Investor Registration Rights
      Agreement of even date herewith between the Parent and the Secured Party (the
      “Investor
      Registration Rights Agreement”),
      and
      the Irrevocable Transfer Agent Instructions among the Parent, the Secured Party,
      the Parent’s transfer agent, and David Gonzalez, Esq. (the “Transfer
      Agent Instructions”)
      (collectively referred to as the “Transaction
      Documents”),
      each
      Company hereby grants to the Secured Party a security interest in and to the
      pledged property of each Company identified on Exhibit
      A
      hereto
      (collectively referred to as the “Pledged
      Property”)
      to
      secure all of the Obligations (as defined below).

     

    NOW,
      THEREFORE, in
      consideration of the promises and the mutual covenants herein contained, and
      for
      other good and valuable consideration, the adequacy and receipt of which are
      hereby acknowledged, the parties hereto hereby agree as follows:

     

    ARTICLE
      1.

     

    DEFINITIONS
      AND INTERPRETATIONS

     

    
      	
            	Section
              1.1.	
              Recitals.
                

            

    

     

    The
      above
      recitals are true and correct and are incorporated herein, in their entirety,
      by
      this reference.

     

    
      	
            	Section
              1.2.	
              Interpretations.
                

            

    

     

    Nothing
      herein expressed or implied is intended or shall be construed to confer upon
      any
      person other than the Secured Party any right, remedy or claim under or by
      reason hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
            	Section
              1.3.	
              Obligations
                Secured.

            

    

     

    The
      security interest created hereby in the Pledged Property constitutes continuing
      collateral security for all of the obligations of the Parent now existing or
      hereinafter incurred to the Buyers, whether oral or written and whether arising
      before, on or after the date hereof including, without limitation following
      obligations (collectively, the “Obligations”):

    

    (a)
      for
      so long as the Convertible Debentures are outstanding, the payment by the
      Parent, as and when due and payable (by scheduled maturity, acceleration, demand
      or otherwise), of all amounts from time to time owing by it in respect of the
      Securities Purchase Agreement, the Convertible Debentures and the other
      Transaction Documents; and

    

    (b)
      for
      so long as the Convertible Debentures are outstanding, the due performance
      and
      observance by the Parent of all of its other obligations from time to time
      existing in respect of any of the Transaction Documents, including without
      limitation, the Parent’s obligations with respect to any conversion or
      redemption rights of the Secured Party under the Convertible
      Debentures.

    

    ARTICLE
      2.

     

    PLEDGED
      PROPERTY; EVENT OF DEFAULT

     

    
      	
            	Section
              2.1.	
              Pledged
                Property.

            

    

     

    (a) As
      collateral security for all of the Obligations, the Company hereby pledges
      to
      the Secured Party, and creates in the Secured Party for its benefit, a
      continuing security interest in and to all of the Pledged Property whether
      now
      owned or hereafter acquired.

     

    (b) Simultaneously
      with the execution and delivery of this Agreement, the Company shall make,
      execute, acknowledge, file, record and deliver to the Secured Party any
      documents reasonably requested by the Secured Party to perfect its security
      interest in the Pledged Property. Simultaneously with the execution and delivery
      of this Agreement, the Company shall make, execute, acknowledge and deliver
      to
      the Secured Party such documents and instruments, including, without limitation,
      financing statements, certificates, affidavits and forms as may, in the Secured
      Party’s reasonable judgment, be necessary to effectuate, complete or perfect, or
      to continue and preserve, the security interest of the Secured Party in the
      Pledged Property, and the Secured Party shall hold such documents and
      instruments as secured party, subject to the terms and conditions contained
      herein.

     

    (c)
      Establishment
      of a Lockbox Account, Dominion Account. 
      As of the date hereof the Parent, each Subsidiary and the Secured Party shall
      have established or designated all of the Company’s and each Subsidiaries bank
      accounts as (i) a depository account, dominion account or such other “blocked
      account” established at a bank or banks (each such bank, a “Blocked
      Account Bank”)
      pursuant to an arrangement with such Blocked Account Bank as well as a (ii)
      lock
      box account (collectively the depository account, dominion account and the
      lock
      box account shall be referred to as “Blocked
      Accounts”)
      or
      such other account as may be selected by the parties hereto for the deposit
      of
      all cash and all collections and proceeds from the Accounts to be deposited
      into
      the deposit account and/or lock box, as applicable, together with the proceeds
      thereof, all goods represented by such Accounts and all such goods that may
      be
      returned by the Company’s and each Subsidiaries customers, and all proceeds of
      any insurance thereon, and all guarantees, securities and liens which the
      Company and each Subsidiary may hold for the payment of any such Accounts
      including, without limitation, all rights of stoppage in transit, replevin
      and
      reclamation and as an unpaid vendor and/or lienor, all of which the Company
      and
      each Subsidiary represents and warrants will be bona fide and existing
      obligations of its respective customers, arising out of the sale of goods by
      the
      Company in the ordinary course of business into any accounts other than the
      Deposit and/or the Lockbox Accounts, as applicable The parties hereto and each
      Blocked Account Bank shall enter into a deposit account control agreement in
      form and substance satisfactory to Secured Party directing such Blocked Account
      Bank, upon notification by the Secured Party of an Event of Default as defined
      herein, to transfer such funds so deposited into the Blocked Accounts, either
      to
      any account maintained by the Secured Party at said Blocked Account Bank or
      by
      wire transfer to appropriate account(s) the Secured Party directs and providing
      the Secured Party such control over the Blocked Accounts until the earlier
      of
      the Event of Default being cured or repayment of the Obligations. Upon an Event
      of Default all funds deposited in such Blocked Accounts shall immediately become
      the property of the Secured Party and the parties hereto shall obtain the
      agreement by such Blocked Account Bank to waive any offset rights against the
      funds so deposited.  

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
            	Section
              2.2.	
              Event
                of Default

            

    

     

    An
      “Event
      of Default”
shall
      be deemed to have occurred under this Agreement upon an Event of Default under
      and as defined in the Convertible Debentures.

     

    ARTICLE
      3.

     

    ATTORNEY-IN-FACT;
      PERFORMANCE

     

    
      	
            	Section
              3.1.	
              Secured
                Party Appointed Attorney-In-Fact.

            

    

     

    Upon
      the
      occurrence and during the continuance of an Event of Default: (a) the Company
      hereby appoints the Secured Party as its attorney-in-fact, with full authority
      in the place and stead of the Company and in the name of the Company or
      otherwise, from time to time in the Secured Party’s discretion to take any
      action and to execute any instrument which the Secured Party may reasonably
      deem
      necessary to accomplish the purposes of this Agreement, including, without
      limitation, to receive and collect all instruments made payable to the Company
      representing any payments in respect of the Pledged Property or any part thereof
      and to give full discharge for the same; (b) the Secured Party may demand,
      collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize
      on the Pledged Property as and when the Secured Party may determine, and (c)
      to
      facilitate collection, the Secured Party may notify account debtors and obligors
      on any Pledged Property to make payments directly to the Secured
      Party.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

      
        	
              	Section
                3.2.	
                Secured
                  Party May Perform.

              

      

    

     

    If
      the
      Company fails to perform any agreement contained herein, the Secured Party,
      at
      its option, may itself perform, or cause performance of, such agreement, and
      the
      expenses of the Secured Party incurred in connection therewith shall be included
      in the Obligations secured hereby and payable by the Company under
      Section 8.3.

     

    ARTICLE
      4.

     

    REPRESENTATIONS
      AND WARRANTIES

     

    
      	
            	Section
              4.1.	
              Authorization;
                Enforceability.

            

    

     

    Each
      of
      the parties hereto represents and warrants that it has taken all action
      necessary to authorize the execution, delivery and performance of this Agreement
      and the transactions contemplated hereby; and upon execution and delivery,
      this
      Agreement shall constitute a valid and binding obligation of the respective
      party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
      and similar laws affecting creditors’ rights or by the principles governing the
      availability of equitable remedies.

     

    
      	
            	Section
              4.2.	
              Ownership
                of Pledged Property.

            

    

     

    The
      Company represents and warrants that it is the legal and beneficial owner of
      the
      Pledged Property free and clear of any lien, security interest, option or other
      charge or encumbrance (each, a “Lien”) except for the security interest created
      by this Agreement and other Permitted Liens disclosed in Schedule II attached
      hereto. For purposes of this Agreement, “Permitted Liens” means: (1) the
      security interest created by this Agreement, (2) existing Liens disclosed by
      the
      Company to the Secured Party; (3) inchoate Liens for taxes, assessments or
      governmental charges or levies not yet due, as to which the grace period, if
      any, related thereto has not yet expired, or being contested in good faith
      and
      by appropriate proceedings for which adequate reserves have been established
      in
      accordance with GAAP; (4) Liens of carriers, materialmen, warehousemen,
      mechanics and landlords and other similar Liens which secure amounts which
      are
      not yet overdue by more than 60 days or which are being contested in good faith
      by appropriate proceedings; (5) licenses, sublicenses, leases or subleases
      granted to other Persons not materially interfering with the conduct of the
      business of the Company; (6) Liens securing capitalized lease obligations and
      purchase money indebtedness incurred solely for the purpose of financing an
      acquisition or lease; (7) easements, rights-of-way, restrictions, encroachments,
      municipal zoning ordinances and other similar charges or encumbrances, and
      minor
      title deficiencies, in each case not securing debt and not materially
      interfering with the conduct of the business of the Company and not materially
      detracting from the value of the property subject thereto; (8) Liens arising
      out
      of the existence of judgments or awards which judgments or awards do not
      constitute an Event of Default; (9) Liens incurred in the ordinary course of
      business in connection with workers compensation claims, unemployment insurance,
      pension liabilities and social security benefits and Liens securing the
      performance of bids, tenders, leases and contracts in the ordinary course of
      business, statutory obligations, surety bonds, performance bonds and other
      obligations of a like nature (other than appeal bonds) incurred in the ordinary
      course of business (exclusive of obligations in respect of the payment for
      borrowed money); (10) Liens in favor of a banking institution arising by
      operation of law encumbering deposits (including the right of set-off) and
      contractual set-off rights held by such banking institution and which are within
      the general parameters customary in the banking industry and only burdening
      deposit accounts or other funds maintained with a creditor depository
      institution; (11) usual and customary set-off rights in leases and other
      contracts; and (12) escrows in connection with acquisitions and
      dispositions.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
            	Section
              4.3.	
              Name
                Change.
                The Company and each Subsidiary have only effectuated changes to
                their
                respective corporate names as designated in Schedule 4.3
                herein.

            

    

     

    ARTICLE
      5.

     

    DEFAULT;
      REMEDIES; SUBSTITUTE COLLATERAL

     

    
      	
            	Section
              5.1	
              Method
                of Realizing Upon the Pledged Property: Other Remedies.

            

    

     

    If
      any
      Event of Default shall have occurred and be continuing:

     

    (a) The
      Secured Party may exercise in respect of the Pledged Property, in addition
      to
      any other rights and remedies provided for herein or otherwise available to
      it,
      all of the rights and remedies of a secured party upon default under the Uniform
      Commercial Code (whether or not the Uniform Commercial Code applies to the
      affected Pledged Property), and also may (i) take absolute control of the
      Pledged Property, including, without limitation, transfer into the Secured
      Party's name or into the name of its nominee or nominees (to the extent the
      Secured Party has not theretofore done so) and thereafter receive, for the
      benefit of the Secured Party, all payments made thereon, give all consents,
      waivers and ratifications in respect thereof and otherwise act with respect
      thereto as though it were the outright owner thereof, (ii) require the
      Company to assemble all or part of the Pledged Property as directed by the
      Secured Party and make it available to the Secured Party at a place or places
      to
      be designated by the Secured Party that is reasonably convenient to both
      parties, and the Secured Party may enter into and occupy any premises owned
      or
      leased by the Company where the Pledged Property or any part thereof is located
      or assembled for a reasonable period in order to effectuate the Secured Party's
      rights and remedies hereunder or under law, without obligation to the Company
      in
      respect of such occupation, and (iii) without notice except as specified
      below and without any obligation to prepare or process the Pledged Property
      for
      sale, (A) sell the Pledged Property or any part thereof in one or more
      parcels at public or private sale, at any of the Secured Party's offices or
      elsewhere, for cash, on credit or for future delivery, and at such price or
      prices and upon such other terms as the Secured Party may deem commercially
      reasonable and/or (B) lease, license or dispose of the Pledged Property or
      any part thereof upon such terms as the Secured Party may deem commercially
      reasonable. The Company agrees that, to the extent notice of sale or any other
      disposition of the Pledged Property shall be required by law, at least ten
      (10)
      days' notice to the Company of the time and place of any public sale or the
      time
      after which any private sale or other disposition of the Pledged Property is
      to
      be made shall constitute reasonable notification. The Secured Party shall not
      be
      obligated to make any sale or other disposition of any Pledged Property
      regardless of notice of sale having been given. The Secured Party may adjourn
      any public or private sale from time to time by announcement at the time and
      place fixed therefor, and such sale may, without further notice, be made at
      the
      time and place to which it was so adjourned. The Company hereby waives any
      claims against the Secured Party arising by reason of the fact that the price
      at
      which the Pledged Property may have been sold at a private sale was less than
      the price which might have been obtained at a public sale or was less than
      the
      aggregate amount of the Obligations, even if the Secured Party accepts the
      first
      offer received and does not offer such Pledged Property to more than one
      offeree, and waives all rights that the Company may have to require that all
      or
      any part of such Pledged Property be marshaled upon any sale (public or private)
      thereof. The Company hereby acknowledges that (i) any such sale of the
      Pledged Property by the Secured Party may be made without warranty,
      (ii) the Secured Party may specifically disclaim any warranties of title,
      possession, quiet enjoyment or the like, and (iii) such actions set forth
      in clauses (i) and (ii) above shall not adversely affect the commercial
      reasonableness of any such sale of Pledged Property. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (b) Upon
      an
      Event of Default all funds deposited in such Blocked Accounts shall immediately
      become the property of the Buyer. The Secured Party shall direct such Blocked
      Account Bank, to transfer such funds so deposited into the Blocked Accounts,
      either to any account maintained by the Secured Party at said Blocked Account
      Bank or by wire transfer to appropriate account(s) the Secured Party directs
      and
      providing the Secured Party such control over the Blocked Accounts until the
      earlier of the Event of Default being cured or repayment of the Obligations.
      

     

    (c) Any
      cash
      held by the Secured Party as Pledged Property and all cash proceeds received
      by
      the Secured Party in respect of any sale of or collection from, or other
      realization upon, all or any part of the Pledged Property shall be applied
      (after payment of any amounts payable to the Secured Party pursuant to Section
      8.3 hereof) by the Secured Party against, all or any part of the Obligations
      in
      such order as the Secured Party shall elect, consistent with the provisions
      of
      the Securities Purchase Agreement. Any surplus of such cash or cash proceeds
      held by the Secured Party and remaining after the indefeasible payment in full
      in cash of all of the Obligations shall be paid over to whomsoever shall be
      lawfully entitled to receive the same or as a court of competent jurisdiction
      shall direct.

     

    (d) In
      the
      event that the proceeds of any such sale, collection or realization are
      insufficient to pay all amounts to which the Secured Party is legally entitled,
      the Company shall be liable for the deficiency, together with interest thereon
      at the rate specified in the Convertible Debentures for interest on overdue
      principal thereof or such other rate as shall be fixed by applicable law,
      together with the costs of collection and the reasonable fees, costs, expenses
      and other client charges of any attorneys employed by the Secured Party to
      collect such deficiency.

     

    (e) The
      Company hereby acknowledges that if the Secured Party complies with any
      applicable state, provincial, or federal law requirements in connection with
      a
      disposition of the Pledged Property, such compliance will not adversely affect
      the commercial reasonableness of any sale or other disposition of the Pledged
      Property.

     

    (f) The
      Secured Party shall not be required to marshal any present or future collateral
      security (including, but not limited to, this Agreement and the Pledged
      Property) for, or other assurances of payment of, the Obligations or any of
      them
      or to resort to such collateral security or other assurances of payment in
      any
      particular order, and all of the Secured Party's rights hereunder and in respect
      of such collateral security and other assurances of payment shall be cumulative
      and in addition to all other rights, however existing or arising. To the extent
      that the Company lawfully may, the Company hereby agrees that it will not invoke
      any law relating to the marshaling of collateral which might cause delay in
      or
      impede the enforcement of the Secured Party's rights under this Agreement or
      under any other instrument creating or evidencing any of the Obligations or
      under which any of the Obligations is outstanding or by which any of the
      Obligations is secured or payment thereof is otherwise assured, and, to the
      extent that it lawfully may, the Company hereby irrevocably waives the benefits
      of all such laws.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
            	Section
              5.2	
              Duties
                Regarding Pledged Property.

            

    

     

    The
      Secured Party shall have no duty as to the collection or protection of the
      Pledged Property or any income thereon or as to the preservation of any rights
      pertaining thereto, beyond the safe custody and reasonable care of any of the
      Pledged Property actually in the Secured Party’s possession.

     

    ARTICLE
      6.

     

    AFFIRMATIVE
      COVENANTS

     

    The
      Company covenants and agrees that, from the date hereof and until the
      Obligations have been fully paid and satisfied or the Convertible Debentures
      have been fully converted, unless the Secured Party shall consent otherwise
      in
      writing (as provided in Section 8.4 hereof):

     

    
      	
            	Section
              6.1.	
              Existence,
                Properties, Etc.

            

    

     

    (a) The
      Company shall do, or cause to be done, all things, or proceed with due diligence
      with any actions or courses of action, that may be reasonably necessary
      (i) to maintain Company’s due organization, valid existence and good
      standing under the laws of its state of incorporation, and (ii) to preserve
      and keep in full force and effect all qualifications, licenses and registrations
      in those jurisdictions in which the failure to do so could have a Material
      Adverse Effect (as defined below); and (b) the Company shall not do, or
      cause to be done, any act impairing the Company’s corporate power or authority
      (i) to carry on the Company’s business as now conducted, and (ii) to
      execute or deliver this Agreement or any other document delivered in connection
      herewith, including, without limitation, any UCC-1 Financing Statements required
      by the Secured Party (which other loan instruments collectively shall be
      referred to as the “Loan
      Instruments”) to
      which it is or will be a party, or perform any of its obligations hereunder
      or
      thereunder. For purpose of this Agreement, the term “Material
      Adverse Effect”
shall
      mean any material and adverse affect as determined by Secured Party in its
      reasonable discretion, whether individually or in the aggregate, upon
      (a) the Company’s assets, business, operations, properties or condition,
      financial or otherwise; (b) the Company’s ability to make payment as and
      when due of all or any part of the Obligations; or (c) the Pledged
      Property.

     

    
      	
            	Section
              6.2.	
              Financial
                Statements and Reports.

            

    

     

    The
      Company shall furnish to the Secured Party within a reasonable time such
      financial data as the Secured Party may reasonably request.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
            	Section
              6.3.	
              Accounts
                and Reports.

            

    

     

    The
      Company shall maintain a standard system of accounting in accordance with
      generally accepted accounting principles consistently applied (“GAAP”) and
      provide, at its sole expense, to the Secured Party the following:

     

    (a) as
      soon
      as available, a copy of any notice or other communication alleging any
      nonpayment or other material breach or default, or any foreclosure or other
      action respecting any material portion of its assets and properties, received
      respecting any of the indebtedness of the Company in excess of $500,000 (other
      than the Obligations), or any demand or other request for payment under any
      guaranty, assumption, purchase agreement or similar agreement or arrangement
      respecting the indebtedness or obligations of others in excess of $500,000;
      and

     

    (b) within
      fifteen (15) days after the making of each submission or filing, a copy of
      any report, financial statement, notice or other document, whether periodic
      or
      otherwise, submitted to the shareholders of the Company, or submitted to or
      filed by the Company with any governmental authority involving or affecting
      (i)
      the Company that could reasonably be expected to have a Material Adverse Effect;
      (ii) the Obligations; (iii) any part of the Pledged Property; or
      (iv) any of the transactions contemplated in this Agreement or the Loan
      Instruments (except, in each case, to the extent any such submission, filing,
      report, financial statement, notice or other document is posted on EDGAR
      Online).

     

    
      	
            	Section
              6.4.	
              Maintenance
                of Books and Records; Inspection.

            

    

     

    The
      Company shall maintain its books, accounts and records in accordance with GAAP,
      and permit the Secured Party, its officers and employees and any professionals
      designated by the Secured Party in writing, at any time during normal business
      hours and upon reasonable notice to visit and inspect any of its properties
      (including but not limited to the collateral security described in the
      Transaction Documents), corporate books and financial records, and to discuss
      its accounts, affairs and finances with any employee, officer or director
      thereof (it being agreed that, unless an Event of Default shall have occurred
      and be continuing, there shall be no more than two (2) such visits and
      inspections in any Fiscal Year).

     

    
      	
            	Section
              6.5.	
              Maintenance
                and Insurance.

            

    

     

    (a) The
      Company shall maintain or cause to be maintained, at its own expense, all of
      its
      material assets and properties in good working order and condition, ordinary
      wear and tear excepted, making all necessary repairs thereto and renewals and
      replacements thereof.

     

    (b) The
      Company shall maintain or cause to be maintained, at its own expense, insurance
      in form, substance and amounts (including deductibles), which the Company deems
      reasonably necessary to the Company’s business, (i) adequate to insure all
      assets and properties of the Company of a character usually insured by persons
      engaged in the same or similar business against loss or damage resulting from
      fire or other risks included in an extended coverage policy; (ii) against
      public liability and other tort claims that may be incurred by the Company;
      (iii) as may be required by the Transaction Documents and/or applicable law
      and (iv) as may be reasonably requested by Secured Party, all with financially
      sound and reputable insurers.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

      
        	
              	Section
                6.6.	
                Contracts
                  and Other Collateral.

              

      

    

     

    The
      Company shall perform all of its obligations under or with respect to each
      instrument, receivable, contract and other intangible included in the Pledged
      Property to which the Company is now or hereafter will be party on a timely
      basis and in the manner therein required, including, without limitation, this
      Agreement, except to the extent the failure to so perform such obligations
      would
      not reasonably be expected to have a Material Adverse Effect.

     

    
      	
            	Section
              6.7.	
              Defense
                of Collateral, Etc.

            

    

     

    The
      Company shall defend and enforce its right, title and interest in and to any
      part of: (a) the Pledged Property; and (b) if not included within the
      Pledged Property, those assets and properties whose loss would reasonably be
      expected to have a Material Adverse Effect, each against all manner of claims
      and demands on a timely basis to the full extent permitted by applicable law
      (other than any such claims and demands by holders of Permitted
      Liens).

     

    
      	
            	Section
              6.8.	
              Taxes
                and Assessments.

            

    

     

    The
      Company shall (a) file all material tax returns and appropriate schedules
      thereto that are required to be filed under applicable law, prior to the date
      of
      delinquency (taking into account any extensions of the original due date),
      (b) pay and discharge all material taxes, assessments and governmental
      charges or levies imposed upon the Company, upon its income and profits or
      upon
      any properties belonging to it, prior to the date on which penalties attach
      thereto, and (c) pay all material taxes, assessments and governmental
      charges or levies that, if unpaid, might become a lien or charge upon any of
      its
      properties; provided,
      however,
      that
      the Company in good faith may contest any such tax, assessment, governmental
      charge or levy described in the foregoing clauses (b) and (c) so long as
      appropriate reserves are maintained with respect thereto if and to the extent
      required by GAAP. 

     

    
      	
            	Section
              6.9.	
              Compliance
                with Law and Other Agreements.
                

            

    

     

    The
      Company shall maintain its business operations and property owned or used in
      connection therewith in compliance with (a) all applicable federal, state
      and local laws, regulations and ordinances governing such business operations
      and the use and ownership of such property, and (b) all agreements,
      licenses, franchises, indentures and mortgages to which the Company is a party
      or by which the Company or any of its properties is bound, except where the
      failure to so comply would not reasonably be expected to have a Material Adverse
      Effect.

     

    
      	
            	Section
              6.10.	
              Notice
                of Default.
                

            

    

     

    The
      Company shall give written notice to the Secured Party of the occurrence of
      any
      Event of Default.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

      
        	
              	Section
                6.11.	
                Notice
                  of Litigation.

              

      

    

     

    The
      Company shall give notice, in writing, to the Secured Party of (a) any
      actions, suits or proceedings wherein the amount at issue is in excess of
      $250,000, instituted by any persons against the Company, or affecting any of
      the
      assets of the Company, and (b) any dispute, not resolved within fifteen
      (15) days of the commencement thereof, between the Company on the one hand
      and
      any governmental or regulatory body on the other hand, which might reasonably
      be
      expected to have a Material Adverse Effect on the business operations or
      financial condition of the Company.

     

    
      	
            	Section
              6.13.	
              Future
                Subsidiaries.

            

    

     

    If
      the
      Company shall hereafter create or acquire any subsidiary, simultaneously with
      the creation or acquisition of such subsidiary, the Company shall cause such
      subsidiary to grant to the Secured Party a security interest of the same tenor
      as created under this Agreement. 

     

    Section6.14.   
       Deposit/Lock
      Box Accounts. The
      Company and each Subsidiary shall cause all cash and all collections and
      proceeds from the Accounts to be deposited into the Deposit Account and/or
      Lock
      Box, as applicable, together with the proceeds thereof, all goods represented
      by
      such Accounts and all such goods that may be returned by the Company’s and each
      Subsidiaries customers, and all proceeds of any insurance thereon, and all
      guarantees, securities and liens which the Company and each Subsidiary may
      hold
      for the payment of any such Accounts including, without limitation, all rights
      of stoppage in transit, replevin and reclamation and as an unpaid vendor and/or
      lienor, all of which the Company and the each Subsidiary represents and warrants
      will be bona fide and existing obligations of its respective customers, arising
      out of the sale of goods by the Company and each Subsidiary in the ordinary
      course of business into any accounts other than the Deposit and/or the Lockbox
      Accounts, as applicable.

     

    ARTICLE
      7.

     

    NEGATIVE
      COVENANTS

     

    The
      Company covenants and agrees that, from the date hereof until the Obligations
      have been fully paid and satisfied, the Company shall not, unless the Secured
      Party shall consent otherwise in writing:

     

    
      	
            	Section
              7.1.	
              Liens
                and Encumbrances.

            

    

     

    Directly
      or indirectly make, create, incur, assume or permit to exist any Lien in, to
      or
      against any part of the Pledged Property other than Permitted
      Liens.

     

    
      	
            	Section
              7.2.	
              Restriction
                on Redemption and Cash
                Dividends

            

    

     

    Directly
      or indirectly, redeem, repurchase or declare or pay any cash dividend or
      distribution on its capital stock without the prior express written consent
      of
      the Secured Party.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      
        	
              	Section
                7.3.	
                Incurrence
                  of Indebtedness.

              

      

    

     

    
      Directly
        or indirectly, incur or guarantee, assume or suffer to exist any indebtedness,
        other than the indebtedness evidenced by the Convertible Debentures and other
        Permitted Indebtedness. “Permitted
        Indebtedness”
means:
        (i) indebtedness evidenced by Convertible Debentures; (ii) indebtedness
        described on the Disclosure Schedule to the Securities Purchase Agreement;
        (iii)
        indebtedness incurred solely for the purpose of financing the acquisition
        or
        lease of any equipment by the Company, including capital lease obligations
        with
        no recourse other than to such equipment; (iv) indebtedness (A) the repayment
        of
        which has been subordinated to the payment of the Convertible Debentures
        on
        terms and conditions acceptable to the Secured Party, including with regard
        to
        interest payments and repayment of principal, (B) which does not mature or
        otherwise require or permit redemption or repayment prior to or on the
        91st
        day
        after the maturity date of any Convertible Debentures then outstanding; and
        (C)
        which is not secured by any assets of the Company; (v) indebtedness solely
        between the Company and/or one of its domestic subsidiaries, on the one hand,
        and the Company and/or one of its domestic subsidiaries, on the other which
        indebtedness is not secured by any assets of the Company or any of its
        subsidiaries, provided that (x) in each case a majority of the equity of
        any
        such domestic subsidiary is directly or indirectly owned by the Company,
        such
        domestic subsidiary is controlled by the Company and such domestic subsidiary
        has executed a security agreement in the form of this Agreement and (y) any
        such
        loan shall be evidenced by an intercompany note that is pledged by the Company
        or its subsidiary, as applicable, as collateral pursuant to this Agreement;
        (vi)
        reimbursement obligations in respect of letters of credit issued for the
        account
        of the Company or any of its subsidiaries for the purpose of securing
        performance obligations of the Company or its subsidiaries incurred in the
        ordinary course of business so long as the aggregate face amount of all such
        letters of credit does not exceed $500,000 at any one time; and (vii) renewals,
        extensions and refinancing of any indebtedness described in clauses (i) or
        (iii)
        of this subsection.

    

     

    
      	
            	Section
              7.4.	
              Places
                of Business.

            

    

     

    Change
      the location of its chief place of business, chief executive office or any
      place
      of business disclosed to the Secured Party, unless such change in location
      is to
      a different location within the United States and the Company provides notice
      to
      the Secured Party of new location within 10 days’ of such change in
      location.

     

    Section
      7.5.      Company
      Name. The
      Company and each Subsidiary shall not change their respective names with out
      providing the Secured Party thirty (30) calendar days prior written
      notice.

     

    Section
      7.6.      Bank
      Accounts.
       The
      Company and each Subsidiary shall not open, create, assume, establish or
      maintain any bank account with out having it designated as a “Deposit Account”
and complying with the term hereunder.

     

    Section
      7.7.      Deposit/Lockbox
      Accounts. The
      Company and each Subsidiary shall not direct, instruct, cause to be deposited
      or
      otherwise deposit any cash and or any collections and proceeds from the
      Accounts, together with the proceeds thereof, all goods represented by such
      Accounts and all such goods that may be returned by the Company’s and each
      Subsidiaries customers, and all proceeds of any insurance thereon, and all
      guarantees, securities and liens which the Company and each Subsidiary may
      hold
      for the payment of any such Accounts including, without limitation, all rights
      of stoppage in transit, replevin and reclamation and as an unpaid vendor and/or
      lienor, all of which the Company represents and warrants will be bona fide
      and
      existing obligations of its respective customers, arising out of the sale of
      goods by the Company and each Subsidiary in the ordinary course of business
      into
      any accounts other than the Deposit and/or the Lockbox Accounts, as
      applicable.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      8.

     

    MISCELLANEOUS

     

    
      	
            	Section
              8.1.	
              Notices.

            

    

     

    All
      notices or other communications required or permitted to be given pursuant
      to
      this Agreement shall be in writing and shall be considered as duly given on:
      (a) the date of delivery, if delivered in person or by nationally
      recognized overnight delivery service or (b) five (5) days after
      mailing if mailed from within the continental United States by certified mail,
      return receipt requested to the party entitled to receive the same:

     

      	
              If
                to the Secured Party:

            	
              YA
                Global Investments, L.P.

            
	
               

            	
              101
                Hudson Street-Suite 3700 

            
	
               

            	
              Jersey
                City, New Jersey07302

            
	
               

            	
              Attention:

            	
              Mark
                Angelo

            
	
               

            	
               

            	
              Portfolio
                Manager

            
	
               

            	
              Telephone:

            	
              (201)
                986-8300

            
	
               

            	
              Facsimile:

            	
              (201)
                985-8266

            
	
               

            	
               

            
	
              With
                a copy to:

            	
              David
                Gonzalez, Esq.

            
	
               

            	
              101
                Hudson Street, Suite 3700

            
	
               

            	
              Jersey
                City, NJ07302

            
	
               

            	
              Telephone:

            	
              (201)
                985-8300

            
	
               

            	
              Facsimile:

            	
              (201)
                985-8266

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
              And
                if to the Company:

            	
              Innova
                Robotics and Automations, Inc., Inc.

            
	
               

            	
              15870
                Pine Ridge Road

            
	
               

            	
              Fort
                Myers, FL33908

            
	
               

            	
              Attention:

            	
              Eugene
                Gartlan

            
	
               

            	
              Telephone:

            	
              (239)
                466-0488

            
	
               

            	
              Facsimile:

            	
              (239)
                466-7270

            
	
               

            	
               

            
	
              With
                a copy to:

            	
              Sichenzia
                Ross Friedman Ference LLP

            
	
               

            	
              61
                Broadway – 32nd Floor

            
	
               

            	
              New
                York, NY10006

            
	
               

            	
              Attention:

            	
              Gregory
                Sichenzia

            
	
               

            	
              Telephone:

            	
              (212)
                930-9700

            
	
               

            	
              Facsimile:

            	
              (212)
                930-9725

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Any
      party
      may change its address by giving notice to the other party stating its new
      address. Commencing on the tenth (10th) day
      after the giving of such notice, such newly designated address shall be such
      party’s address for the purpose of all notices or other communications required
      or permitted to be given pursuant to this Agreement.

     

    
      	
            	Section
              8.2.	
              Severability.

            

    

     

    If
      any
      provision of this Agreement shall be held invalid or unenforceable, such
      invalidity or unenforceability shall attach only to such provision and shall
      not
      in any manner affect or render invalid or unenforceable any other severable
      provision of this Agreement, and this Agreement shall be carried out as if
      any
      such invalid or unenforceable provision were not contained herein.

     

    
      	
            	Section
              8.3.	
              Expenses.

            

    

     

    In
      the
      event of an Event of Default, the Company will pay to the Secured Party the
      amount of any and all reasonable out-of-pocket expenses, including the
      reasonable fees and expenses of its counsel, which the Secured Party may incur
      in connection with: (i) the custody or preservation of, or the sale,
      collection from, or other realization upon, any of the Pledged Property;
      (ii) the exercise or enforcement of any of the rights of the Secured Party
      hereunder or (iii) the failure by the Company to perform or observe any of
      the provisions hereof.

     

    
      	
            	Section
              8.4.	
              Waivers,
                Amendments, Etc.

            

    

     

    The
      Secured Party’s delay or failure at any time or times hereafter to require
      strict performance by Company of any undertakings, agreements or covenants
      shall
      not waive, affect, or diminish any right of the Secured Party under this
      Agreement to demand strict compliance and performance herewith. Any waiver
      by
      the Secured Party of any Event of Default shall not waive or affect any other
      Event of Default, whether such Event of Default is prior or subsequent thereto
      and whether of the same or a different type. None of the undertakings,
      agreements and covenants of the Company contained in this Agreement, and no
      Event of Default, shall be deemed to have been waived by the Secured Party,
      nor
      may this Agreement be amended, changed or modified, unless such waiver,
      amendment, change or modification is evidenced by an instrument in writing
      specifying such waiver, amendment, change or modification and signed by the
      Secured Party in the case of any such waiver, and signed by the Secured Party
      and the Company in the case of any such amendment, change or
      modification.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

      
        	
              	Section
                8.5.	
                Continuing
                  Security Interest; Partial Release.

              

      

    

     

    (a)
      This
      Agreement shall create a continuing security interest in the Pledged Property
      and shall: (i) remain in full force and effect until payment or conversion
      in full of the Convertible Debentures; (ii) be binding upon the Company and
      its successors and assigns; and (iii) inure to the benefit of the Secured
      Party and its successors and assigns. Upon the payment or satisfaction in full
      or conversion in full of the Convertible Debentures, this Agreement and the
      security interest created hereby shall terminate, and, in connection therewith,
      the Company shall be entitled to the return, at its expense, of such of the
      Pledged Property as shall not have been sold in accordance with Section 5.2
      hereof or otherwise applied pursuant to the terms hereof and the Secured Party
      shall deliver to the Company such documents as the Company shall reasonably
      request to evidence such termination.

     

    (b) Effective
      upon the closing of a disposition of any Pledged Property, provided the Secured
      Party consents in writing prior to such disposition or such disposition is
      made
      in the ordinary course of business, the security interest granted hereunder
      in
      the Pledged Property so disposed of shall terminate and the Secured Party shall
      deliver such documents as the Company shall reasonably request to evidence
      such
      termination; provided, however, the security interest granted hereunder in
      all
      remaining Pledged Property shall remain in full force and effect.

     

    
      	
            	Section
              8.6.	
              Independent
                Representation.

            

    

     

    Each
      party hereto acknowledges and agrees that it has received or has had the
      opportunity to receive independent legal counsel of its own choice and that
      it
      has been sufficiently apprised of its rights and responsibilities with regard
      to
      the substance of this Agreement.

     

    
      	
            	Section
              8.7.	
              Applicable
                Law: Jurisdiction.

            

    

     

    This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the State of New Jersey without regard to the principles of conflict of laws.
      The parties further agree that any action between them shall be heard in Hudson
      County, New Jersey, and expressly consent to the jurisdiction and venue of
      the
      Superior Court of New Jersey, sitting in Hudson County and the United States
      District Court for the District of New Jersey sitting in Newark, New Jersey
      for
      the adjudication of any civil action asserted pursuant to this
      Paragraph.

     

    
      	
            	Section
              8.8.	
              Waiver
                of Jury Trial.

            

    

     

    AS
      A
      FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO
      MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES
      ANY
      RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
      AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

      
        	
              	Section
                8.9.	
                Entire
                  Agreement.

              

      

    

     

    This
      Agreement constitutes the entire agreement among the parties and supersedes
      any
      prior agreement or understanding among them with respect to the subject matter
      hereof.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

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

    

    
      	
              COMPANY:

            
	
              INNOVA
                ROBOTICS AND AUTOMATION, INC.

            
	 	 
	
              By:

            	
              /s/Eugene
                Gartlan

            
	
              Name: 

            	
              Eugene
                Gartlan

            
	
              Title:

            	
              Chief
                Executive Officer

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

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

     

    
      	
              COMPANY:

            
	
              COROWARE
                TECHNOLOGIES, INC.

            
	 	 
	
              By:

            	
              /s/Lloyd
                Spencer

            
	
              Name:

            	
              Lloyd
                T. Spencer

            
	
              Title:

            	
              President
                and Chief Executive Officer

            

    

    
       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

    

     

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

     

    
      	
              COMPANY:

            
	
              ROBOTIC
                WORKSPACE TECHNOLOGIES, INC.

            
	 	 
	
              By:

            	
              /s/Walter
                Weisel

            
	
              Name:

            	
              Walter
                Weisel

            
	
              Title:

            	
              President

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

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

     

    
      	
              COMPANY:

            
	
              INNOVA
                ROBOTICS, INC.

            
	 	 
	
              By:

            	
              /s/Walter
                Wiesel

            
	
              Name:

            	
              Walter
                Wiesel

            
	
              Title:

            	
              President

            

    

    
       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

    

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

    

    
      	
              COMPANY:

            
	
              ROBOTIC
                SOFTWARE SERVICES, INC.

            
	 	 
	
              By:

            	
              /s/Eugene
                Gartlan

            
	
              Name:

            	
              Eugene
                Gartlan

            
	
              Title:

            	
              President

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

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

    

    
      	
              SECURED
                PARTY:

            
	
              YA
                GLOBAL INVESTMENTS, L.P.

            
	 	 
	
              By:

            	
              Yorkville
                Advisors, LLC

            
	
              Its:

            	
              General
                Partner

            
	 	 
	
              By:

            	
              /s/Mark
                Angelo

            
	
              Name:

            	
              Mark
                Angelo

            
	
              Title:

            	
              Portfolio
                Manager

            

    

    
       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

    

     

    SCHEDULE
      I

     

    LEGAL
      NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OF
      ORGANIZATION

     

    
      	
               

              Company’s
                Name

            	
              State
                of

              Organization

            	
              Employer
                ID

            	
              Organizational
                ID

            
	
              CoroWare
                Technologies, Inc.

            	
              FL

            	
              760828301

            	
              P06000060768

            
	
              Robotic
                Workspace Technologies, Inc.

            	
              FL

            	
              650530259

            	
              P06000143976

            
	
              Innova
                Robotics, Inc. (f/k/a Service Robots, Inc.)

            	
              FL

            	
              830388620

            	
              P03000100287

            
	
              Robotic
                Software Services, Inc. (f/k/a Altronics Service, Inc.)

            	
              FL

            	
              592952927

            	
              K91938

            

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      II

    

    Permitted
      Liens

    

    Robotic
      Workspace Technologies, Inc. 

    

    1)
      US
      Small Business Administration – UCC- 1
      filed with
      _____ Secretary of State on 

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    DEFINITION
      OF PLEDGED PROPERTY

     

    For
      the
      purpose of securing prompt and complete payment and performance by the Company
      of all of the Obligations, the Company unconditionally and irrevocably hereby
      grants to the Secured Party a continuing security interest in and to, and lien
      upon, the following Pledged Property of the Company:

     

    (a) all
      goods
      of the Company, including, without limitation, machinery, equipment, furniture,
      furnishings, fixtures, signs, lights, tools, parts, supplies and motor vehicles
      of every kind and description, now or hereafter owned by the Company or in
      which
      the Company may have or may hereafter acquire any interest, and all
      replacements, additions, accessions, substitutions and proceeds thereof, arising
      from the sale or disposition thereof, and where applicable, the proceeds of
      insurance and of any tort claims involving any of the foregoing;

     

    (b) all
      inventory of the Company, including, but not limited to, all goods, wares,
      merchandise, parts, supplies, finished products, other tangible personal
      property, including such inventory as is temporarily out of Company’s custody or
      possession and including any returns upon any accounts or other proceeds,
      including insurance proceeds, resulting from the sale or disposition of any
      of
      the foregoing;

     

    (c) all
      contract rights and general intangibles of the Company, including, without
      limitation, goodwill, trademarks, trade styles, trade names, leasehold
      interests, partnership or joint venture interests, patents and patent
      applications, copyrights, deposit accounts whether now owned or hereafter
      created;

     

    (d) all
      documents, warehouse receipts, instruments and chattel paper of the Company
      whether now owned or hereafter created;

     

    (e) all
      accounts and other receivables, instruments or other forms of obligations and
      rights to payment of the Company (herein collectively referred to as
“Accounts”),
      together with the proceeds thereof, all goods represented by such Accounts
      and
      all such goods that may be returned by the Company’s customers, and all proceeds
      of any insurance thereon, and all guarantees, securities and liens which the
      Company may hold for the payment of any such Accounts including, without
      limitation, all rights of stoppage in transit, replevin and reclamation and
      as
      an unpaid vendor and/or lienor;

     

    (f) to
      the
      extent assignable, all of the Company’s rights under all present and future
      authorizations, permits, licenses and franchises issued or granted in connection
      with the operations of any of its facilities;

     

    (g) all
      investment property, equity interests, securities or other instruments in other
      companies, including, without limitation, any subsidiaries, investments or
      other
      entities (whether or not controlled); whether no existing or later acquired
      or
      created and

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (h) all
      products and proceeds (including, without limitation, insurance proceeds) from
      the above-described Pledged Property.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    DISCLOSURE
      SCHEDULES

     

    to

    Security
      Agreement

     

    Schedule
      4.3: Name Changes

    

    Company
      Name History

    

    Innova
      Robotics & Automation, Inc. was previously Innova Holdings, Inc., which was
      previously HyTech Technology Group, which was previously, SRM Networks.

    

    Innova
      Robotics, Inc. the subsidiary was previously Service Robots, Inc. which was
      previously Robotic Artists, Inc. 

    

    Robotic
      Software Services, Inc. was previously Altronics Service, Inc.

     

    
      
        
        

      

      
        27

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