Document:

SECURITIES
          PURCHASE AGREEMENT

        

        THIS SECURITIES
          PURCHASE AGREEMENT
          (this
“Agreement”),
          dated
          as of July 21, 2006, by and among INNOVA
          HOLDINGS, INC.,
          a
          Delaware corporation (the “Company”),
          and
          the Buyers listed on Schedule I attached hereto (individually, a
“Buyer”
or
          collectively “Buyers”).

         

        WITNESSETH

        

        WHEREAS,
          the
          Company and the Buyer(s) are executing and delivering this Agreement in
          reliance
          upon an exemption from securities registration pursuant to Section 4(2)
          and/or
          Rule 506 of Regulation D (“Regulation
          D”)
          as
          promulgated by the U.S. Securities and Exchange Commission (the “SEC”)
          under
          the Securities Act of 1933, as amended (the “Securities
          Act”);

         

        WHEREAS,
          the
          parties desire that, upon the terms and subject to the conditions contained
          herein, the Company shall issue and sell to the Buyer(s), as provided herein,
          and the Buyer(s) shall purchase up to Two Million Eight Hundred Twenty
          Five
          Thousand Dollars ($2,825,000) of secured convertible debentures (the
“Convertible
          Debentures”),
          which
          shall be convertible into shares of the Company’s common stock, par value $0.001
          (the “Common
          Stock”)
          (as
          converted, the “Conversion
          Shares”)
          of
          which One Million Two Hundred Fifty Thousand Dollars ($1,250,000) shall
          be
          funded on the fifth (5th)
          business day following the date hereof (the “First
          Closing”),
          Five
          Hundred Seventy Five Thousand Dollars ($575,000) shall be funded on the
          date the
          registration statement (the “Registration
          Statement”)
          is
          filed, pursuant to the Investor Registration Rights Agreement dated the
          date
          hereof, with the United States Securities and Exchange Commission (the
          “SEC”)
          (the
“Second
          Closing”),
          and
          One Million Dollars ($1,000,000) shall be funded within three (3) business
          days
          after the date the Registration Statement is declared effective by the
          SEC (the
“Third
          Closing”)
          (individually referred to as a “Closing”
          collectively referred to as the “Closings”),
          for a
          total purchase price of up to Two Million Eight Hundred Twenty Five Thousand
          Dollars ($2,825,000), (the “Purchase
          Price”)
          in the
          respective amounts set forth opposite each Buyer(s) name on Schedule I
          (the
“Subscription
          Amount”);
          and

         

        WHEREAS,
          contemporaneously with the execution and delivery of this Agreement, the
          parties
          hereto are executing and delivering a Registration Rights Agreement (the
          “Investor
          Registration Rights Agreement”)
          pursuant to which the Company has agreed to provide certain registration
          rights
          under the Securities Act and the rules and regulations promulgated there
          under,
          and applicable state securities laws; and

         

        WHEREAS,
          contemporaneously with the execution and delivery of this Agreement, the
          Company
          and the Buyers are executing and delivering a Security Agreement; CoroWare
          Technologies, Inc., a wholly owned subsidiary of the Company, and the Buyers
          are
          executing and delivering a Security Agreement (all such security agreements
          shall be referred to as the “Security
          Agreement”)
          pursuant to which the Company and its wholly owned subsidiaries agreed
          to
          provide the Buyers a security interest in Pledged Collateral (as this term
          is
          defined in the each Security Agreement) to secure the Company’s obligations
          under this Agreement, the Transaction Documents, or any other obligations
          of the
          Company to the Buyer;

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        WHEREAS,
          contemporaneously with the execution and delivery of this Agreement, the
          parties
          hereto are executing and delivering Irrevocable Transfer Agent Instructions
          (the
“Irrevocable
          Transfer Agent Instructions”)

         

        NOW,
          THEREFORE,
          in
          consideration of the mutual covenants and other agreements contained in
          this
          Agreement the Company and the Buyer(s) hereby agree as
          follows:

      

       

      1. PURCHASE
        AND SALE OF CONVERTIBLE DEBENTURES.

       

      (a) Purchase
        of Convertible Debentures.
        Subject
        to the satisfaction (or waiver) of the terms and conditions of this Agreement,
        each Buyer agrees, severally and not jointly, to purchase at each Closing
        and
        the Company agrees to sell and issue to each Buyer, severally and not jointly,
        at each Closing, Convertible Debentures in amounts corresponding with the
        Subscription Amount set forth opposite each Buyer’s name on Schedule I hereto.

       

      (b) Closing
        Date.
        The
        First Closing of the purchase and sale of the Convertible Debentures shall
        take
        place at 10:00 a.m. Eastern Standard Time on the fifth (5th)
        business day following the date hereof, subject to notification of satisfaction
        of the conditions to the First Closing set forth herein and in Sections 6
        and 7
        below (or such later date as is mutually agreed to by the Company and the
        Buyer(s)) (the “First
        Closing Date”),
        the
        Second Closing of the purchase and sale of the Convertible Debentures shall
        take
        place at 10:00 a.m. Eastern Standard Time two (2) business days prior to
        the
        date the Registration Statement is filed with the SEC, subject to notification
        of satisfaction of the conditions to the Second Closing set forth herein
        and in
        Sections 6 and 7 below (or such later date as is mutually agreed to by the
        Company and the Buyer(s)) (the “Second
        Closing Date”),
        and
        the Third Closing of the purchase and sale of the Convertible Debentures
        shall
        take place at 10:00 a.m. Eastern Standard Time on the third (3rd) business
        day
        immediately following the date the Registration Statement is declared effective
        by the SEC, subject to notification of satisfaction of the conditions to
        the
        Third Closing set forth herein and in Sections 6 and 7 below (or such earlier
        date as is mutually agreed to by the Company and the Buyer(s)) (the
“Third
        Closing Date”)
        (collectively referred to a the “Closing
        Dates”).
        The
        Closing shall occur on the respective Closing Dates at the offices of Yorkville
        Advisors, LLC, 3700 Hudson Street, Suite 3700, Jersey City, New Jersey 07302
        (or
        such other place as is mutually agreed to by the Company and the Buyer(s)).
        

       

      (c) Form
        of Payment.
        Subject
        to the satisfaction of the terms and conditions of this Agreement, on the
        Closing Dates, (i) the Buyers shall deliver to the Company such aggregate
        proceeds for the Convertible Debentures to be issued and sold to such Buyer(s),
        minus the fees to be paid directly from the proceeds of the Closings as set
        forth herein, and (ii) the Company shall deliver to each Buyer, Convertible
        Debentures which such Buyer(s) is purchasing in amounts indicated opposite
        such
        Buyer’s name on Schedule I, duly executed on behalf of the Company.

       

      2. BUYER’S
        REPRESENTATIONS AND WARRANTIES.

       

      Each
        Buyer represents and warrants, severally and not jointly, that:

       

      
        
          
          

        

        
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      (a) Investment
        Purpose.
        Each
        Buyer is acquiring the Convertible Debentures and, upon conversion of
        Convertible Debentures, the Buyer will acquire the Conversion Shares then
        issuable, for its own account for investment only and not with a view towards,
        or for resale in connection with, the public sale or distribution thereof,
        except pursuant to sales registered or exempted under the Securities Act;
        provided, however, that by making the representations herein, such Buyer
        reserves the right to dispose of the Conversion Shares at any time in accordance
        with or pursuant to an effective registration statement covering such Conversion
        Shares or an available exemption under the Securities Act.

       

      (b) Accredited
        Investor Status.
        Each
        Buyer is an “Accredited
        Investor”
as
        that
        term is defined in Rule 501(a)(3) of Regulation D.

       

      (c) Reliance
        on Exemptions.
        Each
        Buyer understands that the Convertible Debentures are being offered and sold
        to
        it in reliance on specific exemptions from the registration requirements
        of
        United States federal and state securities laws and that the Company is relying
        in part upon the truth and accuracy of, and such Buyer’s compliance with, the
        representations, warranties, agreements, acknowledgments and understandings
        of
        such Buyer set forth herein in order to determine the availability of such
        exemptions and the eligibility of such Buyer to acquire such
        securities.

       

      (d) Information.
        Each
        Buyer and its advisors (and his or, its counsel), if any, have been furnished
        with all materials relating to the business, finances and operations of the
        Company and information he deemed material to making an informed investment
        decision regarding his purchase of the Convertible Debentures and the Conversion
        Shares, which have been requested by such Buyer. Each Buyer and its advisors,
        if
        any, have been afforded the opportunity to ask questions of the Company and
        its
        management. Neither such inquiries nor any other due diligence investigations
        conducted by such Buyer or its advisors, if any, or its representatives shall
        modify, amend or affect such Buyer’s right to rely on the Company’s
        representations and warranties contained in Section 3 below. Each Buyer
        understands that its investment in the Convertible Debentures and the Conversion
        Shares involves a high degree of risk. Each Buyer is in a position regarding
        the
        Company, which, based upon employment, family relationship or economic
        bargaining power, enabled and enables such Buyer to obtain information from
        the
        Company in order to evaluate the merits and risks of this investment. Each
        Buyer
        has sought such accounting, legal and tax advice, as it has considered necessary
        to make an informed investment decision with respect to its acquisition of
        the
        Convertible Debentures and the Conversion Shares.

       

      (e) No
        Governmental Review.
        Each
        Buyer understands that no United States federal or state agency or any other
        government or governmental agency has passed on or made any recommendation
        or
        endorsement of the Convertible Debentures or the Conversion Shares, or the
        fairness or suitability of the investment in the Convertible Debentures or
        the
        Conversion Shares, nor have such authorities passed upon or endorsed the
        merits
        of the offering of the Convertible Debentures or the Conversion
        Shares.

       

      (f) Transfer
        or Resale.
        Each
        Buyer understands that except as provided in the Investor Registration Rights
        Agreement: (i) the Convertible Debentures have not been and are not being
        registered under the Securities Act or any state securities laws, and may
        not be
        offered for sale, sold, assigned or transferred unless (A) subsequently
        registered thereunder, or (B) such Buyer shall have delivered to the Company
        an
        opinion of counsel, in a generally acceptable form, to the effect that such
        securities to be sold, assigned or transferred may be sold, assigned or
        transferred pursuant to an exemption from such registration requirements;
        (ii)
        any sale of such securities made in reliance on Rule 144 under the Securities
        Act (or a successor rule thereto) (“Rule 144”)
        may be
        made only in accordance with the terms of Rule 144 and further, if Rule 144
        is
        not applicable, any resale of such securities under circumstances in which
        the
        seller (or the person through whom the sale is made) may be deemed to be an
        underwriter (as that term is defined in the Securities Act) may require
        compliance with some other exemption under the Securities Act or the rules
        and
        regulations of the SEC thereunder; and (iii) neither the Company nor any
        other
        person is under any obligation to register such securities under the Securities
        Act or any state securities laws or to comply with the terms and conditions
        of
        any exemption thereunder. The Company reserves the right to place stop transfer
        instructions against the shares and certificates for the Conversion
        Shares.

       

      
        
          
          

        

        
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      (g) Legends.
        Each
        Buyer understands that the certificates or other instruments representing
        the
        Convertible Debentures and or the Conversion Shares shall bear a restrictive
        legend in substantially the following form (and a stop -transfer order may
        be
        placed against transfer of such stock certificates):

       

      THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
        THE
        SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH
        A VIEW
        TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
        IN
        THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
        OR AN
        OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
        NOT
        REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS. 

       

      The
        legend set forth above shall be removed and the Company within five (5) business
        days shall issue a certificate without such legend to the holder of the
        Conversion Shares upon which it is stamped, if, unless otherwise required
        by
        state securities laws, (i) in connection with a sale transaction, provided
        the
        Conversion Shares are registered under the Securities Act or (ii) in connection
        with a sale transaction, after such holder provides the Company with an opinion
        of counsel, which opinion shall be in form, substance and scope customary
        for
        opinions of counsel in comparable transactions, to the effect that a public
        sale, assignment or transfer of the Conversion Shares may be made without
        registration under the Securities Act. 

       

      (h) Authorization,
        Enforcement.
        This
        Agreement has been duly and validly authorized, executed and delivered on
        behalf
        of such Buyer and is a valid and binding agreement of such Buyer enforceable
        in
        accordance with its terms, except as such enforceability may be limited by
        general principles of equity or applicable bankruptcy, insolvency,
        reorganization, moratorium, liquidation and other similar laws relating to,
        or
        affecting generally, the enforcement of applicable creditors’ rights and
        remedies.

       

      
        
          
          

        

        
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      (i) Receipt
        of Documents.
        Each
        Buyer and his or its counsel has received and read in their entirety: (i)
        this
        Agreement and each representation, warranty and covenant set forth herein
        and
        the Transaction Documents (as defined herein); (ii) all due diligence and
        other
        information necessary to verify the accuracy and completeness of such
        representations, warranties and covenants; (iii) the Company’s Form 10-KSB for
        the fiscal year ended December 31, 2005; (iv) the Company’s Form 10-QSB for the
        fiscal quarter ended March 31, 2006 and (v) answers to all questions each
        Buyer
        submitted to the Company regarding an investment in the Company; and each
        Buyer
        has relied on the information contained therein and has not been furnished
        any
        other documents, literature, memorandum or prospectus.

       

      (j) Due
        Formation of Corporate and Other Buyers.
        If the
        Buyer(s) is a corporation, trust, partnership or other entity that is not
        an
        individual person, it has been formed and validly exists and has not been
        organized for the specific purpose of purchasing the Convertible Debentures
        and
        is not prohibited from doing so.

       

      (k) No
        Legal Advice From the Company.
        Each
        Buyer acknowledges, that it had the opportunity to review this Agreement
        and the
        transactions contemplated by this Agreement with his or its own legal counsel
        and investment and tax advisors. Each Buyer is relying solely on such counsel
        and advisors and not on any statements or representations of the Company
        or any
        of its representatives or agents for legal, tax or investment advice with
        respect to this investment, the transactions contemplated by this Agreement
        or
        the securities laws of any jurisdiction. 

       

      3. REPRESENTATIONS
        AND WARRANTIES OF THE COMPANY.

       

      The
        Company represents and warrants as of the date hereof to each of the Buyers
        that, except as set forth in the SEC Documents (as defined herein) or in
        the
        Disclosure Schedule attached hereto (the “Disclosure
        Schedule”):

       

      (a) Organization
        and Qualification.
        The
        Company and its subsidiaries are corporations duly organized and validly
        existing in good standing under the laws of the jurisdiction in which they
        are
        incorporated, and have the requisite corporate power to own their properties
        and
        to carry on their business as now being conducted. Each of the Company and
        its
        subsidiaries is duly qualified as a foreign corporation to do business and
        is in
        good standing in every jurisdiction in which the nature of the business
        conducted by it makes such qualification necessary, except to the extent
        that
        the failure to be so qualified or be in good standing would not have a material
        adverse effect on the Company and its subsidiaries taken as a
        whole.

       

      (b) Authorization,
        Enforcement, Compliance with Other Instruments.
        (i) The Company has the requisite corporate power and authority to enter
        into and perform this Agreement, the Security Agreement, the Investor
        Registration Rights Agreement, the Irrevocable Transfer Agent Agreement,
        and any
        related agreements (collectively the “Transaction
        Documents”)
        and to
        issue the Convertible Debentures and the Conversion Shares in accordance
        with
        the terms hereof and thereof, (ii) the execution and delivery of the Transaction
        Documents by the Company and the consummation by it of the transactions
        contemplated hereby and thereby, including, without limitation, the issuance
        of
        the Convertible Debentures the Conversion Shares and the reservation for
        issuance and the issuance of the Conversion Shares issuable upon conversion
        or
        exercise thereof, have been duly authorized by the Company’s Board of Directors
        and no further consent or authorization is required by the Company, its Board
        of
        Directors or its stockholders, (iii) the Transaction Documents have been
        duly
        executed and delivered by the Company, (iv) the Transaction Documents constitute
        the valid and binding obligations of the Company enforceable against the
        Company
        in accordance with their terms, except as such enforceability may be limited
        by
        general principles of equity or applicable bankruptcy, insolvency,
        reorganization, moratorium, liquidation or similar laws relating to, or
        affecting generally, the enforcement of creditors’ rights and remedies. The
        authorized officer of the Company executing the Transaction Documents knows
        of
        no reason why the Company cannot file the registration statement as required
        under the Investor Registration Rights Agreement or perform any of the Company’s
        other obligations under such documents. 

       

      
        
          
          

        

        
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      (c) Capitalization.
        The
        authorized capital stock of the Company consists of 900,000,000 shares of
        Common
        Stock and 10,000,000 shares of Preferred Stock, par value $0.001 (“Preferred
        Stock”)
        of
        which 742,391,000 shares of Common Stock and 492,000 shares of Series B
        Preferred Stock are issued and outstanding. All of such outstanding shares
        have
        been validly issued and are fully paid and nonassessable. No shares of Common
        Stock are subject to preemptive rights or any other similar rights or any
        liens
        or encumbrances suffered or permitted by the Company. As of the date of this
        Agreement, (i) there are no outstanding options, warrants, scrip, rights
        to
        subscribe to, calls or commitments of any character whatsoever relating to,
        or
        securities or rights convertible into, any shares of capital stock of the
        Company or any of its subsidiaries, or contracts, commitments, understandings
        or
        arrangements by which the Company or any of its subsidiaries is or may become
        bound to issue additional shares of capital stock of the Company or any of
        its
        subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
        commitments of any character whatsoever relating to, or securities or rights
        convertible into, any shares of capital stock of the Company or any of its
        subsidiaries, (ii) there are no outstanding debt securities and (iii) there
        are
        no agreements or arrangements under which the Company or any of its subsidiaries
        is obligated to register the sale of any of their securities under the
        Securities Act (except pursuant to the Registration Rights Agreement) and
        (iv)
        there are no outstanding registration statements and there are no outstanding
        comment letters from the SEC or any other regulatory agency. There are no
        securities or instruments containing anti-dilution or similar provisions
        that
        will be triggered by the issuance of the Convertible Debentures as described
        in
        this Agreement. The Company has furnished to the Buyer true and correct copies
        of the Company’s Articles of Incorporation, as amended and as in effect on the
        date hereof (the “Articles
        of Incorporation”),
        and
        the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
        and
        the terms of all securities convertible into or exercisable for Common Stock
        and
        the material rights of the holders thereof in respect thereto other than
        stock
        options issued to employees and consultants. 

       

      (d) Issuance
        of Securities.
        The
        Convertible Debentures are duly authorized and, upon issuance in accordance
        with
        the terms hereof, shall be duly issued, fully paid and nonassessable, are
        free
        from all taxes, liens and charges with respect to the issue thereof. The
        Conversion Shares issuable upon conversion of the Convertible Debentures
        have
        been duly authorized and reserved for issuance. Upon conversion or exercise
        in
        accordance with the Convertible Debentures the Conversion Shares will be
        duly
        issued, fully paid and nonassessable.

       

      
        
          
          

        

        
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      (e) No
        Conflicts.
        The
        execution, delivery and performance of the Transaction Documents by the Company
        and the consummation by the Company of the transactions contemplated hereby
        will
        not (i) result in a violation of the Articles of Incorporation, any certificate
        of designations of any outstanding series of preferred stock of the Company
        or
        the By-laws or (ii) conflict with or constitute a default (or an event which
        with notice or lapse of time or both would become a default) under, or give
        to
        others any rights of termination, amendment, acceleration or cancellation
        of,
        any agreement, indenture or instrument to which the Company or any of its
        subsidiaries is a party, or result in a violation of any law, rule, regulation,
        order, judgment or decree (including federal and state securities laws and
        regulations and the rules and regulations of The National Association of
        Securities Dealers Inc.’s OTC Bulletin Board on which the Common Stock is
        quoted) applicable to the Company or any of its subsidiaries or by which
        any
        property or asset of the Company or any of its subsidiaries is bound or
        affected. Neither the Company nor its subsidiaries is in violation of any
        term
        of or in default under its Articles of Incorporation or By-laws or their
        organizational charter or by-laws, respectively, or any material contract,
        agreement, mortgage, indebtedness, indenture, instrument, judgment, decree
        or
        order or any statute, rule or regulation applicable to the Company or its
        subsidiaries. The business of the Company and its subsidiaries is not being
        conducted, and shall not be conducted in violation of any material law,
        ordinance, or regulation of any governmental entity. Except as specifically
        contemplated by this Agreement and as required under the Securities Act and
        any
        applicable state securities laws, the Company is not required to obtain any
        consent, authorization or order of, or make any filing or registration with,
        any
        court or governmental agency in order for it to execute, deliver or perform
        any
        of its obligations under or contemplated by this Agreement or the Registration
        Rights Agreement in accordance with the terms hereof or thereof. All consents,
        authorizations, orders, filings and registrations which the Company is required
        to obtain pursuant to the preceding sentence have been obtained or effected
        on
        or prior to the date hereof. The Company and its subsidiaries are unaware
        of any
        facts or circumstance, which might give rise to any of the
        foregoing.

       

      (f) SEC
        Documents: Financial Statements.
        Since
        January 1, 2003, the Company has filed all reports, schedules, forms, statements
        and other documents required to be filed by it with the SEC under the Securities
        Exchange Act of 1934, as amended (the “Exchange
        Act”)
        (all
        of the foregoing filed prior to the date hereof or amended after the date
        hereof
        and all exhibits included therein and financial statements and schedules
        thereto
        and documents incorporated by reference therein, being hereinafter referred
        to
        as the “SEC
        Documents”).
        The
        Company has delivered to the Buyers or their representatives, or made available
        through the SEC’s website at http://www.sec.gov., true and complete copies of
        the SEC Documents. As of their respective dates, the financial statements
        of the
        Company disclosed in the SEC Documents (the “Financial
        Statements”)
        complied as to form in all material respects with applicable accounting
        requirements and the published rules and regulations of the SEC with respect
        thereto. Such financial statements have been prepared in accordance with
        generally accepted accounting principles, consistently applied, during the
        periods involved (except (i) as may be otherwise indicated in such Financial
        Statements or the notes thereto, or (ii) in the case of unaudited interim
        statements, to the extent they may exclude footnotes or may be condensed
        or
        summary statements) and, fairly present in all material respects the financial
        position of the Company as of the dates thereof and the results of its
        operations and cash flows for the periods then ended (subject, in the case
        of
        unaudited statements, to normal year-end audit adjustments). No other
        information provided by or on behalf of the Company to the Buyer which is
        not
        included in the SEC Documents, including, without limitation, information
        referred to in this Agreement, contains any untrue statement of a material
        fact
        or omits to state any material fact necessary in order to make the statements
        therein, in the light of the circumstances under which they were made, not
        misleading.

       

      
        
          
          

        

        
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      (g) 10(b)-5.
        The SEC
        Documents do not include any untrue statements of material fact, nor do they
        omit to state any material fact required to be stated therein necessary to
        make
        the statements made, in light of the circumstances under which they were
        made,
        not misleading.

       

      (h) Absence
        of Litigation.
        There
        is no action, suit, proceeding, inquiry or investigation before or by any
        court,
        public board, government agency, self-regulatory organization or body pending
        against or affecting the Company, the Common Stock or any of the Company’s
        subsidiaries, wherein an unfavorable decision, ruling or finding would (i)
        have
        a material adverse effect on the transactions contemplated hereby (ii) adversely
        affect the validity or enforceability of, or the authority or ability of
        the
        Company to perform its obligations under, this Agreement or any of the documents
        contemplated herein, or (iii) have a material adverse effect on the business,
        operations, properties, financial condition or results of operations of the
        Company and its subsidiaries taken as a whole.

       

      (i) Acknowledgment
        Regarding Buyer’s Purchase of the Convertible Debentures.
        The
        Company acknowledges and agrees that the Buyer(s) is acting solely in the
        capacity of an arm’s length purchaser with respect to this Agreement and the
        transactions contemplated hereby. The Company further acknowledges that the
        Buyer(s) is not acting as a financial advisor or fiduciary of the Company
        (or in
        any similar capacity) with respect to this Agreement and the transactions
        contemplated hereby and any advice given by the Buyer(s) or any of their
        respective representatives or agents in connection with this Agreement and
        the
        transactions contemplated hereby is merely incidental to such Buyer’s purchase
        of the Convertible Debentures or the Conversion Shares. The Company further
        represents to the Buyer that the Company’s decision to enter into this Agreement
        has been based solely on the independent evaluation by the Company and its
        representatives.

       

      (j) No
        General Solicitation.
        Neither
        the Company, nor any of its affiliates, nor any person acting on its or their
        behalf, has engaged in any form of general solicitation or general advertising
        (within the meaning of Regulation D under the Securities Act) in connection
        with
        the offer or sale of the Convertible Debentures or the Conversion
        Shares.

       

      (k) No
        Integrated Offering.
        Neither
        the Company, nor any of its affiliates, nor any person acting on its or their
        behalf has, directly or indirectly, made any offers or sales of any security
        or
        solicited any offers to buy any security, under circumstances that would
        require
        registration of the Convertible Debentures or the Conversion Shares under
        the
        Securities Act or cause this offering of the Convertible Debentures or the
        Conversion Shares to be integrated with prior offerings by the Company for
        purposes of the Securities Act.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (l) Employee
        Relations.
        Neither
        the Company nor any of its subsidiaries is involved in any labor dispute
        nor, to
        the knowledge of the Company or any of its subsidiaries, is any such dispute
        threatened. None of the Company’s or its subsidiaries’ employees is a member of
        a union and the Company and its subsidiaries believe that their relations
        with
        their employees are good.

       

      (m) Intellectual
        Property Rights.
        The
        Company and its subsidiaries own or possess adequate rights or licenses to
        use
        all trademarks, trade names, service marks, service mark registrations, service
        names, patents, patent rights, copyrights, inventions, licenses, approvals,
        governmental authorizations, trade secrets and rights necessary to conduct
        their
        respective businesses as now conducted. The Company and its subsidiaries
        do not
        have any knowledge of any infringement by the Company or its subsidiaries
        of
        trademark, trade name rights, patents, patent rights, copyrights, inventions,
        licenses, service names, service marks, service mark registrations, trade
        secret
        or other similar rights of others, and, to the knowledge of the Company there
        is
        no claim, action or proceeding being made or brought against, or to the
        Company’s knowledge, being threatened against, the Company or its subsidiaries
        regarding trademark, trade name, patents, patent rights, invention, copyright,
        license, service names, service marks, service mark registrations, trade
        secret
        or other infringement; and the Company and its subsidiaries are unaware of
        any
        facts or circumstances which might give rise to any of the
        foregoing.

       

      (n) Environmental
        Laws.
        To the
        best of the Company’s knowledge, the Company and its subsidiaries are (i) in
        compliance with any and all applicable foreign, federal, state and local
        laws
        and regulations relating to the protection of human health and safety, the
        environment or hazardous or toxic substances or wastes, pollutants or
        contaminants (“Environmental
        Laws”),
        (ii)
        have received all permits, licenses or other approvals required of them under
        applicable Environmental Laws to conduct their respective businesses and
        (iii)
        are in compliance with all terms and conditions of any such permit, license
        or
        approval.

       

      (o) Title.
        Any
        real property and facilities held under lease by the Company and its
        subsidiaries are held by them under valid, subsisting and enforceable leases
        with such exceptions as are not material and do not interfere with the use
        made
        and proposed to be made of such property and buildings by the Company and
        its
        subsidiaries.

       

      (p) Insurance.
        The
        Company and each of its subsidiaries are insured by insurers of recognized
        financial responsibility against such losses and risks and in such amounts
        as
        management of the Company believes to be prudent and customary in the businesses
        in which the Company and its subsidiaries are engaged. Neither the Company
        nor
        any such subsidiary has been refused any insurance coverage sought or applied
        for and neither the Company nor any such subsidiary has any reason to believe
        that it will not be able to renew its existing insurance coverage as and
        when
        such coverage expires or to obtain similar coverage from similar insurers
        as may
        be necessary to continue its business at a cost that would not materially
        and
        adversely affect the condition, financial or otherwise, or the earnings,
        business or operations of the Company and its subsidiaries, taken as a
        whole.

       

      (q) Regulatory
        Permits.
        The
        Company and its subsidiaries possess all material certificates, authorizations
        and permits issued by the appropriate federal, state or foreign regulatory
        authorities necessary to conduct their respective businesses, and neither
        the
        Company nor any such subsidiary has received any notice of proceedings relating
        to the revocation or modification of any such certificate, authorization
        or
        permit.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      (r) Internal
        Accounting Controls.
        The
        Company and each of its subsidiaries maintain a system of internal accounting
        controls sufficient to provide reasonable assurance that (i) transactions
        are
        executed in accordance with management’s general or specific authorizations,
        (ii) transactions are recorded as necessary to permit preparation of financial
        statements in conformity with generally accepted accounting principles and
        to
        maintain asset accountability, and (iii) the recorded amounts for assets
        is
        compared with the existing assets at reasonable intervals and appropriate
        action
        is taken with respect to any differences.

       

      (s) No
        Material Adverse Breaches, etc.
        Neither
        the Company nor any of its subsidiaries is subject to any charter, corporate
        or
        other legal restriction, or any judgment, decree, order, rule or regulation
        which in the judgment of the Company’s officers has or is expected in the future
        to have a material adverse effect on the business, properties, operations,
        financial condition, results of operations or prospects of the Company or
        its
        subsidiaries. Neither the Company nor any of its subsidiaries is in breach
        of
        any contract or agreement which breach, in the judgment of the Company’s
        officers, has or is expected to have a material adverse effect on the business,
        properties, operations, financial condition, results of operations or prospects
        of the Company or its subsidiaries.

       

      (t) Tax
        Status.
        The
        Company and each of its subsidiaries has made and filed all federal and state
        income and all other tax returns, reports and declarations required by any
        jurisdiction to which it is subject and (unless and only to the extent that
        the
        Company and each of its subsidiaries has set aside on its books provisions
        reasonably adequate for the payment of all unpaid and unreported taxes) has
        paid
        all taxes and other governmental assessments and charges that are material
        in
        amount, shown or determined to be due on such returns, reports and declarations,
        except those being contested in good faith and has set aside on its books
        provision reasonably adequate for the payment of all taxes for periods
        subsequent to the periods to which such returns, reports or declarations
        apply.
        There are no unpaid taxes in any material amount claimed to be due by the
        taxing
        authority of any jurisdiction, and the officers of the Company know of no
        basis
        for any such claim.

       

      (u) Certain
        Transactions.
        Except
        for arm’s length transactions pursuant to which the Company makes payments in
        the ordinary course of business upon terms no less favorable than the Company
        could obtain from third parties and other than the grant of stock options
        disclosed in the SEC Documents, none of the officers, directors, or employees
        of
        the Company is presently a party to any transaction with the Company (other
        than
        for services as employees, officers and directors), including any contract,
        agreement or other arrangement providing for the furnishing of services to
        or
        by, providing for rental of real or personal property to or from, or otherwise
        requiring payments to or from any officer, director or such employee or,
        to the
        knowledge of the Company, any corporation, partnership, trust or other entity
        in
        which any officer, director, or any such employee has a substantial interest
        or
        is an officer, director, trustee or partner.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (v) Fees
        and Rights of First Refusal.
        The
        Company is not obligated to offer the securities offered hereunder on a right
        of
        first refusal basis or otherwise to any third parties including, but not
        limited
        to, current or former shareholders of the Company, underwriters, brokers,
        agents
        or other third parties.

       

      4. COVENANTS.

       

      (a) Best
        Efforts.
        Each
        party shall use its best efforts to timely satisfy each of the conditions
        to be
        satisfied by it as provided in Sections 6 and 7 of this Agreement.

       

      (b) Form
        D.
        The
        Company agrees to file a Form D with respect to the Conversion Shares as
        required under Regulation D and to provide a copy thereof to each Buyer promptly
        after such filing. The Company shall, on or before the Closing Date, take
        such
        action as the Company shall reasonably determine is necessary to qualify
        the
        Conversion Shares, or obtain an exemption for the Conversion Shares for sale
        to
        the Buyers at the Closing pursuant to this Agreement under applicable securities
        or “Blue Sky” laws of the states of the United States, and shall provide
        evidence of any such action so taken to the Buyers on or prior to the Closing
        Date.

       

      (c) Reporting
        Status.
        Until
        the earlier of (i) the date as of which the Buyer(s) may sell all of the
        Conversion Shares without restriction pursuant to Rule 144(k) promulgated
        under
        the Securities Act (or successor thereto), or (ii) the date on which (A)
        the
        Buyer(s) shall have sold all the Conversion Shares and (B) none of the
        Convertible Debentures are outstanding (the “Registration
        Period”),
        the
        Company shall file in a timely manner all reports required to be filed with
        the
        SEC pursuant to the Exchange Act and the regulations of the SEC thereunder,
        and
        the Company shall not terminate its status as an issuer required to file
        reports
        under the Exchange Act even if the Exchange Act or the rules and regulations
        thereunder would otherwise permit such termination.

       

      (d) Use
        of
        Proceeds.
        The
        Company will use the proceeds from the sale of the Convertible Debentures
        for
        general corporate and working capital purposes.

       

      (e) Reservation
        of Shares.
        On the
        date hereof, the Company shall initially reserve for issuance to the Buyers
        75,000,000 shares in total for issuance upon both conversions of the Convertible
        Dentures and upon exercise of the Warrants (collectively, the “Initial
        Share Reserve”).
        The
        Company represents that it has sufficient authorized and unissued shares
        of
        Common Stock available to create the Initial Share Reserve after considering
        all
        other commitments that may require the issuance of Common Stock. After the
        Company increases its authorized Common Stock in accordance with Section
        4(0)
        hereof, the Company shall increase the Initial Share Reserve by 193,000,000
        shares to a total reserve of 268,000,000 share for issuance upon conversions
        of
        the Convertible Debentures and upon exercise of the Warrants (collectively,
        the
“Share
        Reserve”).
        The
        Company shall take all action reasonably necessary to at all times have
        authorized, and reserved for the purpose of issuance, such number of shares
        of
        Common Stock as shall be necessary to effect the full conversion of the
        Convertible Debentures and the full exercise of the Warrants. If at any time
        the
        Share Reserve is insufficient to effect the full conversion of the Convertible
        Debentures or the full exercise of the Warrants, the Company shall increase
        the
        Share Reserve accordingly. If the Company does not have sufficient authorized
        and unissued shares of Common Stock available to increase the Share Reserve,
        the
        Company shall call and hold a special meeting of the shareholders within
        thirty
        (30) days of such occurrence, for the sole purpose of increasing the number
        of
        shares authorized. The Company’s management shall recommend to the shareholders
        to vote in favor of increasing the number of shares of Common Stock authorized.
        Management shall also vote all of its shares in favor of increasing the number
        of authorized shares of Common Stock.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (f) Listings
        or Quotation.
        The
        Company shall promptly secure the listing or quotation of the Conversion
        Shares
        upon each national securities exchange, automated quotation system or The
        National Association of Securities Dealers Inc.’s Over-The-Counter Bulletin
        Board (“OTCBB”)
        or
        other market, if any, upon which shares of Common Stock are then listed or
        quoted (subject to official notice of issuance) and shall use its best efforts
        to maintain, so long as any other shares of Common Stock shall be so listed,
        such listing of all Conversion Shares from time to time issuable under the
        terms
        of this Agreement. The Company shall maintain the Common Stock’s authorization
        for quotation on the OTCBB.

       

      (g) Fees
        and Expenses.
        

       

      (i) Each
        of
        the Company and the Buyer(s) shall pay all costs and expenses incurred by
        such
        party in connection with the negotiation, investigation, preparation, execution
        and delivery of the Transaction Documents. The Company shall pay Yorkville
        Advisors, LLC a fee equal to ten percent (10%) of the Purchase Price.

       

      (ii) The
        Company shall pay a structuring fee to Yorkville Advisors, LLC of Fifteen
        Thousand Dollars ($15,000) which shall be paid directly from the proceeds
        of the
        First Closing. 

       

      (iii) The
        Company shall pay Yorkville Advisors, LLC a non-refundable due diligence
        fee of
        Ten Thousand Dollars ($10,000) which shall be paid directly from the proceeds
        of
        the First Closing.

       

      (iv) The
        Company shall issue to the Buyer the following warrants (collectively, the
        “Warrants”):
        

       

      
        	
                Holder

              	 	
                Warrant
                  No.

              	 	
                Term

              	 	
                Warrant
                  Shares

              	 	
                Warrant
                  Exercise Price

              
	
                Cornell
                  Capital Partners, LP.

              	 	
                IVHG-2-1

              	 	
                3
                  Years

              	 	
                23,000,000

              	 	
                $0.0250

              
	
                Cornell
                  Capital Partners, LP.

              	 	
                IVHG-2-2

              	 	
                5
                  years

              	 	
                10,000,000

              	 	
                $0.0500

              
	
                Cornell
                  Capital Partners, LP.

              	 	
                IVHG-2-3

              	 	
                3
                  Years

              	 	
                20,000,000

              	 	
                $0.0650

              
	
                Cornell
                  Capital Partners, LP.

              	 	
                IVHG-2-4

              	 	
                3
                  Years

              	 	
                25,000,000

              	 	
                $0.0750

              
	
                Cornell
                  Capital Partners, LP.

              	 	
                IVHG-2-5

              	 	
                5
                  Years

              	 	
                15,000,000

              	 	
                $0.1000

              
	 	 	 	 	
                 

              	 	 	 	 
	 	 	
                Total

              	 	 	 	
                93,000,000

              	 	 

      

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      The
        shares of Common Stock issuable under the Warrants shall collectively be
        referred to as the “Warrant
        Shares”.
        

       

      (v) The
        Warrant Shares shall have “piggy-back” and demand registration rights.

       

      (vi) Prior
        to
        the Company’s completion of its increase in authorized Common Stock as set forth
        herein, the Investor shall have the right to decide how to allocate the shares
        set aside in the Initial Share Reserve among the Conversion Shares and the
        Warrant Shares in any way it sees fit. 

       

      (h) Corporate
        Existence.
        So long
        as any of the Convertible Debentures remain outstanding, the Company shall
        not
        directly or indirectly consummate any merger, reorganization, restructuring,
        reverse stock split consolidation, sale of all or substantially all of the
        Company’s assets or any similar transaction or related transactions (each such
        transaction, an “Organizational
        Change”)
        unless, prior to the consummation an Organizational Change, the Company obtains
        the written consent of each Buyer. In any such case, the Company will make
        appropriate provision with respect to such holders’ rights and interests to
        insure that the provisions of this Section 4(h) will thereafter be applicable
        to
        the Convertible Debentures.

       

      (i) Transactions
        With Affiliates.
        So long
        as any Convertible Debentures are outstanding, the Company shall not, and
        shall
        cause each of its subsidiaries not to, enter into, amend, modify or supplement,
        or permit any subsidiary to enter into, amend, modify or supplement any
        agreement, transaction, commitment, or arrangement with any of its or any
        subsidiary’s officers, directors, person who were officers or directors at any
        time during the previous two (2) years, stockholders who beneficially own
        five
        percent (5%) or more of the Common Stock, or Affiliates (as defined below)
        or
        with any individual related by blood, marriage, or adoption to any such
        individual or with any entity in which any such entity or individual owns
        a five
        percent (5%) or more beneficial interest (each a “Related
        Party”),
        except for (a) customary employment arrangements and benefit programs on
        reasonable terms, (b) any investment in an Affiliate of the Company, (c)
        any
        agreement, transaction, commitment, or arrangement on an arms-length basis
        on
        terms no less favorable than terms which would have been obtainable from
        a
        person other than such Related Party, (d) any agreement, transaction,
        commitment, or arrangement which is approved by a majority of the disinterested
        directors of the Company; for purposes hereof, any director who is also an
        officer of the Company or any subsidiary of the Company shall not be a
        disinterested director with respect to any such agreement, transaction,
        commitment, or arrangement. “Affiliate”
for
        purposes hereof means, with respect to any person or entity, another person
        or
        entity that, directly or indirectly, (i) has a ten percent (10%) or more
        equity
        interest in that person or entity, (ii) has ten percent (10%) or more common
        ownership with that person or entity, (iii) controls that person or entity,
        or
        (iv) shares common control with that person or entity. “Control”
or
        “controls”
for
        purposes hereof means that a person or entity has the power, direct or indirect,
        to conduct or govern the policies of another person or entity.

       

      (j) Transfer
        Agent.
        The
        Company covenants and agrees that, in the event that the Company’s agency
        relationship with the transfer agent should be terminated for any reason
        prior
        to a date which is two (2) years after the Closing Date, the Company shall
        immediately appoint a new transfer agent and shall require that the new transfer
        agent execute and agree to be bound by the terms of the Irrevocable Transfer
        Agent Instructions (as defined herein).

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      (k) Restriction
        on Issuance of the Capital Stock.
        So long
        as any Convertible Debentures are outstanding, except for Excluded Securities
        (as defined in the Convertible Debentures), the Company shall not, without
        the
        prior written consent of the Buyer(s), (i) issue or sell shares of Common
        Stock
        or Preferred Stock without consideration or for a consideration per share
        less
        than the ninety percent (90%) of the bid price of the Common Stock determined
        immediately prior to its issuance, (ii) issue any preferred stock, warrant,
        option, right, contract, call, or other security or instrument granting the
        holder thereof the right to acquire Common Stock without consideration or
        for a
        consideration less than such Common Stock’s Bid Price determined immediately
        prior to it’s issuance, (iii) enter into any security instrument granting the
        holder a security interest in any and all assets of the Company, or (iv)
        file
        any registration statement on Form S-8 other than to register up to 25,000,000
        shares of Common Stock issued, or underlying options to purchase Common Stock
        issued in connection with any plan which has been approved by the Board of
        Directors of the Company pursuant to which the Company’s securities may be
        issued to any employee, officer, director or consultant for services provided
        to
        the Company. 

       

      (l) Neither
        the Buyer(s) nor any of its affiliates have an open short position in the
        Common
        Stock of the Company, and the Buyer(s) agrees that it shall not, and that
        it
        will cause its affiliates not to, engage in any short sales of or hedging
        transactions with respect to the Common Stock as long as any Convertible
        Debentures shall remain outstanding. 

       

      (m) Rights
        of First Refusal.
        For
        a
        period of 18 months from the date hereof, if the Company intends to raise
        additional capital by the issuance or sale of capital stock of the Company,
        including without limitation shares of any class of common stock, any class
        of
        preferred stock, options, warrants or any other securities convertible or
        exercisable into shares of common stock (whether the offering is conducted
        by
        the Company, underwriter, placement agent or any third party) the Company
        shall
        be obligated to offer to the Buyers such issuance or sale of capital stock,
        by
        providing in writing the principal amount of capital it intends to raise
        and
        outline of the material terms of such capital raise, prior to the offering
        such
        issuance or sale of capital stock  to any third parties including, but not
        limited to, current or former officers or directors, current or former
        shareholders and/or investors of the obligor, underwriters, brokers, agents
        or
        other third parties.  The Buyers shall have ten (10) business days from
        receipt of such notice of the sale or issuance of capital stock to accept
        or
        reject all or a portion of such capital raising offer. 

       

      (n) Lock
        Up Agreements.
        On the
        date hereof, the Company shall obtain from each officer and director a lock
        up
        agreement in the form attached hereto as Exhibit
        A.

       

      (o) Authorized
        Common Stock. The
        Company shall take any and all steps necessary (including increasing its
        authorized capital stock, if necessary) to have a sufficient number of shares
        of
        Common Stock available to create the Share Reserve as set forth in Section
        4(c)
        hereof within 90 days of the date hereof. 

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      5. TRANSFER
        AGENT INSTRUCTIONS.

       

      (a) The
        Company shall issue the Irrevocable Transfer Agent Instructions to its transfer
        agent irrevocably appointing David Gonzalez, Esq. as the Company’s agent for
        purpose of having certificates issued, registered in the name of the Buyer(s)
        or
        its respective nominee(s), for the Conversion Shares representing such amounts
        of Convertible Debentures as specified from time to time by the Buyer(s)
        to the
        Company upon conversion of the Convertible Debentures, for interest owed
        pursuant to the Convertible Debenture, and for any and all Liquidated Damages
        (as this term is defined in the Investor Registration Rights Agreement).
        David
        Gonzalez, Esq. shall be paid a cash fee of Fifty Dollars ($50) for every
        occasion they act pursuant to the Irrevocable Transfer Agent Instructions.
        The
        Company shall not change its transfer agent without the express written consent
        of the Buyer(s), which may be withheld by the Buyer(s) in its sole discretion.
        Prior to registration of the Conversion Shares under the Securities Act,
        all
        such certificates shall bear the restrictive legend specified in Section
        2(g) of
        this Agreement. The Company warrants that no instruction other than the
        Irrevocable Transfer Agent Instructions referred to in this Section 5, and
        stop
        transfer instructions to give effect to Section 2(g) hereof (in the case
        of the
        Conversion Shares prior to registration of such shares under the Securities
        Act)
        will be given by the Company to its transfer agent and that the Conversion
        Shares shall otherwise be freely transferable on the books and records of
        the
        Company as and to the extent provided in this Agreement and the Investor
        Registration Rights Agreement. Nothing in this Section 5 shall affect in
        any way
        the Buyer’s obligations and agreement to comply with all applicable securities
        laws upon resale of Conversion Shares. If the Buyer(s) provides the Company
        with
        an opinion of counsel, in form, scope and substance customary for opinions
        of
        counsel in comparable transactions to the effect that registration of a resale
        by the Buyer(s) of any of the Conversion Shares is not required under the
        Securities Act, the Company shall within two (2) business days instruct its
        transfer agent to issue one or more certificates in such name and in such
        denominations as specified by the Buyer. The Company acknowledges that a
        breach
        by it of its obligations hereunder will cause irreparable harm to the Buyer
        by
        vitiating the intent and purpose of the transaction contemplated hereby.
        Accordingly, the Company acknowledges that the remedy at law for a breach
        of its
        obligations under this Section 5 will be inadequate and agrees, in the event
        of
        a breach or threatened breach by the Company of the provisions of this
        Section 5, that the Buyer(s) shall be entitled, in addition to all other
        available remedies, to an injunction restraining any breach and requiring
        immediate issuance and transfer, without the necessity of showing economic
        loss
        and without any bond or other security being required.

       

      6. CONDITIONS
        TO THE COMPANY’S OBLIGATION TO SELL.

       

      The
        obligation of the Company hereunder to issue and sell the Convertible Debentures
        to the Buyer(s) at the Closings is subject to the satisfaction, at or before
        the
        Closing Dates, of each of the following conditions, provided that these
        conditions are for the Company’s sole benefit and may be waived by the Company
        at any time in its sole discretion:

       

      (a) Each
        Buyer shall have executed the Transaction Documents and delivered them to
        the
        Company.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      (b) The
        Buyer(s) shall have delivered to the Company the Purchase Price for Convertible
        Debentures in respective amounts as set forth next to each Buyer as outlined
        on
        Schedule I attached hereto, minus any fees to be paid directly from the proceeds
        on the Closings as set forth herein, by wire transfer of immediately available
        U.S. funds pursuant to the wire instructions provided by the
        Company.

       

      (c) The
        representations and warranties of the Buyer(s) shall be true and correct
        in all
        material respects as of the date when made and as of the Closing Dates as
        though
        made at that time (except for representations and warranties that speak as
        of a
        specific date), and the Buyer(s) shall have performed, satisfied and complied
        in
        all material respects with the covenants, agreements and conditions required
        by
        this Agreement to be performed, satisfied or complied with by the Buyer(s)
        at or
        prior to the Closing Dates. 

       

      7. CONDITIONS
        TO THE BUYER’S OBLIGATION TO PURCHASE.

       

      (a) The
        obligation of the Buyer(s) hereunder to purchase the Convertible Debentures
        at
        the First Closing is subject to the satisfaction, at or before the First
        Closing
        Date, of each of the following conditions:

       

      (i) The
        Company shall have executed the Transaction Documents and delivered the same
        to
        the Buyer(s).

       

      (ii) The
        Common Stock shall be authorized for quotation on the OTCBB, trading in the
        Common Stock shall not have been suspended for any reason. 

       

      (iii) The
        representations and warranties of the Company shall be true and correct in
        all
        material respects (except to the extent that any of such representations
        and
        warranties is already qualified as to materiality in Section 3 above, in
        which
        case, such representations and warranties shall be true and correct without
        further qualification) as of the date when made and as of the First Closing
        Date
        as though made at that time (except for representations and warranties that
        speak as of a specific date) and the Company shall have performed, satisfied
        and
        complied in all material respects with the covenants, agreements and conditions
        required by this Agreement to be performed, satisfied or complied with by
        the
        Company at or prior to the First Closing Date

       

      (iv) The
        Company shall have executed and delivered to the Buyer(s) the Convertible
        Debentures in the respective amounts set forth opposite each Buyer(s) name
        on
        Schedule I attached hereto.

       

      (v) The
        Buyer(s) shall have received an opinion of counsel from counsel to the Company
        in a form satisfactory to the Buyer(s).

       

      (vi) The
        Company shall have provided to the Buyer(s) a certificate of good standing
        from
        the secretary of state from the state in which the company is
        incorporated.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      (vii) The
        Company shall have filed a form UCC-1 or such other forms as may be required
        to
        perfect the Buyer’s interest in the Pledged Property as detailed in the Security
        Agreement dated the date hereof and provided proof of such filing to the
        Buyer(s).

       

      (viii) The
        Company shall have provided to the Buyer an acknowledgement, to the satisfaction
        of the Buyer, from the Company’s independent certified public accountants as to
        its ability to provide all consents required in order to file a registration
        statement in connection with this transaction.

       

      (ix) The
        Company shall have created the Initial Share Reserve. 

       

      (x) The
        Irrevocable Transfer Agent Instructions, in form and substance satisfactory
        to
        the Buyer, shall have been delivered to and acknowledged in writing by the
        Company’s transfer agent.

       

      (b) The
        obligation of the Buyer(s) hereunder to accept the Convertible Debentures
        at the
        Second Closing is subject to the satisfaction, at or before the Second Closing
        Date, of each of the following conditions:

       

      (i) The
        Common Stock shall be authorized for quotation on the OTCBB, trading in the
        Common Stock shall not have been suspended for any reason. 

       

      (ii) The
        representations and warranties of the Company shall be true and correct in
        all
        material respects (except to the extent that any of such representations
        and
        warranties is already qualified as to materiality in Section 3 above, in
        which
        case, such representations and warranties shall be true and correct without
        further qualification) as of the date when made and as of the Second Closing
        Date as though made at that time (except for representations and warranties
        that
        speak as of a specific date) and the Company shall have performed, satisfied
        and
        complied in all material respects with the covenants, agreements and conditions
        required by this Agreement to be performed, satisfied or complied with by
        the
        Company at or prior to the Second Closing Date. 

       

      (iii) The
        Company shall have executed and delivered to the Buyer(s) the Convertible
        Debentures in the respective amounts set forth opposite each Buyer(s) name
        on
        Schedule I attached hereto.

       

      (iv) The
        Company shall certify that it will file the registration statement with the
        SEC
        in compliance with the rules and regulations promulgated by the SEC for filing
        thereof on the Second Closing Date.

       

      (v) The
        Company shall have certified, in a certificate executed by two officers of
        the
        Company and dated as of the Second Closing Date, that all conditions to the
        Second Closing have been satisfied.

       

      (c) The
        obligation of the Buyer(s) hereunder to accept the Convertible Debentures
        at the
        Third Closing is subject to the satisfaction, at or before the Third Closing
        Date, of each of the following conditions:

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      (i) The
        Common Stock shall be authorized for quotation on the OTCBB, trading in the
        Common Stock shall not have been suspended for any reason. 

       

      (ii) The
        representations and warranties of the Company shall be true and correct in
        all
        material respects (except to the extent that any of such representations
        and
        warranties is already qualified as to materiality in Section 3 above, in
        which
        case, such representations and warranties shall be true and correct without
        further qualification) as of the date when made and as of the Third Closing
        Date
        as though made at that time (except for representations and warranties that
        speak as of a specific date) and the Company shall have performed, satisfied
        and
        complied in all material respects with the covenants, agreements and conditions
        required by this Agreement to be performed, satisfied or complied with by
        the
        Company at or prior to the Third Closing Date. 

       

      (iii) 
        The
        Company shall have executed and delivered to the Buyer(s) the Convertible
        Debentures in the respective amounts set forth opposite each Buyer(s) name
        on
        Schedule I attached hereto.

       

      (iv) 
        The
        Registration Statement shall have been declared effective by the SEC.

       

      (v) The
        Company shall have satisfied its requirements uder Section 4(o) and shall
        have
        created the Share Reserve. 

       

      (vi) The
        Company shall have certified, in a certificate executed by two officers of
        the
        Company and dated as of the Third Closing Date, that all conditions to the
        Third
        Closing have been satisfied.

       

      8. INDEMNIFICATION.

       

      (a) In
        consideration of the Buyer’s execution and delivery of this Agreement and
        acquiring the Convertible Debentures and the Conversion Shares hereunder,
        and in
        addition to all of the Company’s other obligations under this Agreement, the
        Company shall defend, protect, indemnify and hold harmless the Buyer(s) and
        each
        other holder of the Convertible Debentures and the Conversion Shares, and
        all of
        their officers, directors, employees and agents (including, without
        limitation, those retained in connection with the transactions contemplated
        by
        this Agreement) (collectively, the “Buyer
        Indemnitees”)
        from
        and against any and all actions, causes of action, suits, claims, losses,
        costs,
        penalties, fees, liabilities and damages, and expenses in connection therewith
        (irrespective of whether any such Buyer Indemnitee is a party to the action
        for
        which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified
        Liabilities”),
        incurred by the Buyer Indemnitees or any of them as a result of, or arising
        out
        of, or relating to (a) any misrepresentation or breach of any representation
        or
        warranty made by the Company in this Agreement, the Convertible Debentures
        or
        the Investor Registration Rights Agreement or any other certificate, instrument
        or document contemplated hereby or thereby, (b) any breach of any covenant,
        agreement or obligation of the Company contained in this Agreement, or the
        Investor Registration Rights Agreement or any other certificate, instrument
        or
        document contemplated hereby or thereby, or (c) any cause of action, suit
        or
        claim brought or made against such Indemnitee and arising out of or resulting
        from the execution, delivery, performance or enforcement of this Agreement
        or
        any other instrument, document or agreement executed pursuant hereto by any
        of
        the parties hereto, any transaction financed or to be financed in whole or
        in
        part, directly or indirectly, with the proceeds of the issuance of the
        Convertible Debentures or the status of the Buyer or holder of the Convertible
        Debentures the Conversion Shares, as a Buyer of Convertible Debentures in
        the
        Company. To the extent that the foregoing undertaking by the Company may
        be
        unenforceable for any reason, the Company shall make the maximum contribution
        to
        the payment and satisfaction of each of the Indemnified Liabilities, which
        is
        permissible under applicable law.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      (b) In
        consideration of the Company’s execution and delivery of this Agreement, and in
        addition to all of the Buyer’s other obligations under this Agreement, the Buyer
        shall defend, protect, indemnify and hold harmless the Company and all of
        its
        officers, directors, employees and agents (including, without limitation,
        those
        retained in connection with the transactions contemplated by this Agreement)
        (collectively, the “Company
        Indemnitees”)
        from
        and against any and all Indemnified Liabilities incurred by the Company
        Indemnitees or any of them as a result of, or arising out of, or relating
        to (a)
        any misrepresentation or breach of any representation or warranty made by
        the
        Buyer(s) in this Agreement, instrument or document contemplated hereby or
        thereby executed by the Buyer, (b) any breach of any covenant, agreement
        or
        obligation of the Buyer(s) contained in this Agreement, the Investor
        Registration Rights Agreement or any other certificate, instrument or document
        contemplated hereby or thereby executed by the Buyer, or (c) any cause of
        action, suit or claim brought or made against such Company Indemnitee based
        on
        material misrepresentations or due to a material breach and arising out of
        or
        resulting from the execution, delivery, performance or enforcement of this
        Agreement, the Investor Registration Rights Agreement or any other instrument,
        document or agreement executed pursuant hereto by any of the parties hereto.
        To
        the extent that the foregoing undertaking by each Buyer may be unenforceable
        for
        any reason, each Buyer shall make the maximum contribution to the payment
        and
        satisfaction of each of the Indemnified Liabilities, which is permissible
        under
        applicable law.

       

      9. GOVERNING
        LAW: MISCELLANEOUS.

       

      (a) Governing
        Law.
        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.

       

      (b) Counterparts.
        This
        Agreement may be executed in two or more identical counterparts, all of which
        shall be considered one and the same agreement and shall become effective
        when
        counterparts have been signed by each party and delivered to the other party.
        In
        the event any signature page is delivered by facsimile transmission, the
        party
        using such means of delivery shall cause four (4) additional original executed
        signature pages to be physically delivered to the other party within five
        (5)
        days of the execution and delivery hereof.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

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

       

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

       

      (e) Entire
        Agreement, Amendments.
        This
        Agreement supersedes all other prior oral or written agreements between the
        Buyer(s), the Company, their affiliates and persons acting on their behalf
        with
        respect to the matters discussed herein, and this Agreement and the instruments
        referenced herein contain the entire understanding of the parties with respect
        to the matters covered herein and therein and, except as specifically set
        forth
        herein or therein, neither the Company nor any Buyer makes any representation,
        warranty, covenant or undertaking with respect to such matters. No provision
        of
        this Agreement may be waived or amended other than by an instrument in writing
        signed by the party to be charged with enforcement.

       

      (f) Notices.
        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
        confirmation of receipt, when sent by facsimile; (iii) three (3) days after
        being sent by U.S. certified mail, return receipt requested, or (iv) one
        (1) 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
                  Holdings, Inc.

              
	 	 	
                17105
                  San Carlos Boulevard, Suite A6151

              
	 	 	
                Fort
                  Myers, FL 33931

              
	 	 	
                Attention: Walter
                  Weisel

              
	 	 	
                Telephone: (239)
                  466-0488

              
	 	 	
                Facsimile: (239)
                  466-7270

              
	 	 	 
	
                With
                  a copy to:

              	 	
                Sichenzia
                  Ross Friedman Ference LLP

              
	 	 	
                1065
                  Avenue of the Americas

              
	 	 	
                New
                  York, NY 10018

              
	 	 	
                Attention: Gregory
                  Sichenzia

              
	 	 	
                Telephone: (212)
                  930-9700

              
	 	 	
                Facsimile: (212)
                  930-9725

              

      

       

      If
        to the
        Buyer(s), to its address and facsimile number on Schedule I, with copies
        to the
        Buyer’s counsel as set forth on Schedule I. Each party shall provide five (5)
        days’ prior written notice to the other party of any change in address or
        facsimile number.

       

      (g) Successors
        and Assigns.
        This
        Agreement shall be binding upon and inure to the benefit of the parties and
        their respective successors and assigns. Neither the Company nor any Buyer
        shall
        assign this Agreement or any rights or obligations hereunder without the
        prior
        written consent of the other party hereto.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      (h) No
        Third Party Beneficiaries.
        This
        Agreement is intended for the benefit of the parties hereto and their respective
        permitted successors and assigns, and is not for the benefit of, nor may
        any
        provision hereof be enforced by, any other person.

       

      (i) Survival.
        Unless
        this Agreement is terminated under Section 9(l), the representations and
        warranties of the Company and the Buyer(s) contained in Sections 2 and 3,
        the
        agreements and covenants set forth in Sections 4, 5 and 9, and the
        indemnification provisions set forth in Section 8, shall survive the Closing
        for
        a period of two (2) years following the date on which the Convertible Debentures
        are converted in full. The Buyer(s) shall be responsible only for its own
        representations, warranties, agreements and covenants hereunder.

       

      (j) Publicity.
        The
        Company and the Buyer(s) shall have the right to approve, before issuance
        any
        press release or any other public statement with respect to the transactions
        contemplated hereby made by any party; provided, however, that the Company
        shall
        be entitled, without the prior approval of the Buyer(s), to issue any press
        release or other public disclosure with respect to such transactions required
        under applicable securities or other laws or regulations (the Company shall
        use
        its best efforts to consult the Buyer(s) in connection with any such press
        release or other public disclosure prior to its release and Buyer(s) shall
        be
        provided with a copy thereof upon release thereof).

       

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

       

      (l) Termination.
        In the
        event that the First Closing shall not have occurred with respect to the
        Buyers
        on or before five (5) business days from the date hereof due to the Company’s or
        the Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7
        above (and the non-breaching party’s failure to waive such unsatisfied
        condition(s)), the non-breaching party shall have the option to terminate
        this
        Agreement with respect to such breaching party at the close of business on
        such
        date without liability of any party to any other party; provided, however,
        that
        if this Agreement is terminated by the Company pursuant to this Section 9(l),
        the Company shall remain obligated to reimburse the Buyer(s) for the fees
        and
        expenses of Yorkville Advisors LLC described in Section 4(g) above and the
        Termination Agreement of even date herewith (the “Termination
        Agreement”)
        regarding the termination of the Standby Equity Distribution Agreement, as
        provided in the Termination Agreement, shall be null and void.

       

      (m) No
        Strict Construction.
        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.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      

      [REMAINDER
        PAGE INTENTIONALLY LEFT BLANK]

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      

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

       

      
        	 	 	
                 

              
	 	
                COMPANY:
                  
                  INNOVA
                    HOLDINGS, INC. 

                

              
	 	 
	 	By:  	/s/ Walter
                K.
                Weisel
	 	
                

                Name: Walter
                  K. Weisel

              
	 	Title: Chief
                Executive Officer

      

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        I

       

      SCHEDULE
        OF BUYERS 

      

      
        	
                Name

              	 	
                Signature

              	 	
                Address/Facsimile
                  

                Number
                  of Buyer

              	 	
                Amount
                  of Subscription

              
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
                Cornell
                  Capital Partners, LP

              	 	
                By: Yorkville
                  Advisors, LLC

              	 	
                101
                  Hudson Street - Suite 3700

              	 	
                $2,825,000

              
	 	 	
                Its: General
                  Partner

              	 	
                Jersey
                  City, NJ 07303

              	 	 
	 	 	 	 	
                Facsimile: (201)
                  985-8266

              	 	 
	 	 	 	 	 	 	 
	 	 	
                By:/s/
                  Mark Angelo 

              	 	 	 	 
	 	 	
                Name: Mark
                  Angelo

              	 	 	 	 
	 	 	
                Its: Portfolio
                  Manager

              	 	 	 	 
	 	 	 	 	 	 	 
	
                With
                  a copy to: 

              	 	
                Troy
                  Rillo, Esq.

              	 	
                101
                  Hudson Street - Suite 3700

              	 	 
	 	 	 	 	
                Jersey
                  City, NJ 07302

              	 	 
	 	 	 	 	
                Facsimile:
                  (201) 985-8266

              	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

       

      LOCK
        UP AGREEMENT

       

      The
        undersigned hereby agrees that for a period commencing on July 21, 2006 and
        expiring on the date thirty (30) days after the date that all amounts owed
        to
        Cornell Capital Partners, LP (the “Investor”),
        under
        the Secured Convertible Debentures issued to the Investor pursuant to the
        Securities Purchase Agreement between Innova Holdings, Inc. (the “Company”)
        and
        the Investor dated July 21, 2006 have been paid (the “Lock-up
        Period”),
        he,
        she or it will not, directly or indirectly, without the prior written consent
        of
        the Investor, issue, offer, agree or offer to sell, sell, grant an option
        for
        the purchase or sale of, transfer, pledge, assign, hypothecate, distribute
        or
        otherwise encumber or dispose of any securities of the Company, including
        common
        stock or options, rights, warrants or other securities underlying, convertible
        into, exchangeable or exercisable for or evidencing any right to purchase
        or
        subscribe for any common stock (whether or not beneficially owned by the
        undersigned), or any beneficial interest therein (collectively, the
“Securities”)
        except
        in accordance with the volume limitations set forth in Rule 144(e) of the
        General Rules and Regulations under the Securities Act of 1933, as
        amended.

       

      In
        order
        to enable the aforesaid covenants to be enforced, the undersigned hereby
        consents to the placing of legends and/or stop-transfer orders with the transfer
        agent of the Company’s securities with respect to any of the Securities
        registered in the name of the undersigned or beneficially owned by the
        undersigned, and the undersigned hereby confirms the undersigned’s investment in
        the Company.

       

      
        	Dated:
                _______________, 2006	 	 
	 	Signature
	 
	 
 	 
 
	 	Name:  	 
	 	Address:  	 
	 	City,
                State, Zip Code: 	 
	 	 	 
	 	 
	 	Print
                Social Security Number 
                or
                  Taxpayer I.D. Number

              

      

       

      
        
          
          

        

        
          2INVESTOR
        REGISTRATION RIGHTS AGREEMENT

       

      THIS
        REGISTRATION RIGHTS AGREEMENT
        (this
“Agreement”),
        dated
        as of July 21, 2006, by and among INNOVA
        HOLDINGS, INC.,
        a
        Delaware corporation (the “Company”),
        and
        the undersigned investors listed on Schedule I attached hereto (each, an
“Investor”
and
        collectively, the “Investors”).

       

      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 Investors secured
        convertible debentures (the “Convertible
        Debentures”)
        which
        shall be convertible into that number of shares of the Company’s common stock,
        par value $0.001 per share (the “Common
        Stock”),
        pursuant to the terms of the Securities Purchase Agreement for an aggregate
        purchase price of up to Two Million Eight Hundred Twenty Five Thousand Dollars
        ($2,825,000). Capitalized terms not defined herein shall have the meaning
        ascribed to them in the Securities Purchase Agreement.

       

      B. To
        induce
        the Investors 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 Investors hereby agree as
        follows:

       

      1. DEFINITIONS.

       

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

       

      (a) “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.

       

      (b) “Register,”
        “registered,”
and
        “registration”
refer
        to a registration effected by preparing and filing one or more Registration
        Statements (as defined below) in compliance with the Securities Act and pursuant
        to Rule 415 under the Securities Act or any successor rule providing for
        offering securities on a continuous or delayed basis (“Rule
        415”),
        and
        the declaration or ordering of effectiveness of such Registration Statement(s)
        by the United States Securities and Exchange Commission (the “SEC”).

       

      (c) “Registrable
        Securities” means all the shares of Common Stock issuable to the Investors upon
        conversion of the Convertible Debentures, the Warrant Shares, as this term
        is
        defined in the Securities Purchase Agreement, and includes all the shares
        of
        Common Stock listed on Schedule II attached hereto.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (d) “Registration
        Statement”
means
        a
        registration statement under the Securities Act which covers the Registrable
        Securities.

       

      2. REGISTRATION.

       

      (a) Subject
        to the terms and conditions of this Agreement, the Company shall prepare
        and
        file, no later than thirty (30) days from the date hereof (the “Scheduled
        Filing Deadline”),
        with
        the SEC a registration statement on Form S-1 or SB-2 (or, if the Company
        is then
        eligible, on Form S-3) under the Securities Act (the “Initial
        Registration Statement”)
        for
        the resale by the Investors of the Registrable Securities, which includes
        at
        least all shares listed on Schedule II attached hereto. The Company shall
        cause
        the Registration Statement to remain effective until all of the Registrable
        Securities have been sold or may be sold without any restrictions pursuant
        to
        Rule 144(k) of the Securities Act. Prior to the filing of the Registration
        Statement with the SEC, the Company shall furnish a copy of the Initial
        Registration Statement to the Investors for their review and comment. The
        Investors shall furnish comments on the Initial Registration Statement to
        the
        Company within twenty-four (24) hours of the receipt thereof from the
        Company.

       

      (b) Effectiveness
        of the Initial Registration Statement.
        The
        Company shall use its best efforts (i) to have the Initial Registration
        Statement declared effective by the SEC no later than one hundred twenty
        (120)
        days from the date hereof (the “Scheduled
        Effective Deadline”)
        and
        (ii) to insure that the Initial Registration Statement and any subsequent
        Registration Statement remains in effect until all of the Registrable Securities
        have been sold or may be sold without any restrictions pursuant to Rule 144(k)
        of the Securities Act, subject to the terms and conditions of this
        Agreement.

       

      (c) Failure
        to File or Obtain Effectiveness of the Registration Statement.
        In the
        event the Registration Statement is not filed by the Scheduled Filing Deadline
        or is not declared effective by the SEC on or before the Scheduled Effective
        Date, or if after the Registration Statement has been declared effective
        by the
        SEC, sales cannot be made pursuant to the Registration Statement (whether
        because of a failure to keep the Registration Statement effective, failure
        to
        disclose such information as is necessary for sales to be made pursuant to
        the
        Registration Statement, failure to register sufficient shares of Common Stock
        or
        otherwise) then as partial relief for the damages to any holder of Registrable
        Securities by reason of any such delay in or reduction of its ability to
        sell
        the underlying shares of Common Stock (which remedy shall not be exclusive
        of
        any other remedies at law or in equity), the Company will pay as liquidated
        damages (the “Liquidated
        Damages”)
        to the
        holder, at the holder’s option, either a cash amount or shares of the Company’s
        Common Stock within three (3) business days, after demand therefore, equal
        to
        two percent (2%) of the liquidated value of the Convertible Debentures
        outstanding as Liquidated Damages for each thirty (30) day period after the
        Scheduled Filing Deadline or the Scheduled Effective Date as the case may
        be.
        Notwithstanding anything herein to the contrary, in no event shall Liquidated
        Damages exceed twenty four percent (24%) of the aggregate Purchase Price
        for all
        Investors. Notwithstanding anything herein to the contrary, in no event shall
        the Company be required to pay any Liquidated Damages if the Registration
        Statement is not declared effective on the Scheduled Effective Date, if the
        failure to have the Registration Statement declared effective in a timely
        fashion is due solely to SEC comments with respect to the Company’s basis for
        determining that the transaction giving rise to the obligation to register
        the
        Registrable Securities hereunder is eligible for registration under Rule
        415.

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      (d) Liquidated
        Damages.
        The
        Company and the Investor hereto acknowledge and agree that the sums payable
        under subsection 2(c) above shall constitute liquidated damages and not
        penalties and are in addition to all other rights of the Investor, 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 Investor 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 Investor 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 keep the Registration Statement effective pursuant to
        Rule 415 at all times until the date on which the Investor shall have sold
        all the Registrable Securities covered by such Registration Statement (the
        “Registration
        Period”),
        which
        Registration Statement (including any amendments or supplements thereto and
        prospectuses contained therein) shall not contain any untrue statement of
        a
        material fact or omit to state a material fact required to be stated therein,
        or
        necessary to make the statements therein, in light of the circumstances in
        which
        they were made, not misleading.

       

      (b) The
        Company shall 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, during such period, 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.
        

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (c) The
        Company shall furnish to each Investor 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 Investor may reasonably request) and (iii) such other documents
        as such Investor may reasonably request from time to time in order to facilitate
        the disposition of the Registrable Securities owned by such
        Investor.

       

      (d) 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 Investor
        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 Investor 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.

       

      (e) As
        promptly as practicable after becoming aware of such event or development,
        the
        Company shall notify each Investor 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 Investor. The Company
        shall also promptly notify each Investor 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 Investor 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.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (f) 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 Investor 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.

       

      (g) At
        the
        reasonable request of any Investor, the Company shall furnish to such Investor,
        on the date of the effectiveness of the Registration Statement and thereafter
        from time to time on such dates as an Investor 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
        Investors.

       

      (h) The
        Company shall make available for inspection by (i) any Investor and
        (ii) one (1) firm of accountants or other agents retained by the Investors
        (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 Investor hereby agrees, to hold in strict confidence and shall not make
        any
        disclosure (except to an Investor) 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 Investor has knowledge. Each Investor 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.

       

      (i) The
        Company shall hold in confidence and not make any disclosure of information
        concerning an Investor 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 an Investor is sought in or by a court or
        governmental body of competent jurisdiction or through other means, give
        prompt
        written notice to such Investor and allow such Investor, at the Investor’s
        expense, to undertake appropriate action to prevent disclosure of, or to
        obtain
        a protective order for, such information.

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      (j) 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).

       

      (k) The
        Company shall cooperate with the Investors who hold 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 Investors may reasonably request and registered in such names
        as the
        Investors may request.

       

      (l) 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.

       

      (m) The
        Company shall make generally available to its security holders as soon as
        practical, but not later than ninety (90) 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.

       

      (n) 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.

       

      (o) 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 Investors 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
        A.

       

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

       

      4. OBLIGATIONS
        OF THE INVESTORS.

       

      Each
        Investor agrees that, upon receipt of any 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), such Investor will immediately discontinue disposition
        of
        Registrable Securities pursuant to any Registration Statement(s) covering
        such
        Registrable Securities until such Investor’s receipt of the copies of the
        supplemented or amended prospectus contemplated by Section 3(e) 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 an Investor in
        accordance with the terms of the Securities Purchase Agreement in connection
        with any sale of Registrable Securities with respect to which an Investor
        has
        entered into a contract for sale prior to the Investor’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 Investor has not yet
        settled.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      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. 

       

      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 Investor, the directors, officers, partners,
        employees, agents, representatives of, and each Person, if any, who controls
        any
        Investor 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 Investors 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 Investor
        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 Investors pursuant to Section 9
        hereof.

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (b) In
        connection with a Registration Statement, each Investor 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 Investor expressly for use in connection with such Registration
        Statement; and, subject to Section 6(d), such Investor 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
        Investor, which consent shall not be unreasonably withheld; provided, further,
        however, that the Investor 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 Investor 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 Investors
        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 Investor
        prior to such Investor’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.

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (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.

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      8. REPORTS
        UNDER THE EXCHANGE ACT.

       

      With
        a
        view to making available to the Investors 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 Investors 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;

       

      (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 Investor so long as such Investor 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 Investors 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 Investors
        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 Investor 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.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (b) 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
                  Holdings, Inc.

              
	
                 

              	
                17105
                  San Carlos Boulevard, Suite A6151

              
	
                 

              	
                Fort
                  Myers, FL 33931

              
	
                 

              	
                Attention: Walter
                  Weisel

              
	
                 

              	
                Telephone: (239)
                  466-0488

              
	
                 

              	
                Facsimile: (239)
                  466-7270

              
	
                 

              	
                 

              
	
                With
                  Copy to:

              	
                Sichenzia
                  Ross Friedman Ference LLP

              
	
                 

              	
                1065
                  Avenue of the Americas

              
	
                 

              	
                New
                  York, NY 10018

              
	
                 

              	
                Attention: Gregory
                  Sichenzia

              
	
                 

              	
                Telephone: (212)
                  930-9700

              
	
                 

              	
                Facsimile: (212)
                  930-9725

              
	
                 

              	
                 

              

      

      If
        to an
        Investor, to its address and facsimile number on the Schedule of Investors
        attached hereto, with copies to such Investor’s representatives as set forth on
        the Schedule of Investors 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.

       

      (c) 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.

       

      (d) The
        laws
        of the State of New Jersey shall govern all issues concerning the relative
        rights of the Company and the Investors 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.

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (e) This
        Agreement, the Irrevocable Transfer Agent Instructions, the Securities Purchase
        Agreement and related documents including the Convertible Debenture and the
        Security Agreement dated the date hereof (the “Security
        Agreement”)
        constitute the entire agreement among the parties hereto with respect to
        the
        subject matter hereof and thereof. There are no restrictions, promises,
        warranties or undertakings, other than those set forth or referred to herein
        and
        therein. This Agreement, the Irrevocable Transfer Agent Instructions, the
        Securities Purchase Agreement and related documents including the Convertible
        Debenture, and the Security Agreement supersede all prior agreements and
        understandings among the parties hereto with respect to the subject matter
        hereof and thereof.

       

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

       

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

       

      (h) 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.

       

      (i) 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.

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      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.

       

      (j) 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]

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      

      IN
        WITNESS WHEREOF,
        the
        parties have caused this Investor Registration Rights Agreement to be duly
        executed as of day and year first above written.

       

      
        	 	 	 
	 	
                COMPANY: 

              
	 	
                INNOVA
                  HOLDINGS, INC.

              
	 
 	 
 	 
 
	 	By:  	/s/ Walter
                K.
                Weisel
	 	
                

                Name: Walter
                  K. Weisel

              
	 	
                Title: Chief
                  Executive Officer

              

      

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        I

       

      SCHEDULE
        OF INVESTORS

      

      
        	
                Name

              	 	
                Signature

              	 	
                Address/Facsimile
                  

                Number
                  of Investors

              
	
                 

              	 	 	
                 

              	 	
                 

              
	
                Cornell
                  Capital Partners, LP

              	 	By: Yorkville
                Advisors, LLC	
                101
                  Hudson Street - Suite 3700

              
	
                 

              	 	Its: General
                Partner	 	
                Jersey
                  City, NJ 07303

              
	
                 

              	 	 	
                 

              	 	
                Facsimile: (201)
                  985-8266

              
	
                 

              	 	 	
                 

              	 	
                 

              
	 	 	 	 	 	 
	
                 

              	 	By: 	
                 /s/
                  Mark Angelo   

              	 	
                 

              
	
                 

              	 	 	
                Name: Mark
                  Angelo

              	 	
                 

              
	
                 

              	 	 	
                Its: Portfolio
                  Manager

              	 	
                 

              
	
                 

              	 	 	
                 

              	 	
                 

              
	
                With
                  a copy to: 

              	 	Troy
                Rillo, Esq.	 	
                101
                  Hudson Street - Suite 3700

              
	
                 

              	 	 	
                 

              	 	
                Jersey
                  City, NJ 07302

              
	
                 

              	 	 	
                 

              	 	
                Facsimile:
                  (201) 985-8266

              
	
                 

              	 	 	
                 

              	 	
                 

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        I

       

      REGISTRABLE
        SECURITIES

      

      
        	
                Selling
                  Stockholder

              	 	
                Shares
                  of Common Stock to be Registered

              	
                 

              	
                Description

              
	
                Cornell
                  Capital Partners, LP

              	 	
                175,000,000
                  of which 52,000,000 shall be included on the Initial Registration
                  Statement

              	
                 

              	
                Shares
                  of Common Stock underlying the $2,825,000 10% Secured Convertible
                  Debentures issuable pursuant to the Securities Purchase Agreement
                  dated
                  July 21, 2006

              
	 	 	 	 	 
	
                Cornell
                  Capital Partners, LP

              	 	
                93,000,000
                  of which 23,000,000 shall be included on the Initial Registration
                  Statement

              	
                 

              	
                Shares
                  of Common Stock underlying warrants issued pursuant to the Securities
                  Purchase Agreement dated July 21, 2006.

              
	 	 	 	 	 
	
                Cornell
                  Capital Partners, LP

              	 	
                4,848,500

              	
                 

              	
                Shares
                  of Common Stock issued upon surrender of July 14, 2005 Promissory
                  Note.

              

      

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      

      EXHIBIT
        A

       

      FORM
        OF NOTICE OF EFFECTIVENESS

      OF
        REGISTRATION STATEMENT

       

      Attention: 

      
        

        
          	 	
                  Re:

                	
                  INNOVA
                    HOLDINGS, INC.

                

        

      

      
      

      

      Ladies
        and Gentlemen:

      

      We
        are
        counsel to Innova Holdings, Inc., a Delaware 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 investors named therein
        (collectively, the “Investors”)
        pursuant to which the Company issued to the Investors 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 Investors (the “Investor
        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 SEC (the “SEC”)
        relating to the Registrable Securities which names each of the Investors
        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 INVESTORS]

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