Exhibit 10.4

REGISTRATION RIGHTS AGREEMENT
 
 
This Registration Rights Agreement (this “Agreement”) is made and entered into
as of December 21, 2007, by and among XA, Inc., a Nevada corporation (the
“Company”), the Holder of the Notes and Warrants issued by the Company pursuant
to a Securities Purchase Agreement, dated as of the date hereof, by and among
the Investor and the Company (the “SPA”), and Mastodon Ventures, Inc., and its
permitted assigns (“Mastodon”).
 
The Underlying Shares held by the Investor (and any Holder that is a permitted
assignee of the Investor) shall have the registration rights as set forth
herein.
 
The Company and the Investor hereby agree as follows (for the avoidance of
doubt, the Investors other than the Investor (each as defined herein) are
subject to other Registration Rights Agreements):
 
1.           Definitions.  Capitalized terms used and not otherwise defined
herein that are defined in the SPA shall have the meanings given such terms in
the SPA. As used in this Agreement, the following terms shall have the following
meanings:
 
“Additional Effectiveness Date” shall have the meaning set forth in
Section 2(b).
 
“Additional Filing Date” shall have the meaning set forth in Section 2(b).
 
“Additional Notice” shall have the meaning set forth in Section 2(b).
 
“Additional Registration Statement” shall mean any Registration Statement
necessary to register shares of the Registrable Securities which at any time
after the Initial Effectiveness Date and for any reason are not covered by an
effective Registration Statement.
 
“Closing Date” shall mean December 21, 2007 (or such earlier date as the parties
may agree).
 
“Commission” means the United States Securities and Exchange Commission.
 
“Common Stock” means the Company’s common stock par value $0.001 per share.
 
“Conversion Shares” means all shares of Common Stock issuable upon conversion of
the Notes.
 
“Effectiveness Period” shall mean from the date hereof until the earlier to
occur of the date when all Registrable Securities covered by a Registration
Statement either (a) have been sold pursuant to a Registration Statement or an
exemption from the registration requirements of the Securities Act, and (b)
pursuant to a written opinion of Company counsel acceptable to the Company’s
transfer agent and the legal counsel for the Holders, may be sold pursuant to
Rule 144(k).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities (including any permitted assignee).
 

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“Indemnified Party” shall have the meaning set forth in Section 5.
 
“Indemnifying Party” shall have the meaning set forth in Section 5.
 
“Investor” shall mean Sands Brothers Venture Capital III LLC.
 
“Investors” shall mean, collectively, (i) the Investor, and (ii) the other
investors in the offering the Notes and Warrants issued pursuant to the Purchase
Agreements.
 
“Losses” shall have the meaning set forth in Section 5(a).
 
“Initial Effectiveness Date” means, with respect to the Initial Registration
Statement required to be filed pursuant to Section 2(a) of this Agreement.
 
“Initial Filing Date” shall have the meaning set forth in Section 2(a).
 
“Initial Registration Date” shall mean the date that is one hundred and eighty
(180) days from the date hereof; provided that, in the event that a Private
Offering has been consummated during such 180 day period, such date shall refer
to the date of the closing of such Private Offering.
 
“Initial Registration Statement” shall have the meaning set forth in
Section 2(a).
 
“Notes” means all of the Senior Secured Convertible Promissory Notes issued
pursuant the Purchase Agreements between the Company and the applicable
Investors.
 
“Pari Passu Registration Rights Holders” shall have the meaning set forth in
Section 2(f).
 
“Person” shall mean an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
 
“Prior Closings” shall mean the August 8, 2006, September 26, 2006, and October
23, 2006 closing of the sale of an aggregate of $2,700,000 in 11% Senior
Subordinated Secured Convertible Promissory Notes by the Company and the June
2007 closing of the sale of an aggregate of $450,000 in 11% Senior Subordinated
Secured Convertible Promissory Notes by the Company.
 
“Private Offering” shall mean a private placement of the Company’s securities in
which the Company receives gross proceeds of no less than three million dollars
($3,000,000).
 
“Private Offering Investors” shall mean each of the purchasers of securities of
the Company in a Private Offering.
 
“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
 

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“Prospectus” means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Conversion Registrable Securities or
Exchange Registrable Securities covered by the Registration Statement, and all
other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
 
“Purchase Agreements” shall mean those certain Securities Purchase Agreements,
dated on or around the date hereof (including the SPA).
 
“Registrable Securities” means (i) the Underlying Shares, in each case, held by
the Investor (and any Holder that is a permitted assignee of the Investor), and
(ii) the shares of Common Stock underlying all of the securities held by
Mastodon.
 
“Registration Statement” means any registration statement required to be filed
hereunder (which, at the Company’s option, may be an existing registration
statement of the Company previously filed with the Commission, but not declared
effective), including (in each case) the Prospectus, amendments and supplements
to the registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in the registration statement.
 
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Trading Day” means (a) a day on which the Common Stock is traded on a Trading
Market, or (b) if the Common Stock is not quoted on a Trading Market, a day on
which the Common Stock is quoted in the over-the-counter market as reported by
the National Quotation Bureau Incorporated (or any similar organization or
agency succeeding to its functions of reporting price); provided, that in the
event that the Common Stock is not listed or quoted as set forth in (a), and
(b) hereof, then Trading Day shall mean a Business Day;
 
“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the OTC Bulletin
Board, the American Stock Exchange, the New York Stock Exchange, the Nasdaq
National Market or the Nasdaq SmallCap Market.
 

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“Underlying Shares” means collectively, all Conversion Shares and the Warrant
Shares.
 
“Warrant Shares” means all shares of Common Stock issuable upon exercise of the
Warrants.
 
“Warrants” means the Common Stock purchase warrants issued pursuant to the
Purchase Agreements between the Company and the applicable Investors.
 
2.           Registration.
 
           (a)           Initial Registration.  No later than forty-five (45)
days from the Initial Registration Date (the “Initial Filing Date”) the Company
shall file with the Commission a Registration Statement (the “Initial
Registration Statement”), covering the resale of all of the Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule
415.  The Initial Registration Statement required hereunder shall be on Form
S-1, Form SB-2 or Form S-3 (except if the Company is not then eligible to
register for resale the Registrable Securities on Form S-1, Form SB-2 or Form
S-3, in which case the Initial Registration Statement shall be on another
appropriate form in accordance herewith).  The Initial Registration Statement
required hereunder shall contain the Plan of Distribution, attached hereto as
Annex A (which may be modified to respond to comments, if any, received by the
Commission). The Company shall cause the Initial Registration Statement to
become effective, no later than ninety (90) days after the Initial Filing Date
(the “Initial Effectiveness Date”) and remain effective as provided herein. The
Company shall use its best efforts to cause the Initial Registration Statement
to be declared effective under the Securities Act and shall use its best efforts
to keep the Initial Registration Statement continuously effective under the
Securities Act until the expiration of the Effectiveness Period.
 
(b)           Additional Registration.
 
(i)  If at any time and for any reason, an Additional Registration Statement is
required to be filed because at such time the actual number of shares of
Registrable Securities exceeds the number of shares of Registrable Securities
remaining under the Initial Registration Statement, the Company shall have
thirty (30) days to file such Additional Registration Statement, and the Company
shall use its best efforts to cause such Additional Registration Statement to be
declared effective by the Commission as soon as possible, but in no event later
than ninety (90) days after filing (the “Additional Effectiveness Date”).
 
(ii)  Notwithstanding anything to the contrary set forth in this Section 2, in
the event that the Commission does not permit the Company to register all of the
Registrable Securities in the Initial Registration Statement because of the
Commission’s application of Rule 415, the Company shall use its best efforts to
file Additional Registration Statements to register the Registrable Securities
that were not registered in the Initial Registration Statement as promptly as
possible and in a manner permitted by the Commission.  For purposes of this
Section 2(b)(ii), “Additional Filing Date” means with respect to each Additional
Registration Statement filed pursuant hereto, the later of (i) sixty (60) days
following the sale of substantially all of the Registrable Securities included
in the Initial Registration Statement or any Additional Registration Statement
and (ii) six (6) months following the effective date of the Initial Registration
Statement or any Additional Registration Statement, as applicable, or such
earlier date as permitted by the Commission.
 

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(iii)  Each Additional Registration Statement required under this Section 2(b)
shall contain the Plan of Distribution, attached hereto as Annex A (which may be
modified to respond to comments, if any, received by the Commission).  The
Company shall keep the Additional Registration Statement continuously effective
under the Securities Act until the expiration of the Effectiveness Period.
 
(c)           Filing Default Damages.  If an Initial Registration Statement or
Additional Registration Statement (as the case may be) is not filed on or prior
to the Additional Filing Date or Initial Filing Date (as the case may be), then
the Company shall pay to the Holders of the Registrable Securities, for each
thirty (30) day period (or pro rata portion thereof) of such failure and until
the date an Initial Registration Statement or Additional Registration Statement
(as the case may be) is filed and/or the Registrable Securities may be sold
pursuant to Rule 144 or Rule 144(k), as the case may be, as partial liquidated
damages and not as a penalty, an amount in cash equal to two (2%) percent of the
aggregate gross proceeds paid by the Holders for  the Notes. If the Company
fails to pay any partial liquidated damages pursuant to this Section 2 in full
within five (5) days of the date payable, the Company shall pay interest thereon
at a rate of 18% per annum (or such lesser maximum amount that is permitted to
be paid by applicable law) to the Holders, accruing daily from the date such
partial liquidated damages are due until such amounts, plus all such interest
thereon, are paid in full.
 
           (d)           Effectiveness, Etc. Default Damages.  If an Initial
Registration Statement or Additional Registration Statement (as the case may be)
is not declared effective by the Commission on or prior to the Initial
Effectiveness Date or the Additional Effectiveness Date (as the case may be), or
the Commission declared any such Registration Statement effective, but the
Holders of Registrable Securities cannot sell such Registrable Securities
thereunder, for any reason or no reason, then the Company shall pay to the
Holder, for each thirty (30) day period until the Registration Statement is
declared effective (or the Holders of Registrable Securities can sell
thereunder, as the case may be), an amount in cash equal to two (2%) percent of
the aggregate gross proceeds paid by the Holders for the Notes in the
Financing. Notwithstanding anything to the contrary set forth herein, in the
event the Commission does not permit all of the Registrable Securities to be
included in the Initial Registration Statement (or any subsequent Additional
Registration Statements) because of its application of Rule 415, no liquidated
damages shall be payable pursuant to this Section 2(d) shall be payable by the
Company to the extent that such delay shall be attributable to the Commission’s
application of Rule 415.
 
(e)           Piggyback Registrations.  If, at any time following the date
hereof, there is not an effective Registration Statement covering the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder a written notice of
such determination at least twenty (20) days prior to the filing of any such
registration statement and shall automatically include in such registration
statement all Registrable Securities; provided, however, that (i) if, at any
time after giving written notice of is intention to register any securities and
prior to the effective date of the registration statement filed in connection
with such registration, the Company determines for any reason not to proceed
with such registration, the Company will be relieved of its obligation to
register any Registrable Securities in connection with such registration, and
(ii) in case of a determination by the Company to delay registration of its
securities, the Company will be permitted to delay the registration of
Registrable Securities for the same period as the delay in registering such
other securities.
 

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(f)           Ranking of Registration Rights.  For the avoidance of doubt, the
registration rights relating to (i) the Underlying Shares and the Prior
Underlying Shares, (ii) those shares of Common Stock underlying the securities
held by (x) the Private Offering Investors (if any) and (y)
Mastodon (collectively, the “Pari Passu Registrable Securities”), shall rank
pari passu to each other, to the extent that the Company has granted
registration rights applicable to such securities (the holders of such
securities, from time to time, the “Pari Passu Registration Rights
Holders”).  In the event that the Commission does not permit all of the Pari
Passu Registrable Securities to be included in the Initial Registration
Statement or any subsequent Additional Registration Statements because of its
application of Rule 415, the Pari Passu Registration Rights Holders shall
allocate amongst themselves the shares of Common Stock that are permitted to be
so registered, pro rata, in accordance with the total number of Pari Passu
Registrable Securities held by each such holder, as a percentage of the
aggregate shares held by all such holders.  However, neither the Company nor any
of its other security holders (other than the Pari Passu Registration Rights
Holders) may include securities of the Company in the Initial Registration
Statement or any Additional Registration Statements, and the Company shall not
after the date hereof enter into any agreement providing such right to any of
its security holders (except to the Private Offering Investors), unless the
right so granted is subject in all respects to the prior rights in full of the
Pari Passu Registration Rights Holders set forth herein, and is not otherwise in
conflict with such rights.

3.           Registration Procedures.  In connection with the Company’s
registration obligations hereunder, and during the Effectiveness Period, the
Company shall:
 
           (a)           Not less than five (5) business days prior to the
filing of the Registration Statement or any related Prospectus or any amendment
or supplement thereto, the Company shall furnish to Holders, a draft of the
Registration Statement, or any related Prospectus or any amendment or supplement
thereto.
 
           (b)           (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to the Registration Statement
and the Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; and (iii) respond to
any comments received from the Commission with respect to the Registration
Statement or any amendment thereto.
 
           (c)           Notify as promptly as reasonably possible, but no later
than three (3) business days, each Holder of Registrable Securities included in
the Registration Statement: (i) (A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement has been
filed; (B) when the Commission notifies the Company whether there will be a
“review” of the Registration Statement and whenever the Commission comments in
writing on the Registration Statement; and (C) when the Registration Statement
or any post-effective amendment has become effective; (ii) of any request by the
Commission or any other Federal or state governmental authority during the
period of effectiveness of the Registration Statement for amendments or
supplements to the Registration Statement or Prospectus or for additional
information; (iii) of the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement covering any or all of the Registrable Securities or
the initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation of any Proceeding for such purpose; and (v)
of the occurrence of any event or passage of time that makes the financial
statements included in the Registration Statement ineligible for inclusion
therein or any statement made in the Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires any revisions to the Registration
Statement, Prospectus or other documents so that, in the case of the
Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any 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.
 

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           (d)           Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
 
           (e)           Promptly deliver to each Holder no later than three (3)
business days after the Effectiveness Date, without charge, two (2) copies of
the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto (and, upon the request of the Holder such
additional copies as such Persons may reasonably request in connection with
resales by the Holder of Registrable Securities). The Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by the
Holder in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except after
the giving of any notice pursuant to Section 3.
 
           (f)           Prior to any resale of Registrable Securities by a
Holder, use its best efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from the registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement; provided,
however, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified, subject the
Company to any material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.
 
           (g)           Upon the occurrence of any event contemplated by
Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an 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 under which they were made,
not misleading.
 

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           (h)           Use its best efforts to comply with all applicable
rules and regulations of the Commission relating to the registration of the
Registrable Securities pursuant to the Registration Statement or otherwise.
 
           (i)           The Company agrees that the Selling Shareholder
Questionnaire attached hereto as Exhibit A satisfies all of the information
required to be provided by each Holder in connection with the Registration
Statement.  The Company shall not be required to include any Holder that does
not complete, date and execute a Selling Shareholder Questionnaire.
 
           (j)           The Company shall either (a) cause all the Registrable
Securities covered by a Registration Statement 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 (b) secure designation and
quotation of all the Registrable Securities covered by the Registration
Statement on the Nasdaq National Market or the Nasdaq SmallCap Market, or, (c)
if the Company is unsuccessful in satisfying the preceding clauses (a) or (b),
the Company shall secure the inclusion for quotation all the Registrable
Securities covered by the Registration Statement on The American Stock Exchange,
Inc. or if it is unable to do so, on the NASD Bulletin Board and, without
limiting the generality of the foregoing, to arrange for at least two (2) market
makers to register with the National Association of Securities Dealers, Inc.
(“NASD”) as such with respect to 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 covenants that it shall file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder so long as the Holder owns
any Registrable Securitiess; provided, however, the Company may delay any such
filing but only pursuant to Rule 12b-25 under the Exchange Act, and the Company
shall take such further reasonable action as the Holder may reasonably request
(including, without limitation, promptly obtaining any required legal opinions
from Company counsel necessary to effect the sale of Registrable Securities
under Rule 144 and paying the related fees and expenses of such counsel), all to
the extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any Holder of
Registrable Securities, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
 
4.           Registration Expenses.  All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement, other than fees and expenses of counsel or any other
advisor retained by the Holders and discounts and commissions with respect to
the sale of any Registrable Securities by the Holders. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with the Trading Market on which
the Common Stock is then listed for trading, and (B) in compliance with
applicable state securities or Blue Sky laws), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is reasonably requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company, (v) Securities Act liability insurance, if the Company so desires such
insurance, (vi) fees and disbursements in the amount of $20,000 to counsel to
the Investor, Sadis & Goldberg LLP; and (vii) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement.
 

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5.           Indemnification.
 
           (a)           Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
the Holder, the officers, directors, agents and employees of it, each Person who
controls the Holder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable attorneys’ fees)
and expenses (including the cost (including without limitation, reasonable
attorneys’ fees) and expenses relating to an Indemnified Party’s actions to
enforce the provisions of this Section 5) (collectively, “Losses”), as incurred,
to the extent arising out of or relating to any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (1) such untrue statements or omissions are based solely upon information
regarding such Holder furnished (or in the case of an omission, not furnished)
in writing to the Company by or on behalf of such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose), (2) in the case of an occurrence
of an event of the type specified in Section 3(c)(ii)-(v), the use by such
Holder of an outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective and prior to
the receipt by such Holder of notice that such event is no longer applicable, or
(3) the failure of the Holder to deliver a prospectus prior to the confirmation
of a sale.  The Company shall notify the Holders promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement.
 
           (b)           Indemnification by Holder. The Holder shall indemnify
and hold harmless the Company, its directors, officers, agents and employees,
each Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors, officers,
agents or employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the extent
arising out of or based upon: (x) the Holder’s failure to comply with the
prospectus delivery requirements of the Securities Act or (y) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading (i) to
the extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished (or in the case of an omission, not
furnished) in writing by or on behalf of such Holder to the Company specifically
for inclusion in the Registration Statement or such Prospectus or (ii) to the
extent that (1) such untrue statements or omissions are based solely upon
information regarding such Holder furnished (or in the case of an omission, not
furnished) in writing to the Company by or on behalf of such Holder expressly
for use therein, or to the extent that such information relates to such Holder
or such Holder’s proposed method of distribution of Registrable Securities, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto,
or (2) in the case of an occurrence of an event of the type specified in
Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
notice that such event is no longer applicable, or (3) the failure of the Holder
to deliver a Prospectus prior to the confirmation of a sale. In no event shall
the liability of any selling Holder hereunder be greater in amount than the
dollar amount of the subscription amount paid by the Holder in the SPA (or other
purchase agreement to which the Holder acquired securities convertible or
exercisable into the Registrable Securities).
 
           (c)           Conduct of Indemnification Proceedings. If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify
the Person from whom indemnity is sought (the “Indemnifying Party”) in writing,
and the Indemnifying Party shall have the right to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided that the failure of any Indemnified Party to give such
notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that
such failure shall have materially prejudiced the Indemnifying Party.
 
 
An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and the reasonable fees and expenses of one separate counsel for all Indemnified
Parties in any matters related on a factual basis shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding affected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
 

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All reasonable fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Trading Days of written notice thereof to the Indemnifying Party; provided that
the Indemnified Party shall promptly reimburse the Indemnifying Party for that
portion of such fees and expenses applicable to such actions for which such
Indemnified Party is not entitled to indemnification hereunder, determined based
upon the relative faults of the parties.
 
           (d)           Contribution. If a claim for indemnification under
Section 5(a) or Section 5(b) is unavailable to an Indemnified Party (by reason
of public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys’ or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.
 
(e)           Rule 144.  As long as any Holder owns any Notes, Warrants or
Registrable Securities, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
Section 13(a) or 15(d) of the Exchange Act.  As long as any Holder owns any
Notes, Warrants or Registrable Securities, if the Company is not required to
file reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will
prepare and furnish to the Holders and make publicly available in accordance
with Rule 144(c) promulgated under the Securities Act annual and quarterly
financial statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a) or
15(d) of the Exchange Act, as well as any other information required thereby, in
the time period that such filings would have been required to have been made
under the Exchange Act.  The Company further covenants that it will take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such person to sell Conversion Shares and Warrant
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Securities Act,
including providing any legal opinions relating to such sale pursuant to Rule
144, if such person is deemed by the Company’s counsel to be in compliance with
the rules and regulations set forth in Rule 144.  Upon the request of any
Holder, the Company shall deliver to such Holder a written certification of a
duly authorized officer as to whether it has complied with such requirements.

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6.           Miscellaneous.
 
           (a)           Compliance. The Holder covenants and agrees that it
will comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.
 
           (b)           Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and each Holder of the then outstanding Registrable
Securities.  No consideration shall be offered or paid to any Holders of the
Registrable Securities to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration also
is offered to all of the parties to the Transaction Documents or Holders of the
Registrable Securities, as the case may be.  The Company has not, directly or
indirectly, made any agreements with any Investors relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.  Without limiting the foregoing, the
Company confirms that, except as set forth in this Agreement, no Purchaser has
made any commitment or promise or has any other obligation to provide any
financing to the Company or otherwise.
 
           (c)           Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the Trading Day
following the date of delivery to the courier service, if sent by nationally
recognized overnight courier service, (ii) the third Trading Day following the
date of mailing, if sent by first-class, registered or certified mail, postage
prepaid, (iii) the Trading Day following transmission by electronic mail with
receipt confirmed or acknowledged, or (iv) upon actual receipt by the party to
whom such notice is required to be given.  The address for such notices and
communications shall be delivered and addressed as set forth in the SPA (or
other purchase agreement to which the Holder acquired securities convertible or
exercisable into the Registrable Securities) or to such other address as shall
be designated in writing from time to time by a party hereto.
 
           (d)           Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns of each
of the parties and shall inure to the benefit of the Holder.
 
           (e)           Execution and Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and, all of which taken together shall constitute one
and the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original
thereof.
 
           (f)           Governing Law. This Agreement shall be governed by and
construed exclusively in accordance with the internal laws of the State of New
York without regard to the conflicts of laws principles thereof. The parties
hereto hereby irrevocably agree that any suit or proceeding arising directly
and/or indirectly pursuant to or under this Agreement, shall be brought solely
in a federal or state court located in the City, County and State of New York.
By its execution hereof, the parties hereby covenant and irrevocably submit to
the in personam jurisdiction of the federal and state courts located in the
City, County and State of New York and agree that any process in any such action
may be served upon any of them personally, or by certified mail or registered
mail upon them or their agent, return receipt requested, with the same full
force and effect as if personally served upon them in New York City. The parties
hereto waive any claim that any such jurisdiction is not a convenient forum for
any such suit or proceeding and any defense or lack of in personam jurisdiction
with respect thereto. In the event of any such action or proceeding, the party
prevailing therein shall be entitled to payment from the other party hereto of
its reasonable counsel fees and disbursements.
 

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           (g)           Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
 
           (h)           Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
 
(i)           Independent Nature of Investors. The Company acknowledges that the
obligations of each Investor under the Transaction Documents are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under the Transaction Documents. The Company acknowledges that the
decision of each Investor to purchase securities pursuant to the SPA (or other
purchase agreement to which the Holder acquired securities convertible or
exercisable into the Registrable Securities) has been made by such Investor
independently of any other Investor and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of its subsidiaries which may have
made or given by any other Investor or by any agent or employee of any other
Investor, and no Investor or any of its agents or employees shall have any
liability to any Investor (or any other person) relating to or arising from any
such information, materials, statements or opinions. The Company acknowledges
that nothing contained herein, or in any Transaction Document, and no action
taken by any Investor pursuant hereto or thereto (including, but not limited to,
the (i) inclusion of a Investor in a Registration Statement and (ii) review by,
and consent to, such Registration Statement by a Investor) shall be deemed to
constitute the Investors as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Investors are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Company acknowledges
that each Investor shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of this Agreement
or out of the other Transaction Documents, and it shall not be necessary for any
other Investor to be joined as an additional party in any proceeding for such
purpose. The Company acknowledges that for reasons of administrative convenience
only, the Transaction Documents have been prepared by counsel for one of the
Investors and such counsel does not represent all of the Investors. The Company
acknowledges that it has elected to provide all Investors with the same terms
and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by the Investors. The Company acknowledges
that such procedure with respect to the Transaction Documents in no way creates
a presumption that the Investors are in any way acting in concert or as a group
with respect to the Transaction Documents or the transactions contemplated
hereby or thereby.
 
(j)           This Agreement Supersedes All Prior Agreements Between
Parties.  Each of the Company and the Investor agree that this Agreement
supersedes in its entirety all of the terms and provisions of any prior
agreements between such parties concerning the registration rights and the like
pertaining to the Underlying Shares.  Each of the Company and Mastodon agree
that this Agreement supersedes in its entirety all of the terms and provisions
of any prior agreements between such parties concerning the registration rights
and the like pertaining to the shares of Common Stock underlying any securities
currently held by Mastodon.

[Remainder of page intentionally left blank]

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

 
XA, INC.
 

By: /s/ Joseph Wagner   
Name:  Joseph Wagner
Title:  President

 
Other Signature Pages Follow

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OTHER SIGNATURE PAGES TO REGISTRATION RIGHTS AGREEMENT

 
 
Sands Brothers Venture Capital III LLC
 
By:  /s/ Scott
Baily                                                              
     Name: Scott
Baily                                                                
     Title: COO                                                            
     Address: 90 Park Ave. 31st Fl, New York, NY
10016                                                                          
     Facsimile
Number:  212-953-4978                                                                         
 
   

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ANNEX A
 
Plan of Distribution

The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
 
        ·
 ordinary brokerage transactions and transactions in which the broker/dealer
solicits purchasers;
        ·
 block trades in which the broker/dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
        ·
 purchases by a broker/dealer as principal and resale by the broker/dealer for
its account;
        ·
 an exchange distribution in accordance with the Rules of the applicable
exchange;
        ·
 privately negotiated transactions;
        ·
 settlement of short sales;
        ·
 broker/dealers may agree with the Selling Stockholders to sell a specified
number of such shares at a stipulated price per share;
        ·
 a combination of any such methods of sale; and
        ·
 any other method permitted pursuant to applicable law.

 
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
 
Broker/dealers engaged by the Selling Stockholders may arrange for other
brokers/dealers to participate in sales. Broker/dealers may receive commissions
from the Selling Stockholders (or, if any broker/dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
Selling Stockholders do not expect these commissions to exceed what is customary
in the types of transactions involved.
 
The Selling Stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act of 1933 amending the list of
Selling Stockholders to include the pledgee, transferee or other successors in
interest as Selling Stockholders under this prospectus.
 
The Selling Stockholders and any broker/dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker/dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions under the
Securities Act. The Selling Stockholders have informed the Company that it does
not have any agreement or understanding, directly or indirectly, with any person
to distribute the Common Stock.
 
The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
 

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EXHIBIT A
 
SELLING STOCKHOLDER QUESTIONNAIRE
XA, Inc.
875 North Michigan Avenue, Suite 2626
Chicago, Illinois 60611

Ladies and Gentlemen:
 
I acknowledge that I am a holder of securities of XA, Inc. (the “Company”).  I
understand that I will be named as a selling stockholder in the prospectus that
forms a part of the registration statement on Form S-1 (or other applicable
form) that the Company will file with the Securities and Exchange Commission to
register under the Securities Act of 1933, as amended, the securities I expect
to sell. The Company will use the information that I provide in this
Questionnaire to ensure the accuracy of the registration statement and the
prospectus.
 

 
Please answer every question.
If the answer to any question is “none” or “not applicable,” please so state.
 

1.  Name.  Type or print your name exactly as it should appear in the
Registration Statement.

______________________________________________

2.  Manner of Ownership of Shares:
 

  Individual _______     Community Property ________    Tenants in Common
_______

  Joint Tenants with Rights of Survivorship ________       Corporate ________

  Partnership ______         Trust ________     Other
___________________________

3.  Contact Information. Provide the address, telephone number and fax number
where you can be reached during business hours.
 
Address:                                                                                                                                
 
Phone:                                                                                                                                
 
Fax:                 
 
4.  Relationship with the Company. Describe the nature of any position, office
or other material relationship you have had with the Company during the past
three years.
 

 

5.  Organizational Structure.  Please indicate or (if applicable) describe how
you are organized.
 
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(a) Are you a natural person?
(if so, please mark the box and skip to Question 5)
 
[  ]Yes  [  ]No
(b) Are you a reporting company under the 1934 Act?
(if so, please mark the box and skip to Question 5)
 
[  ]Yes  [  ]No
(c) Are you a majority-owned subsidiary of a reporting company under the 1934
Act?
(if so, please mark the box and skip to Question 5)
 
[  ]Yes  [  ]No
(d) Are you a registered investment fund under the 1940 Act?
(if so, please mark the box and skip to Question 5)
[  ]Yes  [  ]No

If you have answered ““no”” to all of the foregoing questions, please describe:
(i) the exact legal description of your entity (e.g., corporation, partnership,
limited liability company, etc.); (ii) whether the legal entity so described is
managed by another entity and the exact legal description of such entity (repeat
this step until the last entity described is managed by a person or persons,
each of whom is described in any one of (a) through (d) above), (iii) the names
of each person or persons having voting and investment control over the
Company’’s securities that the entity owns (e.g., director(s), general
partner(s), managing member(s), etc.).
 
Legal Description of Entity:                         
 
                             
Name of Entity(ies) Managing Such Entity (if
any):                                                                                     
 

Name of Entity(ies) Managing such Entity(ies) (if
any):                                                                                     
 

·           Name(s) of Natural Persons Having Voting or Investment
 
Control Over the Shares Held by such
Entity(ies):                                                                           
 

 

6.  Ownership of the Company’s Securities.  This question covers your beneficial
ownership of the Company’s securities.  Please consult the Appendix A to this
Questionnaire for information as to the meaning of “beneficial
ownership.”  State the number of shares of the Company’s common stock that you
beneficially owned as of the date this Questionnaire is signed:
 

No. of Shares of Stock
 

 
7.  Acquisition of Shares.  Please describe below the manner in which you
acquired your shares of Common Stock of the Company including, but not limited
to, the date, the name and address of the seller(s), the purchase price and
pursuant to which documents (the “Acquisition Documents”).  Please forward such
documents used to acquire your shares as provided below.
 
8.  Plan of Distribution.  I have reviewed the proposed “Plan of Distribution”
attached to this Registration Rights Agreement as Annex A, and agree that the
statements contained therein reflect my intended method(s) of distribution or,
to the extent these statements are inaccurate or incomplete, I have communicated
in writing to one of the parties listed above my signature to any changes to the
proposed “Plan of Distribution” that are required to make these statements
accurate and complete.  ¨(Please check the box if you have made any changes to
Appendix B)
 

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9.  Reliance on Responses. I acknowledge and agree that the Company and its
legal counsel shall be entitled to rely on my responses in this Questionnaire in
all matters pertaining to the registration statement and the sale of any shares
of common stock of the Company pursuant to the registration statement.
 
10.  NASD.  The National Association of Securities Dealers, Inc. (“NASD”) may
request, in connection with their review of the Registration Statement and
Prospectus under the Securities Act of 1933, as amended, that the Company inform
them of the names of all persons who purchased securities from the Company,
together with any affiliations with the NASD of such purchasers. In order to aid
the Company in responding to such request, the undersigned furnishes the
following information:

PART A: DETERMINATION OF RESTRICTED PERSON STATUS:
 
Please check all appropriate categories.
 
The undersigned is:

 ___ (i) a broker-dealer;
 

___ (ii)  an officer, director, general partner, associated person1 or employee
of a broker-dealer (other than a limited business broker-dealer)2;
 

___ (iii)  an agent of a broker-dealer (other than a limited business
broker-dealer) that is engaged in the investment banking or securities business;

___ (iv)an immediate family member3 of a person described in (ii) or (iii)
above. Under certain circumstances, if the undersigned checks this category,
he/she/it may be able to participate in New Issue investments.  The Company may
request additional information in order to determine the eligibility of the
undersigned under this Restricted Person category;

___ (v)  a finder or any person acting in a fiduciary capacity to a managing
underwriter, including, but not limited to, attorneys, accountants and financial
consultants;

___ (vi) a person who has authority to buy or sell securities for a bank,
savings and loan institution, insurance company, investment company, investment
advisor or collective investment account4 (including a private investment
vehicle such as a hedge fund or an offshore fund);

___ (vii)an immediate family member of a person described in (v) or (vi) above
who materially supports5, or receives material support from, the undersigned;
 
1  A person “associated with” a broker-dealer includes any natural person
engaged in the investment banking or securities business who is directly or
indirectly controlling or controlled by a broker-dealer, any partner, director,
officer or sole proprietor of a broker-dealer.
 
2  A limited business broker-dealer is any broker-dealer whose authorization to
engage in the securities business is limited solely to the purchase and sale of
investment company/variable contracts securities and direct participation
program securities.
 
3  The term "Immediate family" includes the investor’s: (i) parents, (ii)
mother-in-law or father-in-law. (iii) husband or wife, (iv) brother or sister,
(v) brother-in-law or sister-in-law, (vi) son-in-law or daughter-in-law, (vii)
children, and (viii) any other person who is supported, directly or indirectly,
to a material extent by an officer, director, general partner, employee, agent
of a broker-dealer or person associated with a broker-dealer.
 
4  A "collective investment account" is any hedge fund, investment corporation,
or any other collective investment vehicle that is engaged primarily in the
purchase and/or sale of securities. investment clubs (groups of individuals who
pool their money to invest in stock or other securities and who are collectively
responsible for making investment decisions) and family investment vehicles
(legal entities that are beneficially owned solely by immediate family members
(as defined above)) are not considered collective investment accounts.

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___ (viii)a person listed or required to be listed in Schedule A, B or C of a
Form BD (other than with respect to a limited business broker-dealer), except
persons whose listing on Schedule A, B or C is related to a person identified by
an ownership code of less than 10% on Schedule A;

___ (ix)a person that (A) directly or indirectly owns 10% or more of a public
reporting company listed, or required to be listed, in Schedule A of a Form BD
or (B) directly or indirectly owns 25% or more of a public reporting company
listed, or required to be listed in Schedule B of a Form BD, in each case (A) or
(B), other than a reporting company that is listed on a national securities
exchange or is traded on the Nasdaq National Market, or other than with respect
to a limited business broker/dealer;

___ (x)an immediate family member of a person described in (viii) or (ix)
above.  Under certain circumstances, if the undersigned places a check next to
this category, he/she/it  may be able to participate in New Issue
investments.  The Company may request additional information in order to
determine the eligibility of the undersigned under this Restricted Person
category;

___ (xi)any entity (including a corporation, partnership, limited liability
company, trust or other entity) in which any person or persons listed in (i)-(x)
above has a beneficial interest6; or

___None of the above categories apply and the undersigned is eligible to
participate in New Issue securities.

PART B:  DETERMINATION OF EXEMPTED ENTITY STATUS:
 
The undersigned  is:
 
____ (i)  a publicly-traded entity (other than a broker-dealer or an affiliate
of a broker-dealer, where such broker-dealer is authorized to engage in the
public offering of New Issues either as a selling group member or underwriter)
that is listed on a national securities exchange or traded on the Nasdaq
National Market or is a foreign issuer whose securities meet the quantitative
designation criteria for listing on a national securities exchange or trading on
the Nasdaq National Market;

____ (ii)an investment company registered under the Investment Company Act of
1940, as amended;

____ (iii)a corporation, partnership, limited liability company, trust or any
other entity (including a private investment vehicle such as a hedge fund or an
offshore fund, or a broker-dealer organized as an investment partnership) and

 
(A)
the beneficial interests of Restricted Persons do not exceed in the aggregate
10% of such entity; or

 
(B)
such entity limits participation by Restricted Persons to not more than 10% of
the profits and losses of New Issues;

 
____ (iv)  an investment company organized under the laws of a foreign
jurisdiction and

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5  The term “material” support” means directly or indirectly providing more than
25% of a person’s income in the prior calendar year or living in the same
household with a member of one’s Immediate family.
 
6The term ‘beneficial interest” means any economic interest such as the right to
share in gains or losses. The receipt of a management or performance based fee
for operating a collective investment account, or other fee for acting in a
fiduciary capacity, is not considered a beneficial interest in the account;
however, if such fee is subsequently invested into the account (as a deferred
fee arrangement or otherwise), it is considered a beneficial interest in that
account.

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(A)          the investment company is listed on a foreign exchange or
authorized for sale to the public by a foreign regulatory authority; and
(B)           no person owning more than 5% of the shares of the investment
company is a Restricted Person;

____ (v) (A)an employee benefits plan under the U.S. Employee Retirement Income
Security Act of 1974, as amended, that is qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the “Code”) and such plan is not
sponsored solely by a broker-dealer, (B) a state or municipal government
benefits plan that is subject to state and/or municipal regulation or (C) a
church plan under Section 414(e) of the Code;

____(vi)  a tax exempt charitable organization under Section 501(3) of the Code;

____(vii)a common trust fund or similar fund as described in Section
3(a)(12)(A)(iii) of the Securities Exchange Act of 1934, as amended, and the
Company

(A)           has investments from 1,000 or more accounts, and
(B)           does not limit beneficial interests in the Company principally to
trust accounts of Restricted Persons; or

____ (viii) an insurance company general, separate or investment account, and
 
(A)           the account is funded by premiums from 1,000 or more
policyholders, or, if a general account, the insurance company has 1,000 or more
policyholders, and
(B)            the insurance company does not limit the policyholders whose
premiums are used to fund the account principally to Restricted Persons, or, if
a general account, the insurance company does not limit its policyholders
principally to Restricted Persons.

Please acknowledge that your answers to the foregoing questions are true and
correct to the best of your information and belief by signing and dating this
Questionnaire where indicated below.  Please return the completed executed
questionnaire via fax to The Loev Law Firm, PC at (713) 524-4122as soon as
possible.
 
If at any time you discover that your answer to any question was inaccurate, or
if any event occurring after your completion hereof would require a change in
your answer to any questions, please immediately contact The Loev Law Firm, PC
at (713) 524-4110.

 

 
Date:                                           , 2007
(Print name of selling stockholder)
 
By:           
(Signature)
 
Name:                                                                           
(Print name)
 
Title:                                                                           

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APPENDIX A
1.
Definition of “Beneficial Ownership”

 
(a)
A “Beneficial Owner” of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship or
otherwise has or shares:

 
(1)
Voting power which includes the power to vote, or to direct the voting of, such
security; and/or

 
(2)
Investment power which includes the power to dispose, or direct the disposition
of, such security.

Please note that either voting power or investment power, or both, is sufficient
for you to be considered the beneficial owner of shares.
 
 
(b)
Any person who, directly or indirectly, creates or uses a trust, proxy, power of
attorney, pooling arrangement or any other contract, arrangement or device with
the purpose or effect of divesting such person of beneficial ownership of a
security or preventing the vesting of such beneficial ownership as part of a
plan or scheme to evade the reporting requirements of the federal securities
acts shall be deemed to be the beneficial owner of such security.
 

(c)
Notwithstanding the provisions of paragraph (a), a person is deemed to be the
“beneficial owner” of a security, if that person has the right to acquire
beneficial ownership of such security within 60 days, including but not limited
to any right to acquire:  (A) through the exercise of any option, warrant or
right; (B) through the conversion of a security; (C) pursuant to the power to
revoke a trust, discretionary account or similar arrangement; or (D) pursuant to
the automatic termination of a trust, discretionary account or similar
arrangement; provided, however, any person who acquires a security or power
specified in paragraphs (A), (B) or (C) above, with the purpose or effect of
changing or influencing the control of the issuer, or in connection with or as a
participant in any transaction having such purpose or effect, immediately upon
such acquisition shall be deemed to be the beneficial owner of the securities
which may be acquired through the exercise or conversion of such security or
power.

 

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