ex10-11.htm


    
       

      Exhibit
        10.11

      FORBEARANCE
        AGREEMENT

    

    
      


       

      This
        Forbearance Agreement ("Forbearance
        Agreement") is made and entered into as of this 3 day of January,
        2008 by and
        between LASALLE BANK NATIONAL ASSOCIATION ("Lender"), and THE
        EXPERIENTIAL AGENCY,
        INC., an Illinois corporation (the "Borrower").

    

    
      


       

      A.           
        Lender extended a certain
        loan
        facility to the Borrower pursuant to that certainBusiness
        Loan Agreement dated August 27,
        2007 ("Loan Agreement") as evidenced by thatcertain
        Promissory Note dated August 27,
        2007 in the original principal amount of $867,000.

    

    
      


       

      B.           
        Borrower's obligations under
        the
        Loan Agreement and Promissory Note aresecured
        by a lien in favor of Lender on
        all assets of Borrower as provided for in that certain Commercial
        Security Agreement dated
        September 28, 2004 ("Security Agreement").

    

    
      


       

      C.           
        Borrower's obligations under
        the
        Loan Agreement, Promissory Note and SecurityAgreement
        (collectively, "Loan
        Documents") are guaranteed by XA Inc., the parent corporationof
        Borrower, pursuant to that certain
        Commercial Guaranty dated August 27, 2007
        ("Guaranty").

    

    
      


       

      D.           
        In connection with certain
        financial accommodations entered into between Parentand
        certain Junior Lenders (as
        referenced on Schedule
        1attached hereto) ("Junior
        Lenders"),Borrower
        granted a security interest in
        its assets to the Junior Lenders to secure the Parent'sobligations
        to the Junior Lenders
        arising from such financial accommodations ("Parent FinancialAccommodations").

    

    
      


       

      E.           
        In consideration for Lender
        consenting to the Borrower's grant of securityinterests  in  its  assets  to  the
        Junior  Lenders  in  connection  with  the  Parent  Financial
Accommodations,
        each Junior Lender, for
        the benefit of Lender, entered into the SubordinationAgreements
        referenced on Schedule
        1attached hereto.
        (''Subordination Agreements").

    

    
      


       

      F.           
        All outstanding principal
        and
        accrued interest owed under the Promissory Notewas
        due and payable on December 1, 2007,
        and remains unpaid.

    

    
      


       

      G.           
        Borrower has certain financial
        covenants under the Loan Documents,  andBorrower
        has not satisfied such
        financial covenants.

    

    
      


       

      H.            
        Borrower is in default under the Loan Documents and certain Events of Default
        have occurred and are
        continuing under the Loan Documents;

    

    
      


       

      I.              
        Borrower has requested that Lender forbear from exercising its rights and
        remedies under the
        Loan
        Documents; and

    

    
      


       

      J.             
        Bank is willing to forbear until June 1, 2008 ("Forbearance Period") to enforce
        its rights and remedies
        under the Loan Documents, conditioned upon the prompt and full performance of the
        terms and conditions
        set forth herein.

    

    
      


       

      NOW
        THEREFORE, Lender reserves at its
        sole option and discretion all rights and remedies available
        to it under the Loan
        Documents, and applicable law, including but not limitedto
        its rights to foreclose on any
        collateral (the "Collateral") securing the Note. Without waiving any such
        rights
        and remedies, however, and without waiving any defaults, Lender is willing
        to
forbear from exercising
        certain of its rights and remedies, but only upon terms and conditions
described below. All
        terms
        not defined herein shall have the same meaning as they have in the Loan
        Documents.

    

    
      


       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      1.           
        Borrower shall pay to Bank
        upon
        execution of this Forbearance Agreement,$100,000
        in readily available funds
        which will reduce the amount of principal on the Note to $738,000.00.

    

    
      


       

      2.           
        Borrower shall enter into
        a new
        note in the amount of $738,000.00 as set forth inExhibit
        "B"
        hereto.

    

    
      


       

      3.           
        Bank acknowledges that Junior
        Lenders may loan to Borrower the $100,000.00referenced
        in Paragraph 1. hereinabove
        and may loan additional funds to Borrower from time totime
        ("Junior
        Loans").   The Junior Lenders and Borrower acknowledge and agree
        that theseJunior
        Loans remain subordinate to the
        Bank's Senior Debt as set forth in the existingSubordination
        Agreements among Bank,
        Borrower and the Junior Lenders.

    

    
      


       

      4.           
        Borrower shall provide to
        Bank
        weekly Accounts Receivable Aging Reports inform
        and substance reasonably
        satisfactory to Bank.

    

    
      


       

      5.           
        Interest on the $738,000.00
        Note
        shall continue to accrue monthly on the existingprincipal
        balance as set forth in the
        note,

    

    
      


       

      6.           
        Inaddition
        to making monthly initial
        payments and meeting its other obligations,Borrower
        shall make principal payments
        under the Note as follows:

       

      a.           
        $10,000 on March 1,
        2008

    

    
      b.           
        $10,000 on April 1,
        2008

      c.           
        $10,000 on May 1,
        2008

    

    
      


       

      7.           
        Borrower, Guarantors and Junior
        Lenders will execute a General Release as setforth
        in Exhibit
        "A"hereto as an additional
        inducement to Bank.

    

    
      


       

      8.           
        Borrower acknowledges, agrees,
        warrants and represents that:

    

    
      


       

      a.        As
        of January 3, 2008, the current balance on the Note (not including attorneys fees, expenses
        and other
        charges) was as follows:

       

    

    
      	
              
              

              Principal

            	
              
              

              $837,904.00

            
	
              Interest
                to January 3,
                2008

            	
              $6,674.14

            
	
              Late
                Charges

            	
              $1,582.71

            
	
              Costs
                and
                Expenses

            	
              $0

            
	 	
              $846,160.85

            


    

    
      


    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      b.          
        The Note is valid, binding
        and an
        enforceable obligation of Borrower toBank.
        Borrower has no claims,
        counterclaims, rights of setoff or defenses with respect to
        theNote,
        to any of its obligations under
        the Loan Documents (the "Obligations"), or to the Bank'sexercise
        of any right or remedy
        available to it under the terms of the Loan Documents, thisForbearance
        Agreement or applicable
        law.

    

    
      


       

      c.          
        The security interests and
        pledges
        that Borrower granted to Bank in theLoan
        Documents to secure the Note are
        valid, binding, and enforceable, remain first and validsecurity
        interests in the Property and
        other respective collateral, and are hereby
        reaffirmed.

    

    
      


       

      d.          
        The Event of Defaults under
        the
        Loan Documents have occurred and arematerial.
        No notice or cure periods
        apply to the Defaults.


    

    
       

      e.          
        The Bank is entitled to demand
        immediate payment of the Note, and immediate  performance  of
        the  Obligations  under  the  Loan  Documents,  without  setoff,
counterclaim
        or
        defense.

    

    
      


       

      f.          
        The Bank has not waived any:
        of
        the Defaults which may occur in thefuture,
        or any of its rights to payment
        of the Note or Borrower's performance of the Obligations.  
Nothing
        herein shall be construed as any
        such waiver.

    

    
      


       

      g.          
        All   of  Borrower's   and   Guarantors'   agreements,   acknowledgments,warranties
        and representations contained
        in this Forbearance Agreement are material to Bank'swillingness
        to enter into this
        Forbearance Agreement.

    

    
      


       

      9.          
        As an inducement to Bank to
        enter
        into this Forbearance Agreement, Borrower,Guarantors
        and Junior Lenders agree to
        execute the General Release, a copy of which is attachedhereto
        as Exhibit
        "A".In addition, Borrower
        and Guarantors waive and affirmatively agree notto
        allege, assert or otherwise pursue
        any claim, defense, affirmative defense, counterclaim causeof
        action, setoff or other right that
        they may have, as of the date hereof, against Bank, whetherknown
        or unknown, including but not
        limited to any contest of (i) the existence and materialityof
        the Defaults, (ii) the
        enforceability, applicability or validity of any provisions of the
        LoanDocuments,
        or the enforcement or
        validity of the terms and provisions set forth herein, (iii)Bank's
        right to demand immediate payment
        of the Notes, and performance of the Obligations inthe
        event of borrower's default of the
        Forbearance Agreement, (iv) Bank's right to all rents, issues,   profits,   products   and  proceeds   from  the  Property,   (v)   the   existence,   validity,enforceability
        or perfection of security
        interests granted to Bank in the Loan Documents or hereunder
        in any of the collateral, whether real
        or personal property, tangible or intangible property,
        or any right or other
        interest, now or hereafter arising, (vi) the conduct of the Bank in
        administering
        the financial arrangements between
        Borrower and Bank, or (vii) any legal fees and expenses
        incurred by Bank and charged to
        Borrower under this Forbearance Agreement and/or the
        Loan
        Documents.

    

    
      


       

      10.          
        Borrower shall pay all reasonable
        legal fees and expenses incurred by the Bank in connection
        with the Defaults and this Forbearance
        Agreement, including those relating to drafting
        and negotiating this Forbearance
        Agreement, and the costs of judgment, tax lien, U.C.C., title and other searches
        conducted by
        the Bank or its agents in Illinois. Borrower shall pay these fees and expenses within
        10 business
        days of Bank's demand. If not timely paid, such fees and expenses shall be added
        to and
        constitute a part of the Note.

    

    
      


       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      11.           
        Subject to the terms and
        conditions of the Loan Documents and this Forbearance
        Agreement
        and in the absence of any additional
        default, Bank will forbear from exercising only those
        rights and remedies under the Loan
        Documents which it has not already exercised and which
        are triggered exclusively by Events of
        Default/Acceleration, and only for the period from the
        date of this Forbearance Agreement
        through the Forbearance Period.    The Forbearance
        Period
        will terminate, and all liabilities
        under the Note will become immediately due and payable to
        the Bank (if not already so due), and
        after the Forbearance Period Bank has no obligation of(a)
        providing additional forbearance to
        Borrower beyond that described herein (b) renewing the loan
        Documents, or (c) offering Borrower any
        new credit facility after the Forbearance Period.

    

    
      


       

      12.           
        This Forbearance Agreement
        shall
        not be considered accepted and agreed to by Borrower
        or binding upon Bank, unless and until
        Borrower and Guarantors have executed this Agreement
        and returned it to Bank as described
        below.

    

    
      


       

      13.           
        Borrower and Guarantors agree
        to
        execute such other agreements, instruments and
        documents as Bank may reasonably
        request to perfect or continue the perfection of the security
        interests granted in the Loan Documents
        or hereunder.

    

    
      


       

      14.           
        This Forbearance Agreement
        may be
        executed in multiple counterparts, all of which,
        when taken together, shall constitute
        one document.

    

    
      


       

      15.           
        BORROWER  AND   GUARANTORS  ACKNOWLEDGE,   CONSENT  AND
        AGREE  THAT  LASALLE  BANK
        NATIONAL ASSOCIATION  UNDER  THE  LOAN
        DOCUMENTS,
        GUARANTY AND SUBORDINATION
        AGREEMENTS.

    

    
      


       

      16.           
        BORROWER,     GUARANTORS     AND     JUNIOR     LENDERS     AFTER
        CONSULTING
        OR HAVING HAD OPPORTUNITY TO CONSULT
        WITH COUNSEL KNOWINGLY,
        VOLUNTARILY AND INTENTIONALLY WAIVES
        ANY RIGHT IT MAY HAVE
        TO A TRIAL BY JURY IN ANY LITIGATION
        BASED ON OR ARISING OUT OF THIS   FORBEARANCE  AGREEMENT,   THE   LOAN   AGREEMENT,   ANY   OF   THE
        TRANSACTIONS
        CONTEMPLATED BY THE FORBEARANCE
        AGREEMENT OR THE LOAN
        DOCUMENTS, OR ANY COURSE OF CONDUCT,
        DEALING, STATEMENTS OR ACTIONS
        BETWEEN THEM AND BANK (COLLECTIVELY,
        "CLAIMS").   BORROWER AND
        GUARANTORS SHALL NOT SEEK TO
        CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE,
        ANY ACTION IN WHICH A JURY TRIAL HAS
        BEEN WAIVED WITH ANY
        OTHER ACTION IN WHICH A JURY TRIAL
        CANNOT BE OR HAS NOT BEEN WAIVED.

    

    
      


       

      17.           
        IN   ANY   LITIGATION   CONCERNING   CLAIMS,   BORROWER   AND
        GUARANTORS
        AGREE AND CONSENT TO VENUE IN, AND
        VOLUNTARILY AND INTENTIONALLY   WAIVE   THEIR   RIGHT
        TO   HAVE   THE   VENUE   FOR   SUCH
        LITIGATION  IN
        ANY  COURT  OTHER
        THAN,  THE  CIRCUIT  COURT  OF  COOK
        COUNTY,
        ILLINOIS OR THE UNITED STATES DISTRICT
        COURT FOR THE NORTHERN
        DISTRICT OF ILLINOIS, EASTERN DIVISION (COLLECTIVELY, THE "AGREED VENUES"). BORROWER
        AND
        GUARANTORS AGREE THAT, IN THE EVENT THEY COMMENCE
        ANY LITIGATION
        AGAINST BANK CONCERNING THE CLAIMS, THEY WILL ONLY
        COMMENCE SUCH
        LITIGATION IN THE AGREED VENUES, AND THAT, TO
        THE EXTENT THEY
        COMMENCE SUCH LITIGATION IN A DIFFERENT VENUE, THEY
        WILL CONSENT TO
        (AND THEY WAIVE ANY OBJECTIONS TO) A MOTION
        BY BANK TO
        CHANGE VENUE TO THE AGREED VENUES. FURTHER, BORROWER
        AND GUARANTORS
        WAIVE ANY RIGHT THEY MAY
        HAVE TO FILE A MOTION TO CHANGE VENUE FROM THE AGREED VENUES IN THE EVENT THAT LITIGATION
        CONCERNING
        THE CLAIMS IS PENDING IN EITHER OF THE AGREED
        VENUES.

    

    
      


       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      18.           
        Failure of Borrower to have executed and delivered to Bank a copy of this
        Forbearance Agreement,
        by
        12:00 p.m. on January 7, 2008, will be deemed a rejection of this offer and
        refusal to comply with the terms and conditions set forth above. In that
        event,
        Bank may immediately
        commence and exercise all rights and remedies available to it and applicable
        law against Borrower
        and
        the Collateral.

    

    
      


       

      IN
        WITNESS WHEREOF, the parties have
        signed, sealed and delivered this Agreement as of the day and year first
        above
        written.

    

    
       

      Borrower
        acknowledges and agrees to the
        terms and conditions set forth herein. 

    

    
      


      
      

      
        	LASALLE
                BANK
                NATIONAL ASSOCIATION	
                THE
                  EXPERIENTIAL AGENCY,
                  INC.

              
	
                By:
/s/
                  Michael D.
                  Smith          
                  

                Title: SVP
                  & Reg.
                  Rep.             

                Its:____________________

                Name: Michael
                  D. Smith          
                  

              	
                By:
/s/
                  Joseph
                  Wagner         
                  

                Title: CEO                               
                  

                Its:__________________         
                  

                Name: Joseph
                  Wagner         
                  

              


      

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
      GUARANTOR

    

    
      


       

      Agreed
        and consented to this Forbearance
        Agreement by the undersigned as guarantor, and it hereby ratifies and confirms its obligations
        to LaSalle
        Bank National Association under the Commercial Guaranty dated August 27,
        2007.

    

    
      


       

      XA
        INC.

    

    
      By:/s/
        Joseph
        Wagner                         


    

    
      Name:
Joseph
        Wagner                         


    

    
      Title:
CEO                                                            
        

    

    
      


       

      JUNIOR
        LENDERS:

    

    
      


       

      Agrees
        and consented to this Forbearance
        Agreement by the undersigned as Junior Lenders, and we ratify and confirm our obligations
        to LaSalle
        Bank National Association under our respective Subordination
        Agreements

       

    

    
      SANDS
        BROTHERS VENTURE CAPITAL, LLC


      By:
/s/
        Scott Baily                               


      Name:
Scott
        Baily                               


    

    
      Title:COO                                            
        

    

    
       

       

    

    
      


      SANDS
        BROTHERS VENTURE CAPITAL II,
        LLC

      
        
          By:
/s/
            Scott Baily                               


          Name:
Scott
            Baily                               


          
            Title:COO                                            
              

          

        

      

      


    

     

    SANDS
      BROTHERS VENTURE CAPITAL III,
      LLC

    
      
        
          By:
/s/
            Scott Baily                               


          Name:
Scott
            Baily                               


          
            Title:COO                                            
              

          

        

      

    

    


     

    


    
    

    SANDS
      BROTHERS VENTURE CAPITAL IV,
      LLC

    
      
        By:
/s/
          Scott Baily                               


        Name:
Scott
          Baily                               


        
          Title:COO                                            
            

        

      

KATE
&
ADAM
      BRIDGE
      PARTNERS, L.P.

    
      By:
/s/
        Scott Baily                               


      Name:
Scott
        Baily                               


      
        Title:COO                                            
          

      

    

    
       

      VISION
        OPPORTUNITY MASTER FUND,
        LTD.

    

    
      By:
/s/
        Adam Benowitz                     


    

    
      Name:
Adam
        Benowitz                     


    

    
      Title:
CEO                                                            
        

    

    
      


       

      
        /s/
          G. Chris
Andersen                  


        G.
          Chris Andersen

         

        /s/
          Paul M.
          Higbee                             


        Paul
          M. Higbee

      

    

     

     

    
      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        
EXHIBIT
        A

    

    
      


       

      GENERAL
        RELEASE

    

    
      


       

      KNOW
        ALL MEN BY THESE PRESENTS, THAT the
        Undersigned, (the "Releasor"), for good and valuable
        consideration, the
        receipt and sufficiency of which are hereby acknowledged, for:
        (i) themselves, (ii)
        any parent, affiliate or subsidiary thereof, (iii) any partnership or joint
        venture of which
        any person or entity comprising any of the Releasors (or any parent, affiliate
        or subsidiary thereof) is a partner, (iv) any person or entity owning the
        beneficial interest in the trust, any parent, affiliate or subsidiary thereof
        or
        any partnership or joint
        venture of which such person or entity (or any parent, affiliate or subsidiary
        thereof), is a partner, and
        (v) the respective partners, officers, directors, shareholders, heirs, legal
        representatives, legatees,
        successors and assigns of all of the foregoing persons and entities,
hereby release and
        forever
        discharge LaSalle Bank National Association ("Bank"), its past, present and future
        shareholders,
        successors, assigns, officers, directors, agents, attorneys and employees
        together with their respective heirs, legal representatives, legatees,
        successors, and assigns, of
        and from all actions, claims demands, damages, debts, losses, liabilities,
        indebtedness, causes of
        action either at law or in equity and obligations of whatever kind or nature,
        whether known or unknown,
        direct or indirect, new or existing, by reason of any matter, cause or thing
        whatsoever from the
        beginning of the world to the date of this General Release arising out of
        or
relating to any matter
        or
        thing whatsoever, including without limitation, the claims asserted or
which could have been
        asserted by the Releasors in connection with loans to
        Borrower.

    

    
      


       

      It
        is acknowledged that Releasor has
        read this General Release and consulted counsel before executing same;
        that Releasor has
        relied upon its own judgment and that of its counsel in executing this General
        Release and have not relied on or been induced by any representation,
statement or act by
        any
        other party referenced to herein which is not referred to in this instrument; that the
        Releasor enters
        into this General, Release and Covenant voluntarily, with full knowledge of its significance;
        and that
        this General Release is in all respects complete and
        final.

    

    
      


       

      If
        any term or provision of this General
        Release or the application thereof to any person, entity or circumstance
        shall, to any
        extent, be held invalid and/or unenforceable by a court of competent jurisdiction,
        the remainder of
        this General Release, or the application of such term of provisions to persons,
        entities or circumstances other than those as to which it is held invalid
        or
        unenforceable shall not be affected thereby, and each term and provision
        of the
        General Release shall be
        valid and be enforced to the fullest extent permitted by
        law.

    

    
      


       

       

       

       

       

       

       

      
        
          
          

        

        
          
            Exhibit
              A-1

          

          
            

          

        

        
          
          

        

      

    

    
      IN
        WITNESS WHEREOF, the Releasor has
        caused this General Release to be executed on
        December      , 2007.

    

    
      


       

      RELEASOR:

       

       

       

      
      

      
        	
                XA
                  INC., as
                  Guarantor

              	
                THE
                  EXPERIENTIAL AGENCY,
                  INC

              
	
                By:
/s/
                  Joseph Wagner

                Name: Joseph
                  Wagner

                Its: CEO

              	
                By:
/s/
                  Joseph Wagner

                Name: Joseph
                  Wagner

                Its: CEO

              


      

    

    
       

    

    
 

    
      
        
        

      

      
        
          Exhibit
            A-2

        

        
          

        

      

      
        
        

      

    

     

    


    
      


    

    


    
      


       

    

    
      SCHEDULE
        1


      SUBORDINATION
        AGREEMENTS

    

    
      SUBORDINATION
        AGREEMENT dated as of
        August ____ , 2006
        (the "Subordination Agreement")
        is executed by and among
        Sands Brothers Venture Capital LLC, Sands Brothers Venture Capital II
        LLC, Sands Brothers
        Venture Capital III LLC, Sands Brothers Venture Capital IV LLC and
        Katie & Adam
        Bridge Partners, L.P. (each a "Junior Lender and collectively, the "Junior
        Lenders"),
        whose address is 90 Park Avenue, 31st Floor, New York, NY 10016,
        LASALLE BANK
        NATIONAL ASSOCIATION, a national banking association (the "Senior Lender'), whose
        address is 135
        South LaSalle Street, Chicago, Illinois 60603, and THE EXPERIENTIAL AGENCY,
        INC., an Illinois
        corporation (the "Borrower"), whose address is 875 North Michigan
        Avenue, Suite 2626,
        Chicago, Illinois 60611.

    

    
      


       

      SUBORDINATION
        AGREEMENT dated as of
        October 17, 2006 (the "Subordination Agreement") is executed
        by and among
        VISION OPPORTUNITY MASTER FUND, LTD, (the "Junior Lender"), whose
        address is 20
        West 55* Street, 5th Floor,
        New York, New York, 10019-5373 and LASALLE BANK
        NATIONAL
        ASSOCIATION, a national banking association (the "Senior Lender'), whose
        address is 135
        South LaSalle Street, Chicago, Illinois 60603, and THE EXPERIENTIAL AGENCY,
        INC., an Illinois
        corporation (the "Borrower"), whose address is 875 North Michigan Avenue,
        Suite 2626,
        Chicago, Illinois 60611.

    

    
      


       

      SUBORDINATION
        AGREEMENT DATED AS OF
        October 17, 2006 ("the Subordination Agreement") is executed by and among
        G.
        CHRIS ANDERSEN AND PAUL M. HIGBEE (collectively, "the
        "Junior Lender"),
        whose addresses are 430 Park Avenue, Suite 701, New York, New York, 10022
        and
        175 Elmsley Ct.,. Ridgewood, New Jersey 07450, LASALLE BANK NATIONAL ASSOCIATION,
        a national
        banking association (the "Senior Lender'), whose address is 135
        South LaSalle
        Street, Chicago, Illinois 60603, and THE EXPERIENTIAL AGENCY, INC., an Illinois
        corporation (the "Borrower"), whose address is 875 North Michigan Avenue,
        Suite
        2626, Chicago, Illinois 60611.

    

    
      


       

       

       

       

       

       

       

      
        
          
          

        

        
          
            Schedule
              1