Exhibit 10.6



















                                    XA, INC.



                          SECURITIES PURCHASE AGREEMENT







                             As of October 23, 2006




















<PAGE>

     THIS  SECURITIES  PURCHASE AGREEMENT, dated as of this 23th day of October,
2006 (this "AGREEMENT"), between XA, INC., a Nevada corporation (the "COMPANY"),
            ---------                                                 -------
and  Vision  Opportunity  Master  Fund,  Ltd.  (the  "PURCHASER").
                                                      ---------

                              W I T N E S S E T H:

     WHEREAS,  the  Company  has  previously  entered into a Securities Purchase
Agreement  on  August  8,  2006  (the  "PRIOR  CLOSING"  and the "PRIOR PURCHASE
                                        --------------            --------------
AGREEMENT"),  whereby  it  sold an aggregate of $1,250,000 in 11% Senior Secured
---------
Convertible  Promissory  Notes  (the  "PRIOR  NOTES")  and  175,000  warrants to
                                       ------------
purchase shares of its common stock at an exercise price of $1.10 per share (the
"PRIOR  WARRANTS"),  to five entities (the "PRIOR PURCHASERS") which Prior Notes
 ---------------                            ----------------
were  secured  by  a  Security  Agreement  (the "PRIOR SECURITY AGREEMENT"). The
                                                 ------------------------
shares  of  common  stock  which  the  Prior Notes were convertible into and the
shares  of  common  stock  which the Prior Warrants were convertible into and an
aggregate  of  1,000,000  additional  warrants  previously issued exercisable at
$0.30  per  share,(collectively  the  "PRIOR  UNDERLYING  SHARES"), were granted
                                       -------------------------
registration  rights  pursuant  to  a  Registration Rights Agreement (the "PRIOR
                                                                           -----
REGISTRATION  AGREEMENT");
-----------------------

     WHEREAS,  the  Company desires to issue to the Purchaser, and the Purchaser
desires  to  purchase  from the Company, the Securities (as such term is defined
below)  as  set  forth  below  (the  "OFFERING");  and
                                      --------

     WHEREAS,  certain  capitalized  terms used in this Agreement are defined in
Section  9.1  hereof;
------------

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

     1.   SALE  AND  PURCHASE  OF  SECURITIES.

          1.1  Sale  and  Purchase  of  Securities.  Subject  to  the  terms and
               -----------------------------------
     conditions  of  this  Agreement, on the Closing Date (as defined in Section
                                                                         -------
     3.1  hereof),  the  Company shall issue, sell and deliver to the Purchaser,
     ---
     and  the  Purchaser  shall purchase from the Company for the Purchase Price
     (as  defined  in  Section  2.1  hereof) (i) 11% Senior Subordinated Secured
                       ------------
     Convertible  Promissory  Notes  in  the  aggregate  principal  amount  of
     $1,250,000  (the  "NOTES")  and  (ii)  warrants to purchase one hundred and
                        -----
     eighty-seven  thousand five hundred (187,500) shares (subject to adjustment
     as  described therein), of the Company's common stock, par value $0.001 per
     share  (the  "COMMON STOCK") at an exercise price of $1.10, and warrants to
                   ------------
     purchase one hundred thousand (100,000) shares at an exercise price of $.30
     per  share  (subject  to adjustment as described therein), of the Company's
     Common  Stock (each a "WARRANT" and collectively the "WARRANTS"). The Notes
                            -------                        --------
     and Warrants shall hereinafter sometimes be collectively referred to as the
     "SECURITIES."  The names, addresses and principal amount of Notes purchased
      ----------
     and  Warrants  received by the Purchaser shall be set forth on Schedule 1.1
                                                                    ------------
     hereto.

<PAGE>

     2.   PURCHASE  PRICE.

          2.1  Purchase Price. The aggregate purchase price of the Securities to
               --------------
     be  purchased  pursuant  to Section 1.1 shall be $1,250,000, (the "PURCHASE
                                 -----------                            --------
     PRICE").
     -----

          2.2  Payment  of  the  Purchase  Price.  At the Closing (as defined in
               ---------------------------------
     Section  3.1  hereof),  the  Purchaser shall pay the Purchase Price by wire
     ------------
     transfer  of  immediately available funds or by such other method as may be
     reasonably  acceptable to the Company and the Purchaser, to such account of
     the  Company  as  shall have been designated in advance to the Purchaser by
     the  Company.  The  Company  may  pay  qualified  Broker  Dealers a selling
     concession,  with  the prior written consent of the Purchaser, of up to 10%
     (after  subtracting  the  $20,000  in due diligence fees (as provided below
     under Section 8.2(d), and up to $25,000 in legal fees) and an unaccountable
     expense allowance of up to 3% of gross proceeds received in connection with
     this  Offering.

     3.   CLOSING.

          3.1  Closing  Date.  The  closing  of  the  sale  and  purchase of the
               -------------
     Securities (the "CLOSING") shall take place on October __, 2006, or at such
                      -------
     other  time,  date  or  place  as  the  parties  hereto may mutually agree;
     provided,  that  all  conditions to the Closing set forth in this Agreement
     --------
     have  been  satisfied or waived by such date. The date on which the Closing
     is  held  is  referred  to  in this Agreement as the "CLOSING DATE." At the
                                                           ------------
     Closing  (i) the Company shall deliver, or cause to be delivered, the Notes
     and  Warrants, each executed by the Company and (ii) the documents referred
     to  in  Section  8  hereof.
             ----------

     4.  REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.  The Company hereby
represents,  covenants  and warrants as of the date hereof and as of the Closing
Date  to  the  Purchaser,  acknowledging  that the Purchaser is relying upon the
accuracy and completeness of the representations and warranties set forth herein
to,  among  other  things,  ensure  that  registration  under  Section  5 of the
Securities  Act  is  not  required in connection with the sale of the Securities
hereby,  as  follows:

          4.1  Organization  and  Good  Standing;  Capitalization.
               --------------------------------------------------

          (a)  The  Company  (and  each  Subsidiary)  is duly organized, validly
     existing and in good standing under the laws of the state of Nevada and has
     the  corporate power and authority to own, lease and operate its properties
     and  assets  and  to  carry  on  its business as now conducted and as it is
     proposed to be conducted. The Company is in good standing under the laws of
     each  jurisdiction in which the conduct of its business or the ownership of
     its  properties  or  assets  requires  such qualification or authorization.

          (b)  All  the  outstanding shares of capital stock of the Company have
     been  duly  authorized,  and  are  validly  issued,  fully  paid  and
     non-assessable.  Except  as  disclosed  on  Schedule 4.1(b) (i) there is no
                                                 --------------
     option,  warrant,  call,  right,  commitment  or  other  agreement  of  any
     character  to which the Company is a party, (ii) there are no securities of
     the  Company outstanding which upon conversion or exchange, and (iii) there
     are  no  share  appreciation  rights,  or  other  similar  rights  based on
     securities  of the Company which, in the case of clause (i), (ii) or (iii),

<PAGE>

     would  require  the  issuance, sale or transfer of any additional shares of
     capital stock or other equity securities of the Company or other securities
     convertible into, exchangeable for or evidencing the right to subscribe for
     or  purchase share capital or other equity securities of the Company. Other
     than as contemplated by this Agreement or Transaction Documents (as defined
     in  Section  4.2),  the  Company is not a party to, nor is it aware of, any
         ------------
     voting  trust  or  other  voting,  stockholders  or  similar agreement with
     respect  to  any  of  the  securities  of  the  Company or of any agreement
     relating  to  the issuance, sale, redemption, transfer or other disposition
     of  the  shares  of  capital  stock  on  other  securities  of the Company.

          4.2  Authorization  of  Agreement; Enforceability. The Company has all
               --------------------------------------------
     requisite  corporate  power  and  authority  to  execute  and  deliver this
     Agreement  and  each other agreement, document, instrument and certificate,
     including,  but  not  limited  to, Waiver Agreements, the Bank Consent, the
     Notes,  Warrants,  Registration Rights Agreement and Security Agreement, to
     be  executed  by  the  Company  in  connection with the consummation of the
     transactions contemplated by this Agreement (collectively, the "TRANSACTION
                                                                     -----------
     DOCUMENTS"), and to perform fully its obligations hereunder and thereunder.
     ---------
     The  execution,  delivery  and performance by the Company of this Agreement
     and  the  Transaction  Documents have been duly authorized by all necessary
     corporate  action  on  the  part  of the Company and its stockholders. This
     Agreement  and each of the Transaction Documents have been duly and validly
     executed  and delivered by the Company and, assuming the due authorization,
     execution and delivery thereof by the Purchaser, this Agreement and each of
     the  Transaction  Documents  constitutes  the  legal,  valid  and  binding
     obligations  of  the Company, enforceable against the Company in accordance
     with  its  respective  terms, subject to applicable bankruptcy, insolvency,
     reorganization, moratorium and similar laws affecting creditors' rights and
     remedies generally and subject, as to enforceability, to general principles
     of  equity  (regardless of whether enforcement is sought in a proceeding at
     law  or  in  equity).

          4.3  No  Conflicts.  The  execution,  delivery  and performance of the
               -------------
     Transaction Documents by the Company and the consummation by the Company of
     the  transactions  contemplated  thereby,  do not and will not (i) conflict
     with  or  violate  any  provision  of the Company's and/or any Subsidiary's
     Articles  of  Incorporation  or  by-laws and any and all amendments thereto
     (collectively, the "INTERNAL DOCUMENTS"), (ii) conflict with, or constitute
                         ------------------
     a  default  (or  an  event  that with notice or lapse of time or both would
     become  a  default)  under,  or  give  to others any rights of termination,
     amendment,  acceleration  or cancellation (with or without notice, lapse of
     time  or both) of, any agreement, credit facility, debt or other instrument
     (evidencing  a  Company  or  Subsidiary  debt  or  otherwise),  or  other
     understanding to which the Company or any Subsidiary is a party or by which
     any  property  or  asset  of  the  Company  or  any  Subsidiary is bound or
     affected,  or  (iii)  result  in  a violation of any law, rule, regulation,
     order,  judgment,  injunction,  decree or other restriction of any court or
     governmental  authority  to  which  the  Company or a Subsidiary is subject
     (including  federal and state securities laws and regulations), or by which
     any  property or asset of the Company or a Subsidiary is bound or affected.

          4.4  Subsidiaries,  Joint  Ventures,  Partnerships,  Etc.
               ---------------------------------------------------

          (a)  As  of  the  Closing  (i)  The Experiential Agency, Inc., (ii) XA
     Scenes,  Inc.,  (iii)  XA  Interactive,  Inc.,  and  (iv)  Fiori  XA,  Inc.
     (collectively the "SUBSIDIARIES") are the only subsidiaries of the Company.
                        ------------
     Each  Subsidiary is wholly owned by the Company, is duly organized, validly

<PAGE>

     existing  and  in  good  standing under the laws of the jurisdiction of its
     incorporation  with corporate power and corporate authority under such laws
     to  own,  lease  and  operate  its  properties  and conduct its business as
     currently  conducted; and is in good standing (if applicable) in each other
     jurisdiction  in which it owns or leases property of a nature, or transacts
     business of a type, that would make such qualification necessary other than
     such  qualifications  which  the  failure  to  have would not reasonably be
     expected  to  have  a  Material  Adverse  Effect.

          (b)  Neither  the Company nor its Subsidiaries is a party to any joint
     venture,  partnership  or  similar  arrangement  or  agreement.

          4.5  Consents  of Third Parties. None of the execution and delivery by
               --------------------------
     the  Company  of  this  Agreement  and  the Transaction Documents, the Bank
     Consent,  the  consummation  of  the  transactions  contemplated  hereby or
     thereby,  or compliance by the Company with any of the provisions hereof or
     thereof  will  (a) conflict with, or result in the breach of, any provision
     of  the  Certificate  of  Incorporation  or  Bylaws  of the Company (or any
     Subsidiary),  (b)  conflict  with,  violate,  result  in  the  breach  or
     termination  of,  or  constitute  a  default  or  give rise to any right of
     termination  or  acceleration  or  right  to  increase  the  obligations or
     otherwise  modify  the terms thereof under any Permit or Order to which the
     Company (or any Subsidiary) is a party or any Contract to which the Company
     or  its  Subsidiaries  is  bound  or  by  which  the  Company or any of its
     properties  or  assets  is  bound,  other  than such conflicts, violations,
     breaches,  defaults, termination or accelerations that would not reasonably
     be  expected  to have a Material Adverse Effect, (c) constitute a violation
     of  any  Law applicable to the Company (or any Subsidiary) or (d) result in
     the  creation  of any Lien upon the properties or assets of the Company (or
     any  Subsidiary).  No  consent,  waiver,  approval,  Order,  Permit  or
     authorization  of,  or  declaration or filing with, or notification to, any
     Person  or  Governmental Body is required on the part of the Company and/or
     its  Subsidiaries  in  connection  with  the execution and delivery of this
     Agreement,  and/or  the  Transaction  Documents,  or  the compliance by the
     Company  with  any  of  the  provisions  hereof  or  thereof.

          4.6  Authorization  of  Securities.
               -----------------------------

          (a)  On  the  Closing  Date,  the  issuance, sale, and delivery of the
     Securities  to  be  purchased  pursuant  to Section 1.1 will have been duly
                                                 -----------
     authorized  by all requisite action of the Company, and, when issued, sold,
     delivered  and  paid  for in accordance with this Agreement, the Securities
     will  be  validly  issued  and  outstanding,  with  no  personal  liability
     attaching  to  the  ownership  thereof.

          (b)  On  the  Closing Date, the issuance and delivery of the shares of
     Common  Stock to be delivered upon conversion of the Notes (the "CONVERSION
                                                                      ----------
     SHARES")  and  upon  exercise  of  the  Warrants  (the "WARRANT SHARES") in
     ------                                                  --------------
     accordance  with the terms thereof (collectively, the Conversion Shares and
     the  Warrants  Shares,  the  "UNDERLYING  SHARES")  will  have  been  duly
                                   ------------------
     authorized  by  all  requisite  action  of the Company and, when issued and
     delivered  in  accordance  with the terms of the Securities, the Underlying
     Shares  will  be  validly  issued  and  outstanding,  fully  paid  and
     non-assessable,  with  no  personal  liability  attaching  to the ownership
     thereof,  and  not subject to preemptive or any other similar rights of the
     stockholders  of  the  Company  or  others.

<PAGE>

          4.7  Certain  Waivers.
               ----------------

          (a)  The  Waiver  of Rights Agreement (the "WAIVER AGREEMENT") entered
                                                      ----------------
     into  as  of July 17, 2006, effective as of June 30, 2006, and extended via
     email  on  August  3,  2006,  to  August  9,  2006,  by  Alpha  Capital
     Aktiengesellschaft,  Stonestreet  Limited  Partnership,  Whalehaven  Funds
     Limited,  Greenwich  Growth  Fund Limited and Genesis Microcap Inc. (each a
     "PRIOR NOTE CREDITOR" and collectively the "PRIOR NOTE CREDITORS") in favor
      -------------------                        --------------------
     of the Company is a valid and binding agreement, duly executed, enforceable
     against the Company and each Note Creditor in accordance with its terms and
     is  in  full  force  and effect. To the best of the Company's knowledge, no
     action  has  been  brought  or  is  contemplated to be brought changing the
     enforcement  of  the  Waiver  Agreement.  The  executed Waiver Agreement is
     attached  hereto  as  Schedule  4.7(a).

          (b)  The  Waiver  of  Rights Agreement (the "SECOND WAIVER AGREEMENT")
                                                              ------ ---------
     entered into as of September 13, 2006, by the Prior Note Creditors in favor
                                                   --------------------
     of the Company is a valid and binding agreement, duly executed, enforceable
     against the Company and each Note Creditor in accordance with its terms and
     is  in  full  force  and effect. To the best of the Company's knowledge, no
     action  has  been  brought  or  is  contemplated to be brought changing the
     enforcement  of  the  Second  Waiver  Agreement. The executed Second Waiver
     Agreement  is  attached  hereto  as  Schedule  4.78(b).

          4.8  Capitalization.  Schedule  4.8  hereto  sets  forth in detail all
               --------------   -------------
     outstanding securities of the Company (including the terms, the holders and
     the  amounts  thereof).  Other than as disclosed in Schedule 4.8, (i) there
                                                         ------------
     are  no  outstanding  securities  of the Company or any of its Subsidiaries
     which  contain any preemptive, redemption or similar provisions, nor is any
     holder  of  securities  of  the  Company  or  any  Subsidiary  entitled  to
     preemptive  or similar rights arising out of any agreement or understanding
     with  the  Company  or  any  Subsidiary by virtue of any of the Transaction
     Documents,  and  there  are  no  contracts,  commitments, understandings or
     arrangements  by  which  the  Company  or any of its Subsidiaries is or may
     become  bound  to  redeem  a  security  of  the  Company  or  any  of  its
     Subsidiaries;  (ii) the Company does not have any stock appreciation rights
     or  "phantom  stock"  plans or agreements or any similar plan or agreement;
     and  (iii)  there  are  no  outstanding options, warrants, script rights to
     subscribe to, calls or commitments of any character whatsoever relating to,
     or  securities,  except  as  a  result  of  the  purchase  and  sale of the
     Transaction  Securities,  or  rights  or  obligations  convertible  into or
     exchangeable  for,  or  giving  any  Person  any  right to subscribe for or
     acquire,  any  shares  of  Common  Stock,  or  contracts,  commitments,
     understandings,  or  arrangements by which the Company or any Subsidiary is
     or  may  become  bound  to  issue  additional  shares  of  Common Stock, or
     secur-ities  or  rights  convertible  or exchangeable into shares of Common
     Stock.

          4.9  SEC  Reports;  Financial  Statements.  The  Company has filed all
               ------------------------------------
     reports  required  to  be  filed  by  it  under  the Securities Act and the
     Exchange  Act,  including pursuant to Section 13(a) or Section 15(d) of the
     Exchange  Act,  for  the  one  (1)  year preceding the date hereof (or such
     shorter  period  as  the Company was required by law to file such material)
     (the  foregoing  materials,  including  the  exhibits  thereto,  being
     collectively  referred  to  herein  as  the  "SEC  REPORTS").  As  of their
                                                   ------------
     respective  dates,  the  SEC Reports complied in all material respects with
     the  requirements  of the Securities Act and the Exchange Act and the rules
     and  regulations  of  the Commission promulgated thereunder, as applicable,
     and  none of the SEC Reports, when filed, contained any untrue statement of

<PAGE>

     a  material  fact or omitted to state a material fact required to be stated
     therein  or  necessary in order to make the statements therein, in light of
     the  circumstances under which they were made, not misleading. All material
     agreements  to  which  the  Company  is a party or to which the property or
     assets  of  the  Company are subject have been filed as exhibits to the SEC
     Reports  to  the  extent  required. The financial statements of the Company
     included in the SEC Reports comply in all material respects with applicable
     accounting  requirements  and  the  rules and regulations of the Commission
     with  respect  thereto  as  in effect at the time of filing. Such financial
     statements  have  been  prepared  in  accordance  with  generally  accepted
     accounting  principles  applied  on  a  consistent basis during the periods
     involved  ("GAAP"),  except as may be otherwise specified in such financial
                 ----
     statements  or  the  notes  thereto  and  except  that  unaudited financial
     statements  may  not  contain  all  footnotes  required by GAAP, and fairly
     present  in all material respects the financial position of the Company and
     its  consolidated  subsidiaries  as  of  and  for the dates thereof and the
     results  of  operations and cash flows for the periods then ended, subject,
     in  the case of unaudited statements, to normal, immaterial, year-end audit
     adjustments.  Additionally, since the adoption of the Sarbanes-Oxley Act of
     2002  (the  "NEW ACT") and to the extent that the Company is subject to the
                  -------
     New  Act,  the Company has complied in all material respects with the laws,
     rules  and  regulation  under  the  New  Act.

          4.10  Material Changes. Since December 31, 2005, (i) there has been no
                ----------------
     event,  occurrence  or development that has had or that could reasonably be
     expected  to  result in a Material Adverse Effect, (ii) the Company has not
     incurred  any material liabilities (contingent or otherwise) other than (A)
     trade  payables  and  accrued  expenses  incurred in the ordinary course of
     business  consistent with past practice and (B) liabilities not required to
     be  reflected  in  the  Company's  financial statements pursuant to GAAP or
     required  to  be  disclosed  in filings made with the Commission, (iii) the
     Company  has  not  altered  its method of accounting or the identity of its
     auditors, (iv) the Company has not declared or made payment or distribution
     of any dividend or distribution of cash or other property to its holders of
     Common  Stock  or purchased, redeemed or made any agreements to purchase or
     redeem  any  shares of its capital stock and (v) the Company has not issued
     any  equity  securities  to  any  officer,  director  or  Affiliate, except
     pursuant  to  existing  Company  stock  option  plans.

          4.11  No  Undisclosed  Liabilities. Other than as disclosed in the SEC
                ----------------------------
     Reports,  neither  the  Company  nor  its  Subsidiaries has any liabilities
     (whether  accrued, absolute, contingent or otherwise, and whether due or to
     become  due or asserted or unasserted), except (a) liabilities provided for
     in  the  Financial  Statements (other than liabilities which, in accordance
     with  GAAP,  need  not be disclosed), (b) liabilities disclosed on Schedule
                                                                        --------
     4.11 hereto and (c) liabilities incurred in the ordinary course of business
     ----
     which  do  not  materially  exceed  historic  levels.

          4.12  Absence  of  Certain  Developments.  In  the  ordinary course of
                ----------------------------------
     business  or  in  the  context  of  the  Transactions  contemplated in this
     Agreement  and  the  Transaction  Documents:

          (a)  there  has not been any Material Adverse Change nor has any event
     occurred  which  could  result  in  any  Material  Adverse  Change;

<PAGE>

          (b) there has not been any declaration, setting a record date, setting
     aside  or authorizing the payment of, any dividend or other distribution in
     respect  of  any shares of capital stock of the Company or its Subsidiaries
     or  any  repurchase,  redemption or other acquisition by the Company or its
     Subsidiaries,  of  any  of the outstanding shares of capital stock or other
     securities  of,  or  other  ownership  interest  in,  the  Company  or  its
     Subsidiaries;

          (c)  there has not been any transfer, issue, sale or other disposition
     by  the  Company  of any shares of capital stock or other securities of the
     Company  or  its  Subsidiaries  or any grant of options, warrants, calls or
     other  rights to purchase or otherwise acquire shares of such capital stock
     or  such  other  securities;

          (d)  neither  the Company nor its Subsidiaries has (i) awarded or paid
     any  bonuses  to  employees or representatives of the Company, (ii) entered
     into any employment, deferred compensation, severance or similar agreements
     (nor  amended  any  such  agreement),  other than in the ordinary course of
     business;

          (e)  neither  the  Company  nor  its  Subsidiaries has made any loans,
     advances  (other  than advances to officers and employees of the Company or
     its  Subsidiaries  which  advances  are  made  in  the  ordinary  course of
     business),  or  capital  contributions to, or investments in, any Person or
     paid  any  fees  or expenses to any Affiliate of the Company other than its
     Subsidiaries;

          (f)  neither  the  Company  nor  its  Subsidiaries  has transferred or
     granted  any rights under any Contracts or licenses, used by the Company in
     its  business;

          (g) there has not been any damage, destruction or loss, whether or not
     covered by insurance, with respect to the property or assets of the Company
     or  its Subsidiaries having a replacement cost of more than $10,000 for any
     single  loss  or  $20,000  for  all  such  losses;

          (h) neither the Company nor its Subsidiaries has mortgaged, pledged or
     subjected  to  any  Lien  any  of  its assets, or acquired any assets for a
     purchase  price  in  excess  of $10,000 in the aggregate or sold, assigned,
     transferred,  conveyed,  leased  or otherwise disposed of any assets of the
     Company  or  its  Subsidiaries for a sale price in excess of $10,000 in the
     aggregate  except  for  assets  acquired  or  sold,  assigned, transferred,
     conveyed,  leased  or  otherwise  disposed  of  in  the  ordinary course of
     business;

          (i)  neither  the  Company  nor  its  Subsidiaries  has  canceled  or
     compromised  any  debt  or  claim,  or  amended,  canceled,  terminated,
     relinquished,  waived  or  released  any  Contract  or right, except in the
     ordinary  course  of  business  consistent  with  past  practice and which,
     individually  or  in the aggregate, would not be material to the Company or
     its  Subsidiaries;

          (j)  neither  the  Company  nor  its Subsidiaries has made any binding
     commitment  to  make  any  capital  expenditures  or  capital  additions or
     betterments  in excess of $20,000 individually or $50,000 in the aggregate;

          (k)  neither  the Company nor its Subsidiaries has incurred any debts,
     obligations  or  liabilities,  whether due or to become due, except current

<PAGE>

     liabilities  incurred  in  the  ordinary  course of business, none of which
     current  liabilities  (individually  or in the aggregate) could result in a
     Material  Adverse  Change;

          (l)  neither  the  Company  nor  its Subsidiaries has entered into any
     transaction  other  than  in the ordinary course of business except for (in
     the  case  of  the  Company)  this  Agreement;

          (m) neither the Company nor its Subsidiaries has encountered any labor
     difficulties  or  labor  union  organizing  activities;

          (n)  neither  the  Company nor its Subsidiaries has made any change in
     the  accounting  principles,  methods  or  practices  followed  by  it  or
     depreciation  or  amortization  policies  or  rates  theretofore  adopted;

          (o)  neither  the  Company  nor  its Subsidiaries has disclosed to any
     Person  any  material  trade secrets except for disclosures made to Persons
     subject  to  valid  and  enforceable  confidentiality  agreements;

          (p)  neither  the  Company  nor  its  Subsidiaries  has  suffered  or
     experienced  any  change  in the relationship or course of dealings between
     the Company and/or its Subsidiaries and any of their suppliers or customers
     which  supply  goods  or  services  to  the  Company or its Subsidiaries or
     purchase  goods  or  services from the Company and or its Subsidiaries; and

          (q)  neither the Company nor its Subsidiaries has made any payment to,
     or  received  any  payment  from, or made or received any investment in, or
     entered  into  any transaction or series of related transactions (including
     without  limitation,  the  purchase,  sale,  exchange  or  lease of assets,
     property  or  services,  or  the  making  of  a loan or guarantee) with any
     Affiliate  in each case, in excess of $10,000 or its equivalent (other than
     any  transactions between or among the Company and its Subsidiaries) (each,
     an  "AFFILIATE  TRANSACTION").
          ----------------------

          4.13  Taxes.  The  Company  and  its  Subsidiaries  have filed all Tax
                -----
     returns (including statements of estimated Taxes owed) and reports required
     to  be filed within the applicable periods (subject to extensions) for such
     filings  and  have  paid all Taxes required to be paid, and has established
     adequate  reserves  (net  of  estimated  Tax payments already made) for the
     payment  of  all  Taxes  payable in respect of the period subsequent to the
     last  periods  covered  by  such  returns.  No deficiencies for any Tax are
     currently  assessed  against the Company or any Subsidiary. There is no Tax
     Lien,  whether  imposed  by  any  federal, state or local taxing authority,
     outstanding  against  the  assets, properties or business of the Company or
     its  Subsidiaries other than Liens for Taxes which are not yet due. Neither
     the  Company nor its Subsidiaries has executed any waiver of the statute of
     limitations  on  the  assessment  or  collection of any Tax or governmental
     charge.  The  Company and its Subsidiaries have properly charged, collected
     and  paid  all  applicable  stamp, sales, use and other similar Taxes on or
     before  the  Closing  Date.

          4.14  Real  Property.  The  Company  currently  has (i) leased certain
                --------------
     locations  for  office  space  and  all material leases, and (ii) owns real
     property,  all  of which leases and real property are listed (including the
     terms  of  such  leases)  on  Schedule  4.14.
                                   --------------

<PAGE>

          4.15  Tangible  Personal  Property;  Assets.  All  material  items  of
                -------------------------------------
     personal  property  and  assets  owned  or  leased  by  the Company and its
     Subsidiaries  are  in  good  operating  condition,  normal  wear  and  tear
     excepted.

          4.16  Intangible  Property.  The  Company and its Subsidiaries own, or
                --------------------
     possess  adequate  rights  or  licenses to use all trademarks, trade names,
     service  marks,  service mark registrations, service names, patents, patent
     rights,  copyrights,  inventions,  licenses,  approvals,  governmental
     authorizations,  trade  secrets  and  rights  necessary  to  conduct  their
     respective  businesses as now conducted, the lack of which could reasonably
     be  expected  to  have  a  Material  Adverse  Effect.  The  Company and its
     Subsidiaries  do  not have any knowledge of any infringement by the Company
     or  its  Subsidiaries  of  trademarks,  trade  name rights, patents, patent
     rights,  copyrights,  inventions,  licenses,  service names, service marks,
     service  mark  registrations,  trade  secrets  or  other  similar rights of
     others, or of any such development of similar or identical trade secrets or
     technical information by others and no claim, action or proceeding has been
     made or brought against, or to the Company's knowledge, has been threatened
     against,  the  Company or its Subsidiaries regarding trademarks, trade name
     rights,  patents,  patent rights, inventions, copyrights, licenses, service
     names,  service  marks,  service mark registrations, trade secrets or other
     infringement,  except  where such infringement, claim, action or proceeding
     would  not  reasonably  be  expected  to have either individually or in the
     aggregate  a  Material  Adverse  Effect.  None  of the Company's employees,
     officers,  or  consultants  are  obligated  under  any  contract (including
     licenses,  covenants,  or commitments of any nature) or other agreement, or
     subject  to  any  judgment, decree, or order of any court or administrative
     agency, that would interfere with the use of such employee's, officer's, or
     consultant's  commercially  reasonable  efforts to promote the interests of
     the  Company  or  that  would  conflict  with  the  Company's  business  as
     conducted. Neither the execution nor delivery of the Transaction Documents,
     nor  the  carrying  on  of  the  Company's business by the employees of the
     Company,  nor the conduct of the Company's business, will, to the Company's
     knowledge, conflict with or result in a breach of the terms, conditions, or
     provisions  of,  or  constitute a default under, any contract, covenant, or
     instrument  under  which any of such employees, officers or consultants are
     now  obligated.

          4.17  Material  Contracts.
                -------------------

          Other  than  as  set forth on Schedule 4.17, or otherwise disclosed in
                                        -------------
     the  Company's  Securities  and Exchange Commission filings (a) neither the
     Company  nor  its  Subsidiaries  nor  any of their respective properties or
     assets  is a party to or bound by any (i) Contract not made in the ordinary
     course  of business, or involving a commitment or payment by the Company or
     any  Subsidiary in excess of $10,000 or, in the Company's belief, otherwise
     material  to the business of the Company or its Subsidiaries, (ii) Contract
     among  members or granting a right of first refusal or for a partnership or
     a  joint  venture  or  for  the acquisition, sale or lease of any assets or
     share  capital of the Company or any other Person or involving a sharing of
     profits,  (iii)  mortgage,  pledge,  conditional  sales  contract, security
     agreement,  factoring  agreement  or other similar Contract with respect to
     any  real or tangible personal property of the Company or its Subsidiaries,
     (iv)  loan  agreement,  credit  agreement,  promissory  note,  guarantee,
     subordination  agreement,  letter  of  credit  or any other similar type of
     Contract,  (v)  Contract  with  any  Governmental Body outside the ordinary
     course of business, (vi) Contract with respect to the discharge, storage or
     removal  of hazardous materials or (vii) binding commitment or agreement to
     enter  into  any  of  the  foregoing.

<PAGE>

          (b)  (i)  Each  of  the Contracts listed on Schedule 4.17 is valid and
                                                      -------------
     enforceable  against the Company or its Subsidiaries in accordance with its
     terms,  subject  to  applicable  bankruptcy,  insolvency,  reorganization,
     moratorium  and  similar  laws  affecting  creditors'  rights  and remedies
     generally  and  subject,  as  to  enforceability,  to general principles of
     equity  (regardless of whether enforcement is sought in a proceeding at law
     or  in  equity),  and  there  is  no  default  under any Contract listed on
     Schedule  4.17  by  the  Company  or  any  of  its  Subsidiaries or, to the
     --------------
     knowledge  of  the  Company, by any other party thereto, which is likely to
     have  a  Material  Adverse  Effect, and no event has occurred that with the
     lapse of time or the giving of notice or both would constitute a default by
     the  Company  thereunder which is likely to have a Material Adverse Effect.

               (ii)  No  previous  or  current  party  to any Contract has given
          written  notice  to the Company or any Subsidiary of, or made a claim,
          verbal  or  written,  with respect to any breach or default thereunder
          and  the  Company  has  no  knowledge  of  any notice of or claim with
          respect  to  any  such  breach  or  default other than such notices or
          claims  with  respect to any such breaches or defaults that would not,
          either  individually  or  in  the aggregate, be reasonably expected to
          have  a  Material  Adverse  Effect.

          (c)  With  respect  to the Contracts listed on Schedule 4.17 that were
                                                         -------------
     assigned  to  the Company or any Subsidiary by a third party, all necessary
     consents  to  such  assignment  have been obtained other than such contents
     which  the  failure  to  obtain  would not be reasonably expected to have a
     Material  Adverse  Effect.

          4.18  Employee Benefits. Except as set forth on Schedule 4.18, neither
                -----------------                         -------------
     the  Company  nor  any  of  its  Subsidiaries  has in effect any employment
     agreements,  consulting  agreements,  deferred  compensation,  pension  or
     retirement  agreements  or arrangements, bonus, incentive or profit-sharing
     plans  or  arrangements,  or  labor  or  collective  bargaining agreements,
     written  or oral. The Company and its Subsidiaries are in compliance in all
     material  respects  with all applicable Laws relating to labor, employment,
     fair  employment  practices,  terms and conditions of employment, and wages
     and  hours.

          4.19  Employees.
                ---------

          (a)  No  key  executive  Employee,  group of Employees nor independent
     contractors  of  the Company or its Subsidiaries has any plans to terminate
     his  or  her  employment  or  relationship  as  an  Employee or independent
     contractor  with  the  Company  or  its  Subsidiaries.

          (b)  To the best of the Company's knowledge, no key executive Employee
     or  any  other Employee of the Company or its Subsidiaries is a party to or
     is  otherwise  bound  by  any  agreement or arrangement (including, without
     limitation,  confidentiality  agreements,  non-competition  agreements,
     licenses,  covenants,  or  commitments  of  any  nature), or subject to any
     judgment,  decree,  or  Order  of  any court or Governmental Body, (i) that
     would  conflict  with  such employee's obligation diligently to promote and
     further  the interest of the Company or its Subsidiaries or (ii) that would
     conflict with the Company's (or its Subsidiaries) business as now conducted
     or  as  proposed  to  be  conducted.

<PAGE>

          (c)  Schedule  4.19(c)  sets forth a list of each of the key executive
               ----------------
     Employees  of  the  Company  who  have  entered  into  an employment and/or
     confidentiality  agreement  with  the  Company.

          4.20 Litigation. Other than is set forth on Schedule 4.20, there is no
               ----------                             -------------
     action,  suit,  inquiry,  notice  of violation, proceeding or investigation
     pending  or,  to the knowledge of the Company, currently threatened against
     or  affecting  the  Company,  any  Subsidiary  or  any  of their respective
     properties  before  or  by  any  court,  arbitrator,  governmental  or
     administrative  agency and/or regulatory authority (federal, state, county,
     local  or foreign), (collectively, an "ACTION") which does and/or could (i)
                                            ------
     adversely affects or challenges the legality, validity or enforceability of
     any  of  the  Transaction Documents and/or the Transaction Securities or to
     consummate  the  transactions contemplated hereby or thereby or (ii) could,
     if  there  were  an unfavorable decision, have or reasonably be expected to
     result  in,  either  individually  or  in the aggregate, a Material Adverse
     Effect.  The  Commission  has  not  issued  any  stop  order or other order
     suspending  the  effectiveness  of  any registration statement filed by the
     Company or any Subsidiary under the Exchange Act or the Securities Act. The
     foregoing  includes, without limitation, actions, pending or threatened (or
     any basis therefor known to the Company), involving the prior employment of
     any  of the Company's employees, their use in connection with the Company's
     business  of  any information or techniques allegedly proprietary to any of
     their  former  employers,  or  their  obligations under any agreements with
     prior employers. The Company is not a party or subject to the provisions of
     any order, writ, injunction, judgment, or decree of any court or government
     agency  or  instrumentality.

          4.21  Compliance  with  Laws;  Permits.  Neither  the  Company nor any
                --------------------------------
     Subsidiary  (i)  is  in  default under or in violation of (and no event has
     occurred  that  has  not  been waived that, with notice or lapse of time or
     both,  would  result  in a default by the Company or any Subsidiary under),
     nor has the Company or any Subsidiary received notice of a claim that it is
     in  default  under  or that it is in violation of, any indenture, mortgage,
     decree,  lease, license, loan or credit agreement or any other agreement or
     instrument  to  which it is a party or by which it or any of its properties
     is  bound  (whether or not such default or violation has been waived), (ii)
     is in violation of any order of any court, arbitrator or governmental body,
     or  (iii) is or has been in violation of any statute, rule or regulation of
     any  governmental  authority,  including  without  limitation  all foreign,
     federal,  state  and  local  laws applicable to its business, except in the
     case  of  clauses  (i),  (ii)  and  (iii) as would not result in a Material
     Adverse  Effect.  Neither  the  Company  nor  any  of  the Subsidiaries has
     received  any written notice of any violation of or noncompliance with, any
     federal,  state,  local or foreign laws, ordinances, regulations and orders
     (including, without limitation, those relating to environmental protection,
     occupational  safety  and health, federal securities laws, equal employment
     opportunity, consumer protection, credit reporting, "truth-in-lending", and
     warranties  and  trade  practices)  applicable  to  its  business or to the
     business  of any Subsidiary, the violation of, or noncompliance with, which
     would  have a materially adverse effect on either the Company's business or

<PAGE>

     operations, or that of any Subsidiary, and the Company knows of no facts or
     set of circumstances which would give rise to such a notice. The execution,
     delivery, and performance of the Transaction Documents and the consummation
     of  the  transactions  contemplated  thereby  will  not  result in any such
     violation or be in conflict with or constitute, with or without the passage
     of  time  and  giving of notice, either a default under any such provision,
     instrument,  judgment,  order,  writ, decree or contract, or an event which
     results in the creation of any lien, charge, or encumbrance upon any assets
     of  the  Company  or the suspension, revocation, impairment, forfeiture, or
     nonrenewal  of  any  material  permit,  license, authorization, or approval
     applicable to the Company, its business or operations, or any of its assets
     or  properties,  except  as  would  not  reasonably  be  expected to have a
     Material  Adverse  Effect.

          4.22  Environmental  and  Safety  Laws.  Neither  the  Company nor its
                --------------------------------
     Subsidiaries  are  in  violation  of  any  applicable  Laws relating to the
     environment  or  occupational  health  and  safety  where the failure to so
     comply  could  have  a Material Adverse Effect and no material expenditures
     are  or  will  be  required in order to comply with any such existing Laws.

          4.23 Investment Company Act. The Company is not, nor is it directly or
               ----------------------
     indirectly  controlled  by  or  acting  on behalf of, any Person that is an
     investment  company  within  the  meaning  of the Investment Company Act of
     1940,  as  amended.

          4.24  Financial  Advisors.  Except  for  Laidlaw,  no  agent,  broker,
                -------------------
     investment  banker, finder, financial advisor or other Person is or will be
     entitled to any broker's or finder's fee or any other commission or similar
     fee  from  the  Company,  directly  or  indirectly,  in connection with the
     transactions contemplated by this Agreement or any Transaction Document and
     no  Person  is  entitled  to any fee or commission or like payment from the
     Company  in respect thereof based in any way on agreements, arrangements or
     understandings  made  by  or  on  behalf  of  the  Company.

          4.25  Condition  of  Properties. All facilities, machinery, equipment,
                -------------------------
     fixtures,  vehicles  and  other  properties  owned,  leased  or used by the
     Company  and  its  Subsidiaries are in good operating condition and repair,
     are  reasonably  fit  and  usable for the purposes for which they are being
     used,  are  adequate  and  sufficient  for the Company and its Subsidiaries
     respective  businesses  and  conform  in  all  material  respects  with all
     applicable  Laws.

          4.26  Pending Changes. The Company has no knowledge of any development
                ---------------
     which  might  reasonably be expected to result in a material adverse affect
     on  the  operations  or  financial  condition  of  the  Company  or  its
     Subsidiaries.

          4.27  Securities  Laws.  The  Company  has  complied  in  all material
                ----------------
     respects  with  all  applicable  U.S.  federal and state securities laws in
     connection with (i) all offers, issuances and sales of its securities prior
     to the date hereof and (ii) the offer, issuance and sale of the Securities.
     All  sales and issuances of currently outstanding securities by the Company
     have  been  to  accredited  investors  within  the  meaning  of Rule 501 of
     Regulation  D  under  the Securities Act. Prior to the Closing, neither the
     Company  nor  anyone  acting  on  its  behalf  has sold, offered to sell or
     solicited offers to buy the Securities or similar securities to, or solicit
     offers  with  respect  thereto  from,  or  entered  into  any  preliminary
     conversations  or  negotiations relating thereto with, any Person, so as to
     bring  the  issuance  and  sale  of  the  Securities under the registration
     provisions  of  the  Securities  Act, and applicable state securities laws.
     Neither  the  Company  nor  any Person acting on its behalf has offered the
     Securities  to  any  Person  by  means of general or public solicitation or
     general  or  public  advertising,  such  as  by  newspaper  or  magazine
     advertisements,  by  broadcast  media,  or  at any seminar or meeting whose
     attendees  were  solicited  by  such  means.

<PAGE>

          4.28  Registration  Rights.  Except  for  any rights granted under the
                --------------------
     Transaction  Documents  and the Prior Registration Agreement, no Person has
     demand  or  other  rights  to  cause  the  Company to file any registration
     statement  under  the  Securities  Act  relating  to  any securities of the
     Company  or  any  right  to participate in any such registration statement.

          4.29  Disclosure;  Survival.  There  is  no  fact  which  has not been
                ---------------------
     disclosed to the Purchaser of which the Company has knowledge and which has
     had  or  could  reasonably  be  anticipated to result in a Material Adverse
     Change.  All  representations and warranties set forth in this Agreement or
     in  any  of  the  Transaction  Documents  or  in any writing or certificate
     delivered in connection with this Agreement shall survive the execution and
     delivery  of  this  Agreement  and  the  consummation  of  the transactions
     contemplated  hereby  for a period of two (2) years (the "SURVIVAL PERIOD")
                                                               ---------------
     and  shall  not be affected by any examination made for or on behalf of the
     Purchaser,  the  knowledge  of  the  Purchaser,  or  the  acceptance by the
     Purchaser  of  any  certificate  or  opinion.

          4.30  No  General Solicitation. Neither the Company, its Subsidiaries,
                ------------------------
     any  of their affiliates nor any person acting on their behalf, has engaged
     in  any  form  of  general  solicitation or general advertising (within the
     meaning  of  Regulation  D under the Securities Act) in connection with the
     offer  or  sale  of  the  Notes  and  the  Warrants.

          4.31  Insurance.  The  Company  has  in full force and effect fire and
                ---------
     casualty  insurance  policies, with extended coverage, sufficient in amount
     (subject  to  reasonable  deductibles)  to  allow  it to replace any of its
     properties  that  might  be  damaged  or  destroyed,  and  the  Company has
     insurance  against  other  hazards,  risks,  and liabilities to persons and
     property to the extent and in the manner customary for companies in similar
     businesses  similarly  situated.

          4.32  Regulatory Permits. The Company and the Subsidiaries possess all
                ------------------
     licenses,  certificates,  authorizations  and  permits  issued  by  the
     appropriate  federal,  state,  local  or  foreign  regulatory  authorities
     necessary  to conduct their respective businesses, except where the failure
     to  possess such permits would not have or reasonably be expected to result
     in  a  Material  Adverse  Effect  ("MATERIAL PERMITS"), and believes it can
                                         ----------------
     obtain,  without  undue  burden  or  expense, any similar authority for the
     conduct of its business as planned to be conducted, and neither the Company
     nor  any  Subsidiary has received any notice of proceedings relating to the
     revocation  or  modification  of  any  Material  Permit.

          4.33  Title  to Property and Assets. The Company (and each Subsidiary)
                -----------------------------
     owns its property and assets free and clear of all mortgages, liens, loans,
     pledges,  security  interests,  claims,  equitable  interests, charges, and
     encumbrances,  except  such  encumbrances  and  liens  which  arise  in the
     ordinary course of business and do not materially impair the Company's (and
     each  Subsidiary's)  ownership or use of such property or assets and/or any
     such  liens,  encumbrances and security interests which arose in connection
     with  the Prior Security Agreement. With respect to the property and assets
     it  leases,  the  Company  (and each Subsidiary) is in compliance with such
     leases  and, to its knowledge, holds a valid leasehold interest free of any
     liens,  claims,  or  encumbrances.

          4.34 Foreign Assets Control Legislation. Neither the sale of the Notes
               ----------------------------------
     nor  the  Warrants  by  the  Company  hereunder nor its use of the proceeds
     thereof  will violate the Trading with the Enemy Act, as amended, or any of

<PAGE>

     the  foreign  assets  control  regulations  of  the  United States Treasury
     Department  (31  CFR,  Subtitle  B,  Chapter V, as amended) or any enabling
     legislation  or  executive  order  relating  thereto.  Without limiting the
     foregoing,  neither the Company nor any of its Subsidiaries (a) is a person
     whose  property  or interests in property are blocked pursuant to Section 1
     of  Executive  Order  13224  of  September  23,  2001 Blocking Property and
     Prohibiting  Transactions  With  Persons Who Commit, Threaten to Commit, or
     Support  Terrorism  (66  Fed.  Reg.  49079  (2001))  or  (b) engages in any
     dealings or transactions, or be otherwise associated, with any such person.
     The Company and its Subsidiaries are in compliance with the USA Patriot Act
     of  2001  (signed  into  law  October  26,  2001).

          4.35  Solvency.  Based on the financial condition of the Company as of
                --------
     the  Closing  Date  (after  giving  effect to the transactions contemplated
     herein  and  in  the  other  Transaction Documents), (i) the Company's fair
     saleable value of its assets exceeds the amount that will be required to be
     paid on or in respect of the Company's existing debts and other liabilities
     (including known contingent liabilities) as they mature; (ii) the Company's
     assets  do  not  constitute  unreasonably  small  capital  to  carry on its
     business for the current fiscal year as now conducted and as proposed to be
     conducted  including  its  capital needs taking into account the particular
     capital  requirements  of  the  business  conducted  by  the  Company,  and
     projected  capital requirements and capital availability thereof; and (iii)
     the  current  cash  flow  of  the  Company,  together with the proceeds the
     Company would receive, were it to liquidate all of its assets, after taking
     into  account  all anticipated uses of the cash, would be sufficient to pay
     all  amounts on or in respect of its debt when such amounts are required to
     be  paid.  The Company does not intend to incur debts beyond its ability to
     pay  such  debts as they mature (taking into account the timing and amounts
     of  cash  to  be  payable  on  or  in  respect  to  its  debt).

     5.  REPRESENTATIONS  AND WARRANTIES OF THE PURCHASER. Each Purchaser hereby
represents  and warrants as of the date hereof and as of the Closing Date to the
Company,  acknowledging  that  the  Company  is  relying  upon  the accuracy and
completeness  of  the  representations and warranties set forth herein to, among
other  things, ensure that registration under Section 5 of the Securities Act is
not  required  in  connection with the sale of the Securities hereby, as follows

          5.1  Organization;  Authority.  The  Purchaser  is  an  entity  duly
               ------------------------
     organized,  validly  existing  and  in  good standing under the laws of the
     jurisdiction  of  its  organization  with  full right, corporate or limited
     liability  company  power and authority to enter into and to consummate the
     transactions  contemplated  by  the  Transaction Documents and otherwise to
     carry  out  its  obligations  thereunder.  The  execution,  delivery  and
     performance  by  such  Purchaser  of  the transactions contemplated by this
     Agreement  has  been  duly authorized by all necessary corporate or similar
     action on the part of such Purchaser. Each Transaction Document to which it
     is  a party has been duly executed by such Purchaser, and when delivered by
     such  Purchaser  in  accordance  with the terms hereof, will constitute the
     valid and legally binding obligation of such Purchaser, enforceable against
     it  in  accordance  with  its  terms,  except  (i) as limited by applicable
     bankruptcy,  insolvency,  reorganization,  moratorium,  and  other  laws of
     general  application  affecting  enforcement of creditors' rights generally
     and  (ii)  as  limited  by  laws  relating  to the availability of specific
     performance,  injunctive  relief,  or  other  equitable  remedies.

<PAGE>

          5.2  Investment  Intent.  The Purchaser represents and warrants to the
               ------------------
     Company  that  it is (a) an "accredited investor" as defined in Rule 501 of
     Regulation  D  of  the  Securities  Act;  and  (b)  acquiring the Purchased
     Securities  to be purchased by it pursuant to this Agreement for investment
     and  not  with  a  view  to  the  distribution  thereof.

          5.3 Investment Purposes. (a) The Purchaser is acquiring the Securities
              -------------------
     for  investment  purposes  only, for its own account, and not as nominee or
     agent  for  any  other  Person,  and  not  with a view to, or for resale in
     connection  with,  any  distribution  thereof  within  the  meaning  of the
     Securities  Act,  (b)  it  understands and acknowledges that the Securities
     have  not  been registered under the Securities Act or any other securities
     laws,  (c)  it  is  not  an  "affiliate"  (as defined in Rule 144 under the
     Securities Act) of the Company, (d) it has such knowledge and experience in
     financial  and  business  matters as to be capable of evaluating the merits
     and  risks  of  its investment, (e) each is an "accredited investor" within
     the  meaning  of Rule 501 of Regulation D under the Securities Act, (f) the
     Company  has  made  available to it the opportunity to ask questions and to
     receive answers, and to obtain information necessary to evaluate the merits
     and  risks  of  this  investment,  and  (g)  the  Purchaser  understands,
     acknowledges  and agrees that the Securities have not been registered under
     (and  that  the Company has no present intention to register the Securities
     under)  the Securities Act or applicable state securities laws, and may not
     be sold or otherwise transferred by the Purchaser to a United States person
     unless  the  Securities  have  been registered under the Securities Act and
     applicable  U.S.  state  securities  laws  or  are sold or transferred in a
     transaction  exempt  therefrom.

          5.4 Short Selling. The Purchaser hereby represents to the Company that
              -------------
     the Purchaser will not make or maintain a "short" position in the Company's
     securities  (i)  until  such date as the Registration Statement is declared
     effective  by the Commission, and (ii) during such portion of the Mandatory
     Conversion  Period  (as  defined  in  the  Note)  until  the  Purchaser has
     delivered  its  Optional Conversion Election Form (as defined in the Note).

     6.  FURTHER  AGREEMENTS  OF  THE  PARTIES.

          6.1  Reserved  Shares.  For so long as the Securities are outstanding,
               ----------------
     the  Company  shall  reserve that number of shares of Common Stock issuable
     upon  conversion  of  the  Notes and exercise of the Warrants, which shares
     shall  not  be  subject  to  any  preemptive  or  other  similar  rights.

          6.2 Access to Information. The Purchaser and its representatives shall
              ---------------------
     be  entitled,  upon  reasonable  notice,  to make such investigation of the
     properties,  business and operations of the Company and such examination of
     the  books, records and financial condition of the Company as it reasonably
     requests  to  make  extracts  and  copies  of  such books and records, upon
     reasonable notice during regular business hours. Any such investigation and
     examination  shall  be  conducted  during  regular business hours and under

<PAGE>

     reasonable  circumstances  without material interference with the Company's
     normal  business  operations, and the Company and its representatives shall
     cooperate  fully  therein.  No  investigation  by  a  Purchaser  or  its
     Representatives prior to or after the date of this Agreement shall diminish
     or  obviate any of the representations, warranties, covenants or agreements
     of the Company contained in this Agreement or the Transaction Documents. In
     order  for  Purchaser  to  have  full  opportunity  to  make such physical,
     business,  accounting  and  legal review, examination of the affairs of the
     Company and investigation as may be reasonably requested, the Company shall
     cause  its  Representatives  to cooperate fully with the Representatives of
     the  Purchaser  in  connection  with  such  review  and  examination.

          6.3 Confidentiality. Except as may be required by applicable Law or as
              ---------------
     otherwise  agreed  among  the  parties  hereto,  neither  the  Company, the
     Purchaser  nor  any  of its Affiliates shall at any time divulge, disclose,
     disseminate,  announce  or release any information to any Person concerning
     this  Agreement,  the  Transaction Documents, the transactions contemplated
     hereby  or  thereby, any trade secrets or other confidential information of
     the  Company  or  the  Purchaser, without first obtaining the prior written
     consent  of  the  other  parties  hereto.

          6.4  Other Actions. The Company and the Purchaser agree to execute and
               -------------
     deliver  such  other  documents  and  take  such other actions as the other
     parties  may  reasonably request for the purpose of carrying out the intent
     of  this  Agreement  and  the  Transaction  Documents.

          6.5  Indemnification.  The  Company  shall indemnify and hold harmless
               ---------------
     each  Purchaser,  the  officers, directors, agents and employees of each of
     them,  each  Person  who controls any such Purchaser (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 (as defined below) actions to enforce
     the  provisions of this Section 6.5) (collectively, "LOSSES"), as incurred,
                             -----------                  ------
     to  the  extent  arising  out  of  or  relating  to  (i)  any  material
     misrepresentation  or  breach of any representation or warranty made by the
     Company  in  the Transaction Documents, or, (ii) any material breach of any
     covenant,  agreement  or  obligation  of  the  Company  contained  in  the
     Transaction  Documents, or (iii) any cause of action, suit or claim brought
     or made against such Indemnified Party and arising out of or resulting from
     the  execution,  delivery,  performance  or  enforcement of the Transaction
     Documents  executed  pursuant  hereto by any of the Indemnified Parties. If
     the  indemnification provided for in this Section 6.5 is held by a court of
                                               -----------
     competent  jurisdiction  to  be  unavailable  to  an Indemnified Party with
     respect  to  any Losses, then the Indemnifying Party (as defined below), in
     lieu  of indemnifying such Indemnified Party hereunder, shall contribute to
     the  amount paid or payable by such Indemnified Party as a result of Losses
     in  such  proportion as is appropriate to reflect the relative fault of the
     Indemnifying  Party  on  the  one  hand and of the Indemnified Party on the
     other  in  connection  with  the actions or omissions that resulted in such
     Losses  as well as any other relevant equitable considerations. The Company
     shall notify the Purchaser 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) 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
      ------------------
     other  party  (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

<PAGE>

     the  payment  of  all fees and expenses incurred in connection with defense
     thereof;  provided,  however,  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 and adversely 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.

          The indemnification obligations under this Section 6.5 are in addition
     to  any  indemnification or similar obligations under any other Transaction
     Document.

          (d)  The  provisions of this Section 6.5 shall survive the termination
     of  this  Agreement  for  a  period  of  three  (3)  years.

          (e) All payments to be made to Purchaser pursuant to this Section 6.5,
     shall  be  paid  no  later  than  five  (5) business days after request for
     payment  is  sent  to  the  Company.

          6.6  Co-Investment  Rights. Each Purchaser hereby shall have the right
               ---------------------
     of first refusal (which right shall be shared with the Prior Purchasers) to
     invest  (in  such  amounts that all of such Purchasers (including the Prior
     Purchasers  and  other  Purchasers  who invest during the offering to which
     this  Agreement is a part) shall so elect) in any and all future financings
     ("FUTURE  FINANCINGS")  of  the Company for thirty-six (36) months from the
       ------------------
     date  of  this Agreement on the identical terms offered to other Investors.
     The  Company  shall  provide  each Purchaser with (i) express prior written
     notice of a Future Financing, and (ii) all required documentation requested
     by the Purchaser related to any Future Financing all no later than ten (10)
     business  days  prior  to  the  final date of the offering period (or other
     applicable  investment  period)  for  any  such  Future  Financings.  Such
     Co-Investment  rights  shall  continue  even  if  a Purchaser elects not to
     invest  in  one  or  more  Future  Financing.

<PAGE>

          6.7  Elimination  of  the  Preferred Stock. The Company agrees that it
               -------------------------------------
     shall  retire  all  of its Series A Preferred Stock (the "SUPER PREFERRED")
                                                               ---------------
     for $1.00 in the aggregate, upon the earlier to occur of (i) the sale of an
     aggregate  of $2,500,000 in additional identical promissory notes (of which
     $1,250,000  in  notes  were  previously  sold  in August 2006) to the Notes
     following  the  Closing  of  the  Bridge Financing (as defined in the Note)
     and/or  other  securities, to repay the remaining 6% Convertible Notes (the
     "6%  NOTES")  currently held by the Prior Note Creditors, and (ii) upon any
      ---------
     default  of  the  Notes  or  other  outstanding  debt/securities.

          6.8  Board  Representation.  The  Company,  effective  on the Closing,
               ---------------------
     hereby  grants  Purchaser,  which  right  shall  be  shared with all of the
     Purchasers  (including the Prior Purchasers and other Purchasers who invest
     during  the  offering  to  which  this  Agreement  is a part), the right to
     appoint  one Director, or if it so elects, a Board Advisory Seat (with both
     the  Prior  Purchasers  and  current  Purchaser  electing  as  a group, one
     Director  or  Board  Advisory Seat), and to receive all financial and other
     information provided to board members and to observe at all board meetings.
     The  Purchaser  nominee shall be immediately included and maintained in the
     Company's  Director  and Officer insurance coverage. In the event Purchaser
     exercises  its  right to appoint a board member, the Company shall nominate
     an  additional  board member so that the total number of board members will
     be  five  (5).  The  Company  shall  provide  to the Purchaser and any then
     designated  observer,  concurrently  with,  and  by  the  same  method  of,
     transmission  to the Board or any committee thereof, any notice of meeting,
     agenda  and  other  materials.

          6.9  Bank Consent. The Company, prior to the Closing Date shall obtain
               ------------
     the  express  written  consent  and/or  necessary waivers from LaSalle Bank
     Nation  Association  (the  "BANK")  and  any other person, so as to approve
                                 ----
     and/or  waive,  as  the  case may be (i) this Agreement; (ii) the Notes and
     Warrants; (iii) the Bridge Financing; (iv) any defaults or event of default
     that  may  have  or  will have occurred; and (v) all other such Transaction
     Documents  as  may  be  deemed  necessary  (the  "BANK  CONSENT").
                                                       -------------

          6.10  Fees and Expenses. Each party shall pay the fees and expenses of
                -----------------
     its advisors, counsel, accountants and other experts, if any, and all other
     expenses,  incurred by such party incident to the negotiation, preparation,
     execution,  delivery  and  performance of this Agreement, provided that the
     Company  shall  pay  all  actual  attorneys'  fees  and expenses (including
     disbursements  and out-of-pocket expenses) for the counsel to the Purchaser
     incurred  by  the  Purchaser  in  connection  with  (i)  the  preparation,
     negotiation,  execution  and  delivery  of  this  Agreement  and  the other
     Transaction  Documents  and the transactions contemplated thereunder, which
     payment shall be made at Closing and shall not exceed $25,000 and (iii) any
     amendments,  modifications or waivers of this Agreement or any of the other
     Transaction  Documents.  In addition, the Company shall pay $20,000 towards
     due  diligence  fees  and  expenses incurred by the Purchaser in connection
     with  the  transaction  contemplated  by  this  Agreement.

     7.  OTHER  OBLIGATIONS  OF  THE  PARTIES.

          7.1 Public Announcements. The Company hereby agrees not to, and not to
              --------------------
     permit  its Subsidiaries to, issue any press release, or otherwise make any
     public  statements  (collectively,  "PRESS  RELEASES")  with respect to the
                                          ---------------
     transactions  contemplated  hereby without the prior written consent of the

<PAGE>

     Purchaser, except as may be required by law. Furthermore, where the Company
     desires  to issue any such Press Release, the parties agree to cooperate in
     good  faith  in  order  to  prepare  such  Press  Release  in such form and
     substance  as  is  agreeable  to  both  parties.

          7.2  Furnishing  Information. Each of the parties hereto will, as soon
               -----------------------
     as  practicable  after  reasonable  request  therefor,  furnish  all  the
     information  concerning  it  required  for  inclusion  in  any statement or
     application  made  by any of them to any governmental or regulatory body in
     connection  with  the  transactions  contemplated  by  this  Agreement.

          7.3  Transfer  Restrictions.
               ----------------------

          (a)  The  Underlying Shares may only be disposed of in compliance with
     state  and  federal securities laws. In connection with any transfer of the
     Underlying  Shares  other  than  pursuant  to  an  effective  registration
     statement,  or  in  connection  with  a  pledge, as contemplated in Section
                                                                         -------
     7.3(b) hereof, the Company may require the transferor thereof to provide to
     -----
     the  Company an opinion of counsel selected by the transferor, the form and
     substance of which opinion shall be reasonably satisfactory to the Company,
     to  the  effect  that  such  transfer does not require registration of such
     transferred  Underlying  Shares under the Securities Act. As a condition of
     transfer,  any  such  transferee  shall agree in writing to be bound by the
     terms of this Agreement and shall have the rights of a Purchaser under this
     Agreement  and  the  Registration  Rights  Agreement.

          (b)  The Purchaser agrees to the imprinting, so long as is required by
     this  Section  7.3(b),  of  a legend on any of the Underlying Shares in the
           --------------
     following  form:

          THESE  SECURITIES  HAVE  NOT  BEEN  REGISTERED WITH THE SECURITIES AND
          EXCHANGE  COMMISSION  OR  THE  SECURITIES  COMMISSION  OF ANY STATE IN
          RELIANCE  UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
          OF  1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
                                     --------------
          BE  OFFERED  OR  SOLD  EXCEPT  PURSUANT  TO  AN EFFECTIVE REGISTRATION
          STATEMENT  UNDER  THE  SECURITIES  ACT  OR  PURSUANT  TO  AN AVAILABLE
          EXEMPTION  FROM,  OR  IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION
          REQUIREMENTS  OF  THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
          STATE  SECURITIES  LAWS  AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
          THE  TRANSFEROR  TO  SUCH  EFFECT,  THE  SUBSTANCE  OF  WHICH SHALL BE
          REASONABLY  ACCEPTABLE  TO  THE  COMPANY.

          (c)  Certificates  evidencing  the Underlying Shares shall not contain
     any legend (including the legend set forth in Section 7.3(b) (i) subsequent
                                                   -------------
     to  the  date  the  Commission  declares effective a registration statement
     covering  the  resale  of the Underlying Shares, (ii) following any sale of
     the  Underlying  Shares  pursuant  to Rule 144, or (iii) if such Underlying
     Shares  are eligible for sale under Rule 144(k). The Company agrees that at
     such  time  as such legend is no longer required under and pursuant to this
     Section  7.3(c),  it will, no later than two (2) Trading Days following the
     --------------
     delivery by a Purchaser to the Company or the Company's transfer agent of a

<PAGE>

     Note for conversion, a Warrant for exercise, a restricted stock certificate
     or a lost securities affidavit, if any, of such securities are lost, as the
     case  may  be,  deliver  to  such  Purchaser  a  certificate  representing
     Underlying  Shares that is free from all restrictive and other legends (the
     "DEADLINE").  The  Company may not make any notation on its records or give
      --------
     instructions  to  any  transfer  agent  of  the  Company  that  enlarge the
     restrictions  on  transfer  set  forth  in  this  Section.

          7.4  Underlying  Share  Delivery  Damages.  In  the  event  that  a
               ------------------------------------
     non-legended  certificate  for  Underlying  Shares  is  not  received  by a
     Purchaser  by  the  Deadline,  as partial compensation to the Purchaser for
     such  loss  as  a  result of such delivery delay, the Company shall pay (as
     liquidated damages and not a penalty) to the Purchaser for late issuance of
     the Underlying Shares an amount of $100 per business day after the Deadline
     for each $10,000 of principal amount of the Note being converted, and/or or
     $10,000 of market value (based upon the then stock price of the Company) of
     Underlying  Shares  of  the Warrant being exercised for as the case may be,
     which  are  not  timely delivered. The penalties in this Section 7.4 are in
     addition  to  any  shall  not  limit  any  other  penalty provisions in the
     Transaction  Documents and shall not limit the Purchaser's right to collect
     other  damages  and/or  remedies.

          7.5 Integration. The Company shall not sell, offer for sale or solicit
              -----------
     offers to buy or otherwise negotiate in respect of any security (as defined
     in Section 2 of the Securities Act) that would be integrated with the offer
     or  sale  of  any  of  the  Securities  in  a manner that would require the
     registration  under the Securities Act of the sale of the Securities to the
     Purchaser  or  that  would  be  integrated  with  the  offer or sale of the
     Securities for purposes of the rules and regulations of any Trading Market.

          7.6  Use of Proceeds. The Company covenants and agrees that all of the
               ---------------
     net  proceeds  that  it  receives  from  the sale of the Notes and Warrants
     pursuant to this Agreement, shall be used solely to repay and/or retire the
     6%  Notes  currently  held  by  the  Prior  Note Creditors in the aggregate
     principal amount of $1,012,434 as of the date hereof with the balance to be
     utilized  for  working  capital.

          7.7  Form D and Blue Sky. The Company shall file a Form D with respect
               -------------------
     to  the  Securities as required under Regulation D under the Securities Act
     and,  upon  written  request,  provide  a  copy  thereof  to each Purchaser
     promptly  after  such  filing. The Company shall, on or before the Closing,
     take  such action as the Company shall reasonably determine is necessary in
     order  to  obtain an exemption for or to qualify any Securities for sale to
     the  Purchaser  pursuant  to  this Agreement under applicable securities or
     "Blue  Sky"  laws  of  the  states  of the United States, and shall provide
     evidence  of  any  such action so taken to the Purchaser on or prior to the
     Closing.  The  Company  shall  make all filings and reports relating to the
     offer  and  sale  of the Securities required under applicable securities or
     "Blue  Sky"  laws of the states of the United States following the Closing.

          7.8  Reservation  of  Common Stock. As of the date hereof, the Company
               -----------------------------
     has  reserved  and the Company shall continue to reserve and keep available
     at  all  times, free of preemptive rights, a sufficient number of shares of
     Common  Stock  for  the  purpose  of  enabling  the  Company  to  issue the
     Conversion  Shares  and  the  Warrant  Shares.

<PAGE>

          7.9  Securities  Laws  Disclosure.  The  Company  shall, by the end of
               ----------------------------
     business  on  the  second (2nd) Business Day following the Closing, issue a
     press  release  or  file  a  Current  Report  on  Form  8-K, disclosing the
     transactions contemplated hereby and make such other filings and notices in
     the  manner  and  time  required  by  the  Commission.

     8.  CONDITIONS  TO  CLOSING.

          8.1  Conditions of Obligations of the Purchaser. The obligation of the
               ------------------------------------------
     Purchaser  to  purchase  and  pay  for  the  Securities  is  subject to the
     fulfillment  prior  to  or on the Closing Date of the following conditions,
     any  of  which  may  be  waived  in  whole  or  in  part  by the Purchaser:

          (a) Representations, Warranties and Covenants. The representations and
              -----------------------------------------
     warranties of the Company under this Agreement shall be deemed to have been
     made  again  on  the  Closing  Date  (other  than those representations and
     warranties made expressly as of a date prior to the Closing Date) and shall
     then be true and correct. The Company shall represent to the Purchaser that
     all  of  the  information  contained  herein  does  not  contain any untrue
     statement  of  a  material fact, or contain any omission of a material fact
     relating  to  such  information  that  is  necessary  in  order to make the
     information,  in  light of the circumstances under which the information is
     provided,  not  misleading.

          (b)  Compliance  with  Agreement. The Company shall have performed and
               ---------------------------
     complied  with  all  covenants,  agreements and conditions required by this
     Agreement  to be performed or complied with by the Company on or before the
     Closing  Date.

          (c)  Approvals.  The Company shall have obtained any and all consents,
               ---------
     waivers,  approvals  or authorizations, with or by any Governmental Body or
     any other Person required for the valid execution of this Agreement and the
     transactions  contemplated  hereby.

          (d) No Injunction. No Governmental Body or any other Person shall have
              -------------
     issued  an  Order  which shall then be in effect restraining or prohibiting
     the  completion of the transactions contemplated hereby, nor shall any such
     Order  be  threatened  or  pending.

          (e)  No  Material Adverse Change. Since June 30, 2006, there shall not
               ---------------------------
     have  been  a  Material  Adverse  Change.

          (f)  Certificate  of  Officer. The Company shall have delivered to the
               ------------------------
     Purchaser  a  certificate  dated  the  Closing  Date, executed by its Chief
     Executive  Officer and Chief Financial Officer, certifying the satisfaction
     of  the  conditions  specified  in paragraphs (a), (b), (c), (d) and (e) of
     this  Section  8.1.
           ------------

          (g)  Opinion  of  the  Company's  Counsel.  The  Purchaser  shall have
               ------------------------------------
     received  from Company counsel, in a form satisfactory to the Purchaser and
     its  counsel,  an  opinion  dated  the  Closing  Date.

          (h)  Certificate  of  Incorporation  and  By-Laws.  The Certificate of
               --------------------------------------------
     Incorporation,  as  amended,  and  the  By-Laws, shall be in full force and
     effect  as  of  the Closing under the laws of the State of Nevada and shall

<PAGE>

     not  have  been  further  amended  or  modified.  A  certified  copy of the
     Certificate  of  Incorporation, as so amended, shall have been delivered to
     counsel  for  the  Purchaser.

          (i)  Closing  Documents  Provided  By  Company. The Purchaser (or such
               -----------------------------------------
     other  person  as  referred  to  herein) shall have received the following:

               (i)  a  Note  in  favor  of  each Purchaser, duly executed by the
          Company, entitling the Purchaser to payment in the amount as stated in
          Schedule  1.1  herein;

               (ii)  Warrants in the name of the Purchaser, duly executed by the
          Company,  entitling  the  Purchaser to purchase such amount of Warrant
          Shares  as  stated  in  Schedule  1.1  herein;

               (iii) Warrants to purchase 100,000 and 133,000 shares assigned to
          the  Purchaser  by  Mastodon Ventures, Inc. and Sands Brothers Venture
          Capital,  LLC,  respectively;

               (iv)  the  Registration  Rights  Agreement  duly  executed by the
          Company;

               (v)  the  Security Agreement duly executed by the Company and all
          documents necessary to perfect the security interest of the Purchaser;

               (vi)  this  Agreement  duly  executed  by  the  Company;

               (vii)  Secretary's Certificate in a form reasonably acceptable to
          Purchaser,  with  good  standing  certificates of the Company and each
          Subsidiary  as  of  a  recent  date;

               (viii)  Legal  Opinion;

               (ix)  Copy of the Bank Consent for the Company to enter into this
          new  debt and all necessary waivers of Bank covenants prohibiting such
          action;

               (x)  A  Waiver  Agreement  executed  by  the  Prior  Purchasers;

               (xi)  Copies  of all Uniform Commercial Code Financing Statements
          filed  in  the  State  of  Nevada  in  connection  with  the  Security
          Agreement;  and

               (ix)  such  other  documents  as  the  Purchaser and/or its legal
          counsel  may request and/or deem necessary (including, but not limited
          to,  a  Good Standing Certificate of recent date from the Secretary of
          State  of  the  State  of  incorporation).

          8.2  Conditions  of Company's Obligations. The Company's obligation to
               ------------------------------------
     issue  and  sell  the  Securities  to  the Purchaser on the Closing Date is
     subject to the fulfillment prior to or on the Closing Date of the following
     conditions,  any of which may be waived in whole or in part by the Company:

          (a) Representations and Warranties. The representations and warranties
              ------------------------------
     of  the  Purchaser  under  this Agreement shall be deemed to have been made
     again  on  the  Closing  Date  and  shall  then  be true and correct in all
     material  respects.

<PAGE>

          (b)  Compliance with Agreement. The Purchaser shall have performed and
               -------------------------
     complied  with  all agreements and conditions required by this Agreement to
     be  performed  or complied with by such Purchaser on or before the Closing.

          (c) Approvals. The Purchaser shall have obtained any and all consents,
              ---------
     waivers,  approvals, Permits or authorizations, with or by any Governmental
     Body or any other Person required for the valid execution of this Agreement
     and  the transactions contemplated hereby including, but not limited to the
     approval  by.

          (d)  Payment  of Purchase Price. The Purchaser shall have delivered to
               --------------------------
     the  Company  the  Purchase  Price  specified  in  Section 2.1 hereof (less
                                                        -----------
     commissions  and  all fees and expenses of Purchaser counsel, and including
     the  due  diligence  fee  of  $20,000).

          (e) No Injunction. No Governmental Body or any other Person shall have
              -------------
     issued  an  Order  which shall then be in effect restraining or prohibiting
     the  completion  of the transactions contemplated hereby including, but not
     limited  to,  the,  Acquisition  nor  shall any such Order be threatened or
     pending.

          (f)  Closing  Documents  Provided By Purchaser. The Company shall have
               -----------------------------------------
     received  the  following:

               (i)  this  Agreement  duly  executed  by  the  Purchaser;

               (ii)  the  Registration  Rights  Agreement  duly  executed by the
          Purchaser.

               (iii)  the  Security  Agreement  executed  by  the  Purchaser

          8.3  Post  Closing  Obligations.  Following  the  Closing  Date:
               --------------------------

               (i)  the Company shall file all necessary documents in accordance
          with  their  obligations  under  the  Security  Agreement;

               (ii)  Purchaser  Counsel  shall  file  all  post closing Blue Sky
          filings  in  the  necessary  jurisdictions.

     9.  MISCELLANEOUS.

          9.1  Certain  Definitions.
               --------------------

          "ACTION" shall have the meaning ascribed to such term in Section 4.20.
           ------

          "AFFILIATE" of any Person means any Person that directly or indirectly
           ---------
     controls,  or  is  under control with, or is controlled by, such Person. As
     used  in  this  definition,  "CONTROL"  (including  with  its  correlative
                                   -------
     meanings,  "CONTROLLED  BY"  and  "UNDER  CONTROL  WITH")  shall  mean  the
                 --------------         --------------------
     possession,  directly  or  indirectly,  of the power to direct or cause the
     direction  of  the  management  or  policies  of  a Person (whether through
     ownership  of  securities  or  partnership or other ownership interests, by
     contract  or  otherwise).

<PAGE>

          "BUSINESS DAY" means any day except Saturday, Sunday and any day which
           ------------
     shall  be a federal legal holiday or a day on which banking institutions in
     the  State  of  New  York  are  authorized  or  required  by  law  or other
     governmental  action  to  close.

          "CLOSING"  means the closing of the purchase and sale of the Notes and
           -------
     the  Warrants  pursuant  to  Section 3.1 on October __, 2006, or such other
     date  as  mutually  agreed  to  by  the  parties.

          "CLOSING  DATE"  means  the  date  of  the  Closing.
           -------------

          "CODE"  means  the  Internal Revenue Code of 1986, as amended, and the
           ----
     rules  and  regulations  promulgated  thereunder.

          "COMMISSION"  means  the  Securities  and  Exchange  Commission.
           ----------

          "COMMON  STOCK" means the shares of common stock, par value $0.001 per
           -------------
     share,  of  the  Company.

          "COMPANY  COUNSEL"  means  David  M.  Loev,  Esq.
           ----------------

          "CONTRACT" means any contract, agreement, indenture, note, bond, loan,
           --------
     instrument,  lease,  conditional  sales  contract,  mortgage,  license,
     franchise,  insurance policy, commitment or other arrangement or agreement,
     whether  written  or  oral.

          "CONVERSION  SHARES"  means  all  shares of Common Stock issuable upon
           ------------------
     conversion  of  the  Notes.

          "EMPLOYEE"  means  any  current  employee,  office  consultant, agent,
           --------
     officer  or  director  of  the  Company.

          "EXCHANGE  ACT" means the Securities Exchange Act of 1934, as amended.
           -------------

          "EXHIBITS"  shall mean the following exhibits attached hereto and made
           --------
     a  part  of  this  Agreement:

          Exhibit  A  -  Registration  Rights  Agreement
          ----------
          Exhibit  B  -  Form  of  Warrants
          ----------
          Exhibit  C  -  Form  of  Note
          ----------
          Exhibit  D  -  Security  Agreement
          ----------

          "GOVERNMENTAL BODY" means any government or governmental or regulatory
           -----------------
     body  thereof,  or  political  subdivision thereof, whether federal, state,
     local  or  foreign, or any agency, instrumentality or authority thereof, or
     any  court  or  arbitrator  (public  or  private).

<PAGE>

          "LAW"  means any federal, state, local or foreign law (including law),
           ---
     statute,  code,  ordinance,  rule,  regulation  or  other  requirement  or
     guideline.

          "LEGAL  PROCEEDING"  means  any  judicial,  administrative or arbitral
           -----------------
     actions,  suits,  proceedings  (public  or private), claims or governmental
     proceedings.

          "LIEN"  means  any  mortgage,  pledge, security interest, encumbrance,
           ----
     lien  or charge of any kind, including, without limitation, any conditional
     sale  or  other  title retention agreement, any lease in the nature thereof
     and  the  filing  of or agreement to give any financing statement under the
     Uniform Commercial Code (or similar laws) of any jurisdiction and including
     any  lien  or  charge  arising  by  statute  or  other  law.

          "MATERIAL  ADVERSE  CHANGE"  means  any material adverse change in the
           -------------------------
     business, assets, liabilities, prospects, properties, results of operations
     or  condition (financial or otherwise) of the Company and its Subsidiaries,
     taken  as  a  whole.

          "MATERIAL  ADVERSE  EFFECT"  means any event, circumstance, condition,
     fact, effect, or other matter which has had or could reasonably be expected
     to have a material adverse effect (i) on the business, assets, liabilities,
     prospects,  properties,  results  of  operations or condition (financial or
     otherwise)  of the Company and its Subsidiaries taken as a whole or (ii) on
     the ability of the Company or its Subsidiaries to perform on a timely basis
     any  material  obligation  under  this  Agreement  or  to  consummate  the
     transactions  contemplated  hereby.

          "NOTES"  shall  have the meaning ascribed to such term in Section 1.1.
           -----                                                    -----------

          "ORDER"  means  any order, injunction, judgment, decree, ruling, writ,
           -----
     assessment  or  arbitration  award.

          "PERMITS"  means  any  approvals,  authorizations, consents, licenses,
           -------
     permits  or  certificates  by  or  of  any  Governmental  Body.

          "PERSON"  means  any individual, corporation, partnership, firm, joint
           ------
     venture,  association,  joint-stock  company,  trust,  unincorporated
     organization,  Governmental  Body  or  other  entity.

          "REGISTRATION  STATEMENT"  means  a registration statement meeting the
           -----------------------
     requirements  set  forth in the Registration Rights Agreement and covering,
     among  other  items,  the resale by the Purchaser of the Underlying Shares.

          "REGISTRATION  RIGHTS  AGREEMENT"  means  the  Registration  Rights
           -------------------------------
     Agreement,  dated  as  of the date of this Agreement, among the Company and
     the  Purchaser,  in  the  form  of  EXHIBIT  A  hereto.
                                         ----------

          "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.

<PAGE>

          "SEC  REPORTS" shall have the meaning ascribed to such term in Section
           ------------                                                  -------
     4.9.
     ---

          "SECURITIES  ACT" means the Securities Act of 1933, as amended, or any
           ---------------
     similar  federal  statute,  and the rules and regulations of the Securities
     and  Exchange  Commission thereunder, all as the same shall be in effect at
     the  time.

          "SUBSIDIARY"  shall  have the meaning ascribed to such term in Section
           ----------                                                    -------
     4.4.
     ---

          "TAXES"  means  any  federal,  state,  local  or foreign income, gross
           -----
     receipts,  license,  payroll,  employment,  excise,  severance,  stamp,
     occupation, premium, windfall profits, environmental (including taxes under
     Section  59A  of  the  Code),  customs  duties,  share  capital, franchise,
     profits,  withholding,  social  security  (or  similar),  unemployment,
     disability,  real  property,  personal  property,  sales,  use,  transfer,
     registration,  value-added,  alternative  or  add-on minimum, estimated, or
     other  tax  of  any  kind  whatsoever,  including any interest, penalty, or
     addition  thereto,  whether  disputed  or  not.

          "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.

          "WARRANT  SHARES"  means  all  shares  of  Common  Stock issuable upon
           ---------------
     exercise  of  the  Warrants.

          "WARRANTS"  shall  have  the  meaning ascribed to such term in Section
          ---------                                                      -------
     1.1.
     ---

          9.2 Further Assurances. The Company and the Purchaser agree to execute
              ------------------
     and  deliver  such  other  documents  or  agreements as may be necessary or
     desirable  for the implementation of this Agreement and the consummation of
     the  transactions  contemplated  hereby.

          9.3  Entire  Agreement;  Amendments  and  Waivers.  This  Agreement
               --------------------------------------------
     (including  the  schedules  and  exhibits  hereto)  represents  the  entire
     understanding  and  agreement  among the parties hereto with respect to the
     subject  matter hereof and can be amended, supplemented or changed, and any
     provision  hereof can be waived, only by written instrument making specific
     reference  to  this Agreement signed by the parties hereto. No action taken
     pursuant to this Agreement, including without limitation, any investigation
     by or on behalf of any party, shall be deemed to constitute a waiver by the
     party  taking  such action of compliance with any representation, warranty,
     covenant or agreement contained herein. The waiver by any party hereto of a

<PAGE>

     breach of any provision of this Agreement shall not operate or be construed
     as  a  further  or  continuing  waiver of such breach or as a waiver of any
     other  or  subsequent  breach.  No  failure  on  the  part  of any party to
     exercise,  and no delay in exercising, any right, power or remedy hereunder
     shall operate as a waiver thereof, nor shall any single or partial exercise
     of  such right, power or remedy by such party preclude any other or further
     exercise  thereof  or the exercise of any other right, power or remedy. All
     remedies  hereunder  are  cumulative  and  are  not  exclusive of any other
     remedies  provided  by  law.

          9.4 Construction. The headings herein are for convenience only, do not
              ------------
     constitute  a  part  of  this Agreement and shall not be deemed to limit or
     affect  any  of  the provisions hereof. The language used in this Agreement
     will  be  deemed  to be the language chosen by the parties to express their
     mutual  intent, and no rules of strict construction will be applied against
     any  party.

          9.5  Successors  and Assigns. This Agreement shall be binding upon and
               -----------------------
     inure  to  the  benefit  of  the parties and their successors and permitted
     assigns.  The  Company  may  not  assign  this  Agreement  or any rights or
     obligations  hereunder without the prior written consent of each Purchaser.
     Any  Purchaser,  however,  may  assign  any or all of its Securities and/or
     rights  under any of the Transaction Documents to any Person, provided such
     transferee  agrees  in writing to be bound, with respect to the transferred
     Securities  and  otherwise,  by  the  provisions  hereof  that apply to the
     "Purchaser."

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

          9.7  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 all of its
     reasonable  legal  fees  and  expenses.

          9.8  Headings;  Interpretive  Matters.  The  section  headings of this
               --------------------------------
     Agreement  are for reference purposes only and are to be given no effect in
     the  construction or interpretation of this Agreement. No provision of this
     Agreement  will  be interpreted in favor of, or against, any of the parties

<PAGE>

     hereto  by  reason  of  the  extent  to which any such party or its counsel
     participated  in  the  drafting thereof or by reason of the extent to which
     any  such provision is inconsistent with any prior draft hereof or thereof.

          9.9  Confidentiality.  Each party hereto covenants and agrees to treat
               ---------------
     any  non-public  information  provided  to it by the Company concerning the
     business  and  finances  of  the  Company  ("CORPORATE  INFORMATION")  as
                                                  ----------------------
     confidential  and  agrees further that it will not use, exploit, reproduce,
     disclose  or  provide  Corporate Information to any third-party (other than
     any  agents  of  the  parties  who  are  bound  by  substantially  similar
     obligations of confidentiality) on its own behalf or otherwise, except with
     the  consent  of  the  Company  or as required by law, legal process or any
     federal  or  state regulatory body having jurisdiction over such party. The
     provisions  of  this  Section 9.9 shall not apply to any information which:
                           -----------

          (a)  was  within  the public domain prior to the time of disclosure of
     Corporate Information to the receiving party or which comes into the public
     domain other than as a result of a breach by the party of this Section 9.9;
                                                                    -----------

          (b)  was rightfully acquired by the receiving party from a third party
     without,  to  the  knowledge of the receiving party, any restriction or any
     obligation  of  confidentiality;  or

          (c) was independently developed by the receiving party without any use
     or  reference  to  the  Corporate  Information.

          The  provisions  of  this Section 9.9 shall survive the termination of
     this Agreement, either in whole or as to any party, for a period of two (2)
     years.

          9.10  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 (a) the next Business
     Day,  if  sent  by U.S. nationally recognized overnight courier service, or
     (b)  upon actual receipt by the party to whom such notice is required to be
     given. The address for such notices and communications to the Company shall
     be  as  set forth below and for each Purchaser shall be as set forth on the
     signature  pages  attached  hereto.

     If  to  the  Company:

          XA,  Inc.
          875  North  Michigan  Avenue,  Suite  2626,
          Chicago,  IL  60611
          Attention:  Joseph  Wagner,  President
          Telephone:  312-397-9100

     With  a  copy  to:

          David  M.  Loev
          Attorney  at  Law
          2777  Allen  Parkway,  Suite  1000
          Houston,  Texas  77019
          Telephone:  713-524-4110

<PAGE>

     If  to  the  Purchaser:

          Vision  Capital  Advisors,  LLC
          20  West  55th  Street
          5th  Floor
          New  York,  NY  10019-5373
          Telephone:  (212)  849-8238

     With  a  copy  to:

          Kramer  Levin  Naftalis  Frankel  LLP
          1177  Avenue  of  the  Americas
          New  York,  New  York  10036
          Attn:  Christopher  Auguste
          Telephone:  (212)  715-7807
          All  notices  are  effective  upon  receipt  or  upon  refusal  if
          properly  delivered.

          9.11  Severability.  If  any provision of this Agreement is invalid or
                ------------
     unenforceable,  the  balance  of  this  Agreement  shall  remain in effect.

          9.12  Binding Effect; Assignment. This Agreement shall be binding upon
                --------------------------
     and  insure  to  the benefit of the parties and their respective successors
     and  permitted assigns. No assignment of this Agreement or of any rights or
     obligations  hereunder  may  be  made  by  the Company or the Purchaser (by
     operation  of  law  or  otherwise) without the prior written consent of the
     other  parties  hereto  and  any  attempted assignment without the required
     consents  shall  be  void.

          9.13  Counterparts.  This  Agreement may be executed simultaneously in
                ------------
     two or more counterparts, each of which shall be deemed an original but all
     of  which  together  shall  constitute  one  and  the  same  instrument.

          9.14  Incorporation  by  Reference;  Breach of Security Agreement. Any
                -----------------------------------------------------------
     default  and/or  breach  of  the  Security  Agreement shall be considered a
     breach  and/or  default  of  this  Agreement. All covenants, agreements and
     obligations  of  the  Company  in the Security Agreement shall be expressly
     incorporated  by  reference  herein  as  if  made directly herein and shall
     survive  termination  of  this  Agreement.


            [The rest of this page has been intentionally left blank]

<PAGE>

     IN  WITNESS  WHEREOF,  the parties hereto have executed or have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as  of  the  date  first  written  above.


                                  XA,  INC.



                                  By: /s/ Joseph Wagner
                                     ------------------------
                                     Joseph  Wagner
                                     Chief  Executive  Officer

<PAGE>
           PURCHASER'S SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT

Vision Opportunity Master Fund, Ltd.
------------------------------------


By: /s/ Adam Benowitz
   --------------------------
     Name: Adam Benowitz
     Title: Portfolio Manager

20 West 55th Street, 5th Floor
New York, NY 10019
-----------------------------
Address

212-867-1416
-----------------------------
Facsimile Number

$1,250,000



<PAGE>
                                  SCHEDULE 1.1

                                    PURCHASER


             NAME AND ADDRESS              PRINCIPAL NOTE      WARRANT SHARES
            OF EACH PURCHASER             AMOUNT PURCHASED     TO BE RECEIVED
            -----------------             ----------------     --------------

     Vision Opportunity Master Fund, Ltd.
       c/o Vision Capital Advisors, LLC
            20 West 55th Street                              187,500 at $1.10
                5th Floor                   $1,250,000
         New York, NY 10019-5373                            100,000 at $.30
            (212) 849-8238
          (212) 867-1416 Fax

<PAGE>