Exhibit 10.12



                           WAIVER OF RIGHTS AGREEMENT

     This  Waiver of Rights Agreement (the "AGREEMENT") is made and entered into
                                            ---------
as  of  October  ___,  2006  (the  "EFFECTIVE DATE"), by and between XA, INC., a
                                    --------------
Nevada  corporation  ("XA")  and  ALPHA  CAPITAL AKTIENGESELLSCHAFT, STONESTREET
LIMITED PARTNERSHIP, WHALEHAVEN FUNDS LIMITED, GREENWICH GROWTH FUND LIMITED and
GENESIS  MICROCAP  INC.  (the  "PURCHASERS"),  each  individually  a "PARTY" and
                                ----------
collectively  the  "PARTIES."
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                              W I T N E S S E T H:
                              - - - - - - - - - -

     WHEREAS,  pursuant  to  a  Subscription  Agreement  entered  into  with the
Purchasers  on  June  30,  2004  (the  "SUBSCRIPTION  AGREEMENT"),  XA  sold the
                                        -----------------------
Purchasers  an aggregate of $2,500,000 in two tranches of Convertible Promissory
Notes  (the  "NOTES"  or the "PURCHASER NOTES"), with an aggregate of $1,250,000
             ------           ---------------
sold  on  June  30, 2004, which amount has been paid in full to date (the "FIRST
TRANCHE")  and  an aggregate of $1,250,000 sold on September 13, 2004, which has
since been reduced to $1,012,500 (not including any accrued and unpaid interest,
the  "SECOND  TRANCHE,"  as  described in the Schedule of payments due under the
      ---------------
Second  Tranche,  attached  hereto  as  Exhibit  A),  due to the conversion of a
                                        ----------
portion  of  the  Notes into shares of XA's common stock which amount is due and
payable  on September 13, 2006 as well as 5,000,000 Class A Warrants to purchase
shares  of  XA's  common  stock,  which were reduced to 250,000 Class A Warrants
pursuant  to  XA's reverse stock split affected December 9, 2004 (the "PURCHASER
                                                                       ---------
WARRANTS");
--------

     WHEREAS,  the  Purchasers and XA previously entered into a Waiver of Rights
Agreement  on  July  17,  2006,  effective as of June 30, 2006, and extended via
email  on  August  3,  2006,  to  August  9,  2006, to waive XA's default of the
repayment  of the First Tranche and certain Reset Provisions which may have come
into  effect  in  connection  with  the sale of $1,250,000 in 11% Senior Secured
Convertible Promissory Notes and warrants to various third party purchasers (the
"FIRST  WAIVER"),  which  funding  closed  August 8, 2006 and a Waiver of Rights
 -------------
Agreement  on  September  13,  2006, to waive the Reset Provisions in connection
with  the  previous  sale  of  $1,250,000  in  11%  Senior  Secured  Convertible
Promissory  Notes  (the  "FIRST  FUNDING  NOTES")  and  the  issuance of 175,000
                          ---------------------
warrants  to purchase shares of XA's common stock at $1.10 per share (the "FIRST
                                                                           -----
FUNDING  WARRANTS"  and  collectively  the  entire  August  8,  2006  funding
-----------------
transaction,  the  "PRIOR  FUNDING");
                    --------------

     WHEREAS,  the  Parties  have  previously  entered into a First Amendment to
Waiver  Agreement,  which  extends  the payment terms of the Second Tranche (the
"FIRST  AMENDMENT");
 ----------------

     WHEREAS,  XA  plans  to raise $1,500,000 of additional capital to repay the
Second  Tranche,  and  provide  working capital for XA subsequent to the Parties
entry  into  this  Agreement  in the form of 11% Senior Secured Promissory Notes
(the  "FUNDING NOTES") and certain other Warrants, including 225,000 warrants to
       -------------
purchase  shares  of  XA's common stock at an exercise price of $1.10 per share,
and  100,000  warrants  to  purchase  shares of XA's common stock at an exercise
price  of  $0.30  per share (collectively the "FUNDING WARRANTS"), pursuant to a
                                               ----------------
Securities  Purchase  Agreement  to be entered into between XA and certain third
parties  subsequent  to  the  Parties  entry  into this Agreement (the "PURCHASE
                                                                        --------
AGREEMENT,"  and  together  with the Funding Warrants, Funding Notes and any and
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all  other agreements and documents entered into in connection with the Funding,
the  "FUNDING"  and  the  "FUNDING  DOCUMENTS");
      -------              ------------------

<PAGE>

     WHEREAS,  XA plans to affect a private offering of up to $10,000,000 of its
debt  or  equity  securities (the "PRIVATE OFFERING"), which the Purchasers have
                                   ----------------
previously  waived  the Reset Provisions in connection with, as set forth in the
term sheet that XA received in connection with the Funding, which was previously
waived  by  the  Prior  Waivers.

     WHEREAS,  the Parties desire to enter into this Agreement in furtherance of
the  terms and conditions of the Prior Waivers; however, both Parties agree that
none of the terms or provisions of the Prior Waivers shall be revised or amended
by  this  Agreement other than as provided below in connection with the Funding.

     NOW,  THEREFORE,  in  consideration  for the promises and pledges contained
below  and other good and valuable consideration, which consideration XA and the
Purchasers  acknowledge  receipt  of, and the premises and the mutual covenants,
agreements,  and  considerations  herein  contained, the Parties hereto agree as
follows:

     1.   PURCHASERS'  WAIVER  OF  THE  RESET  AND  ANTI-DILUTION  RIGHTS OF THE
          ----------------------------------------------------------------------
          NOTES,  PURCHASER  WARRANTS  AND  SUBSCRIPTION  AGREEMENT.
          ---------------------------------------------------------

          Assuming  the  Final  Payment  (as  defined  in  the Prior Waivers) is
          paid in full on or prior to October 18, 2006, the Purchasers agree to:

          a)   Waive the  Favored  Nations  Provision,  Section  12(c)  of  the
               Subscription  Agreement;  Section  3.4 of the Purchaser Warrants;
               Section  2.1(c)D  of  the  Purchaser  Notes; as well as any other
               reset,  anti-dilution  or  re-pricing  rights  in  connection
               (collectively  the  "RESET  PROVISIONS")  with:
                                    -----------------

               i)   the Funding  and  the  Private  Offering;  and

               ii)  certain  other  securities  issuable  by  XA  included  and
                    detailed  in  the  Funding  Documents and previously waived,
                    including:

                    a.   the First  Funding  Notes  and  First  Funding Warrants
                         issued  in  connection  with the First Funding, and the
                         issuance  of  common  stock  in  connection  with  the
                         conversion  of the First Funding Notes and the exercise
                         of  the  First  Funding Warrants, the issuance of which
                         was previously waived by the Purchasers pursuant to the
                         Prior  Waivers,  and  is  herein  reaffirmed;

                    b.   the issuance  of  up  to  250,000  shares  of XA common
                         stock  for  professional  services;

<PAGE>

                    c.   the issuance  of  1,000,000  warrants  to  purchase
                         shares  of  XA's  common  stock at an exercise price of
                         $0.30  per  share;

                    d.   the Funding  Notes  and  the  shares  of  common  stock
                         issuable  in  connection  with  the  conversion  of the
                         Funding  Notes;

                    e.   the Funding  Warrants  and  the  shares  of  common
                         stock  issuable  in connection with the exercise of the
                         Funding  Warrants;

                    f.   certain  shares  of  XA  common  stock  issuable,
                         convertible  and/or  exercisable in connection with the
                         Private  Offering, which shares, as originally detailed
                         on  a  Term  Sheet  attached as an exhibit to the First
                         Waiver,  were  previously  waived pursuant to the First
                         Waiver;  and

                    g.   all of  the  previously  waived  Excepted  Issuances
                         (waived  pursuant  to  Section  3.4  of  the  Purchaser
                         Warrants  and  2.1(c)D of the Purchaser Notes), as such
                         term  is  defined  in Section 12(a) of the Subscription
                         Agreement.

               iii) the Purchasers  further  affirm  all  previous  waivers
                    granted  to  XA  pursuant to the Prior Waivers and the First
                    Amendment  (collectively  with  i  and  ii,  the  "FUNDING
                                                                       -------
                    WAIVER").
                    ------

          PROVIDED,  HOWEVER,  that  in  the  event  that  XA  fails to make the
          --------   -------
          required  Final  Payment  on  or  prior  to  the  Final  Payment Date:

          a)   The Funding  Waiver  shall  be  automatically  revoked;  and

          b)   All of  the  Purchasers'  rights  and  remedies  under  the
               Subscription  Agreement,  the  September 2004 Purchaser Notes and
               Purchaser  Warrants  will  automatically  be restored, other than
               those  rights  waived  pursuant  to the December 29, 2004, Waiver
               Agreement  between  the  Parties.

     2.   PURCHASERS'  CERTIFICATION.
          --------------------------

          Subject  to  the  waiver  granted  in  Section  1(a),  each  of  the
          Purchasers  hereby certify that all of the Purchasers own an aggregate
          of  250,000  Class  A Warrants to purchase shares of XA's common stock
          which  represent  all  of the warrants of XA held by any Purchaser and
          such Class A Warrants have an exercise price per share equal to $9.60.
          Other than the Class A Warrants and upon payment in full of the Notes,
          neither  Purchaser  will  own  or  hold any other securities or claims
          issued  by  XA.

<PAGE>

     3.   MISCELLANEOUS.
          -------------

          (a)  Assignment.  All  of  the  terms,  provisions  and  conditions of
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               this  Agreement  shall  be  binding  upon  and shall inure to the
               benefit  of  and  be  enforceable by the Parties hereto and their
               respective  successors  and  permitted  assigns.

          (b)  Applicable  Law.  This  Agreement  shall  be  construed  in
               ---------------
               accordance  with  and  governed  by  the laws of the State of New
               York,  excluding  any  provision  of  this  Agreement which would
               require  the  use  of  the  laws  of  any  other  jurisdiction.

          (c)  Entire  Agreement,  Amendments  and  Waivers.  This  Agreement
               --------------------------------------------
               constitutes  the  entire  agreement  of  the  Parties  hereto and
               expressly supersedes all prior and contemporaneous understandings
               and  commitments,  whether  written  or oral, with respect to the
               subject  matter  hereof,  other  than the Prior Waivers and First
               Amendment,  which shall remain in effect and be fully enforceable
               against  the  Parties.  No  variations, modifications, changes or
               extensions  of  this Agreement or any other terms hereof shall be
               binding upon any Party hereto unless set forth in a document duly
               executed  by  such  Party  or  an authorized agent or such Party.

          (d)  Waiver.  No  failure  on  the  part  of  any Party to enforce any
               ------
               provisions of this Agreement will act as a waiver of the right to
               enforce  that  provision.

          (e)  Section  Headings.  Section  headings  are  for  convenience only
               -----------------
               and  shall  not define or limit the provisions of this Agreement.

          (f)  Effect  of  Facsimile  and  Photocopied  Signatures.  This
               ---------------------------------------------------
               Agreement  may be executed in several counterparts, each of which
               is an original. It shall not be necessary in making proof of this
               Agreement or any counterpart hereof to produce or account for any
               of the other counterparts. A copy of this Agreement signed by one
               Party  and  faxed  to  another Party shall be deemed to have been
               executed  and  delivered  by  the  signing  Party  as  though  an
               original.  A photocopy of this Agreement shall be effective as an
               original  for  all  purposes.









     [Remainder of page left intentionally blank.  Signature page follows.]

<PAGE>

     This Agreement has been executed by the Parties on the date first written
above, with an Effective Date as provided above.


XA, INC.
--------

/s/ Joseph Wagner
-----------------------
JOSEPH WAGNER
CHIEF EXECUTIVE OFFICER


                                  PURCHASERS:
                                  -----------

ALPHA CAPITAL AKTIENGESELLSCHAFT      STONESTREET LIMITED PARTNERSHIP
--------------------------------      -------------------------------

BY: /s/ Konrad Ackerman               BY: /s/ Michael Finkelstein
   ----------------------------          ------------------------------
ITS:                                  ITS:
    ---------------------------           -----------------------------
PRINTED NAME: Konrad Ackerman         PRINTED NAME: Michael Finkelstein
             ------------------                    --------------------

WHALEHAVEN FUNDS LIMITED             GREENWICH GROWTH FUND LIMITED
------------------------             -----------------------------

BY: /s/ Evan Schemanauer             BY: /s/ Derek Wood
   ---------------------                 --------------------------
ITS:                                 ITS: Director
    -------------------                  --------------------------
PRINTED NAME: Evan Schemanauer       PRINTED NAME: Derek Wood
              ----------------                     ----------------


GENESIS MICROCAP INC.
---------------------

BY: /s/ Larry Gibbons
   ---------------------------
ITS: Authorized Signatory
    --------------------------
PRINTED NAME: Larry Gibbons
             -----------------

<PAGE>

                                                                       EXHIBIT A

               Schedule of payments due under the Second Tranche

                                                       Late Payments Per Day 15%
                                       Amount Due       Interest per day, if the
                                    October 18, 2006  Second Tranche is not paid
                                                          on October 18, 2006)
--------------------------------------------------------------------------------
Alpha Capital Aktiengesellschaf     $    585,302.74   $                   236.30
Stonestreet Limited Partnership     $    356,271.23   $                   143.84
Whalehaven Funds Limited            $     89,000.63   $                    35.93
Greenwich Growth Fund Limited       $             -   $                        -
Genesis Microcap Inc.               $             -   $                        -
                                    ---------------   --------------------------
                        Total Due   $  1,030,574.60   $                   416.07
                                    ===============   ==========================

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