Document:

Exhibit
      10.11

    
 

    THIS
      WARRANT AND ANY SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF HAVE NOT
      BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED
      FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
      DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE AFFECTED WITHOUT AN
      EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL THAT
      SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED.

     

    

     

    XA,
      INC.

     

    WARRANT
      TO PURCHASE

     

    16,000
      SHARES

     

    OF
      COMMON STOCK

     

    (SUBJECT
      TO ADJUSTMENT)

     

    (Void
      after June 22, 2012)

     

     

     

    
      	
              Bridge
                Warrant No: 5

               

            	
              June
                22, 2007

               

            

    

    

     

    This
      certifies that for value, Katie & Adam Bridge Partners, L.P., or registered
      assigns (the ”Holder”),
      is
      entitled, subject to the terms set forth below, at any time from and after
      June
      22, 2007 (the “Original Issuance
      Date”)
      and
      before 5:00 p.m., Eastern Time, on June 22, 2012 (the “Expiration
      Date”),
      to
      purchase from XA,
      Inc.,
      a
      Nevada corporation (the “Company”),
      Sixteen Thousand
      (16,000) shares
      (subject to adjustment as described herein), of common stock, par value $0.001
      per share, of the Company (the “Common
      Stock”),
      upon
      surrender hereof, at the principal office of the Company referred to below,
      with
      a duly executed subscription form in the form attached hereto as Exhibit A
      and
      simultaneous payment therefor in lawful, immediately available money of the
      United States or otherwise as hereinafter provided, at an initial exercise
      price
      per share of $0.30 (the “Purchase
      Price”).
      The
      Purchase Price is subject to further adjustment as provided in Section
      4
      below.
      The term “Common
      Stock”
shall
      include, unless the context otherwise requires, the stock and other securities
      and property at the time receivable upon the exercise of this Warrant. The
      term
“Warrant,”
as
      used herein, shall mean this Warrant and any other Warrants delivered in
      substitution or exchange therefor as provided herein. 

    

    This
      Warrant is being issued by the Company together with an 11% Senior Secured
      Convertible Promissory Note in the amount of $16,000 (the “Note”)
      pursuant to the terms and conditions set forth in the Securities Purchase
      Agreement dated the date hereof by and between the Holder and the Company (the
      “SPA”),
      in
      connection with the sale by the Company of $500,000 aggregate principal amount
      of Notes (the “Follow
      On Notes”).
      

    
      
        
        

      

      
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    1. Exercise.
      This
      Warrant may be exercised at any time or from time to time from and after the
      Original Issuance Date and before 5:00 p.m., Eastern Time, on June 22,
      2012, unless such Warrant is terminated pursuant to Section
      6,
      below,
      on any business day, for the full number of shares of Common Stock called for
      hereby, by surrendering it at the principal office of the Company, at 875 North
      Michigan Avenue, Suite 2626, Chicago, IL 60611, with the subscription form
      duly
      executed, together with payment in an amount equal to (a) the number of
      shares of Common Stock called for on the face of this Warrant, multiplied
      (b) by the Purchase Price. Payment of the Purchase Price may be made at
      Holder’s choosing either: (1) by payment in immediately available funds; or (2)
      in lieu of any cash payment, if this Warrant is exercised on a date when a
      Registration Statement (as defined in the Registration Rights Agreement),
      covering the resale of the shares of Common Stock issuable upon exercise of
      this
      Warrant has not been declared effective by the Securities and Exchange
      Commission (the “Commission”),
      or is
      no longer in effect, and the Fair Market Value (as defined below) is equal
      to or
      greater than the Purchase Price, in exchange for the number of shares of Common
      Stock equal to the product of (x) the number of shares to which the Warrants
      are
      being exercised multiplied by (y) a fraction, the numerator of which is the
      Purchase Price and the denominator of which is the Fair Market Value (as defined
      below). This Warrant may be exercised for less than the full number of shares
      of
      Common Stock at the time called for hereby, except that the number of shares
      receivable upon the exercise of this Warrant as a whole, and the sum payable
      upon the exercise of this Warrant as a whole, shall be proportionately reduced.
      Upon a partial exercise of this Warrant in accordance with the terms hereof,
      this Warrant shall be surrendered, and a new Warrant of the same tenor and
      for
      the purchase of the number of such shares not purchased upon such exercise
      shall
      be issued by the Company to Holder without any charge therefor. A Warrant shall
      be deemed to have been exercised immediately prior to the close of business
      on
      the date of its surrender for exercise as provided above, and the person
      entitled to receive the shares of Common Stock issuable upon such exercise
      shall
      be treated for all purposes as the holder of such shares of record as of the
      close of business on such date. Within two (2) business days after such date,
      the Company shall issue and deliver to the person or persons entitled to receive
      the same a certificate or certificates for the number of full shares of Common
      Stock issuable upon such exercise, together with cash, in lieu of any fraction
      of a share, equal to such fraction of the then Fair Market Value on the date
      of
      exercise of one full share of Common Stock.  

     

    “Fair
      Market Value”
shall
      mean, as of any date: (i) if shares of the Common Stock are listed on a
      national securities exchange, the average of the closing prices as reported
      for
      composite transactions during the ten (10) consecutive trading days preceding
      the trading day immediately prior to such date or, if no sale occurred on a
      trading day, then the mean between the closing bid and asked prices on such
      exchange on such trading day; (ii) if shares of the Common Stock are not so
      listed but are traded on the NASDAQ National Market (“NNM”),
      the
      average of the closing prices as reported on the NNM during the ten (10)
      consecutive trading days preceding the trading day immediately prior to such
      date or, if no sale occurred on a trading day, then the mean between the highest
      bid and lowest asked prices as of the close of business on such trading day,
      as
      reported on the NNM; or if applicable, the Nasdaq Capital Market (“NCM”),
      (iii)
      if not then included for quotation on the NNM or the NCM, the average of the
      highest reported bid and lowest reported asked prices as reported by the OTC
      Bulletin Board of the National Quotation Bureau, as the case may be; or
      (iv) if the shares of the Common Stock are not then publicly traded, the
      fair market price of the Common Stock as determined in good faith by
      the
      independent members of the Board of Directors of the Company and the Holders
      of
      all Warrants.

     

    
      
        
        

      

      
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    2. Shares
      Fully Paid; Payment of Taxes.
      All
      shares of Common Stock issued upon the exercise of this Warrant shall be validly
      issued, fully paid and non-assessable, and the Company shall pay all taxes
      and
      other governmental charges (other than income taxes to the holder) that may
      be
      imposed in respect of the issue or delivery thereof.

     

    3. Transfer
      and Exchange.
      (a)
      Neither this Warrant nor the Common Stock to be issued upon exercise hereof
      (the
“Warrant
      Shares”)
      have
      been registered under the Act or any state securities laws (“Blue
      Sky Laws”).
      This
      Warrant has been acquired for investment purposes and not with a view to
      distribution or resale and may not be sold or otherwise transferred without:
      (i)
      an effective registration statement for such Warrant under the Act and such
      applicable Blue Sky Laws; or (ii) an opinion of counsel reasonably satisfactory
      to the Company that registration is not required under the Act or under any
      applicable Blue Sky Laws. 

     

    (b) Upon
      compliance with applicable federal and state securities laws as set forth in
      Section
      3(a),
      above,
      this Warrant and all rights hereunder are transferable, in whole or in part,
      on
      the books of the Company maintained for such purpose at its Principal Office
      by
      the Holder in person or by duly authorized attorney, upon surrender of this
      Warrant together with a completed and executed assignment form in the form
      attached hereto as Exhibit B,
      and
      payment of any necessary transfer tax or other governmental charge imposed
      upon
      such transfer. Upon any partial transfer, the Company will issue and deliver
      to
      the assignee a new Warrant with respect to the shares of Common Stock for which
      it is exercisable that have been transferred, and will deliver to the Holder
      a
      new Warrant or Warrants with respect to the shares of Common Stock not so
      transferred. A Warrant may be transferred only by the procedure set forth
      herein. No transfer shall be effective until such transfer is recorded on the
      books of the Company, provided that such transfer is recorded promptly by the
      Company, and until such transfer on such books, the Company shall treat the
      registered Holder hereof as the owner of the Warrant for all
      purposes.

     

    (c) This
      Warrant is exchangeable at the Principal Office for two or more new Warrants,
      each in the form of this Warrant, to purchase the same aggregate number of
      shares of Common Stock, each new Warrant to represent the right to purchase
      such
      number of shares as the Holder shall designate at the time of such exchange,
      but
      which shall not exceed the total number of shares for which this Warrant may
      be
      from time to time exercisable.

     

    (d) Transfer
      of the Warrant Shares issued upon the exercise of this Warrant shall be
      restricted in the same manner and to the same extent as the Warrant, and the
      certificates representing such Warrant Shares shall bear substantially the
      following legend, until such Warrant Shares have been registered under the
      Act
      or may be removed as otherwise permitted under the Act:

     

    “THE
      SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE
      STATE SECURITIES LAW
      AND
      MAY NOT BE TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE ACT OR
      SUCH
      APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD
      THERETO, OR (ii) IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY,
      REGISTRATION UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT
      REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.”

     

    
      
        
        

      

      
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    (e) The
      Holder and the Company agree to execute such other documents and instruments
      as
      counsel to the Company deems necessary to effect the compliance of the issuance
      of this Warrant and any Warrant Shares issued upon exercise hereof with
      applicable federal and state securities laws, including compliance with
      applicable exemptions from the registration requirements of such
      laws.

     

    4. Anti-Dilution
      Provisions.
      The
      Purchase Price in effect at any time and the number and kind of securities
      issuable upon conversion of this Warrant shall be subject to adjustment from
      time to time upon the happening of certain events as follows:

     

    A.  Adjustment
      for Stock Splits and Combinations.
      If the
      Company at any time or from time to time on or after the date of Warrant
      issuance (the “Original
      Issuance Date”)
      effects a subdivision of the outstanding Common Stock, the Purchase Price then
      in effect immediately before that subdivision shall be proportionately
      decreased, and conversely, if the Company at any time or from time to time
      on or
      after the Original Issuance Date combines the outstanding shares of Common
      Stock
      into a smaller number of shares, the Purchase Price then in effect immediately
      before the combination shall be proportionately increased. Any adjustment under
      this Section
      4(A) shall
      become effective at the close of business on the date the subdivision or
      combination becomes effective.

     

    B.  Adjustment
      for Certain Dividends and Distributions.
      If the
      Company at any time or from time to time on or after the Original Issuance
      Date
      makes or fixes a record date for the determination of holders of Common Stock
      entitled to receive, a dividend or other distribution payable in additional
      shares of Common Stock, then and in each such event the Purchase Price then
      in
      effect shall be decreased as of the time of such issuance or, in the event
      such
      record date is fixed, as of the close of business on such record date, by
      multiplying the Purchase Price then in effect by a fraction (1) the numerator
      of
      which is the total number of shares of Common Stock issued and outstanding
      immediately prior to the time of such issuance or the close of business on
      such
      record date and (2) the denominator of which shall be the total number of shares
      of Common Stock issued and outstanding immediately prior to the time of such
      issuance or the close of business on such record date plus the number of shares
      of Common Stock issuable in payment of such dividend or distribution;
provided,
      however,
      that if
      such record date is fixed and such dividend is not fully paid or if such
      distribution is not fully made on the date fixed therefor, the Purchase Price
      shall be recomputed accordingly as of the close of business on such record
      date
      and thereafter the Purchase Price shall be adjusted pursuant to this
Section 4(B)
      as of
      the time of actual payment of such dividends or distributions.

     

    
      
        
        

      

      
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    C.  Adjustments
      for Other Dividends and Distributions.
      In the
      event the Company at any time or from time to time on or after the Original
      Issuance Date makes, or fixes a record date for the determination of holders
      of
      Common Stock entitled to receive, a dividend or other distribution payable
      in
      securities of the Company other than shares of Common Stock, then and in each
      such event provision shall be made so that the Holders of Warrants shall receive
      upon exercise thereof, in addition to the number of shares of Common Stock
      receivable thereupon, the amount of securities of the Company which they would
      have received had their Warrants been exercised into Common Stock on the date
      of
      such event and had they thereafter, during the period from the date of such
      event to and including the conversion date, retained such securities receivable
      by them as aforesaid during such period, subject to all other adjustments called
      for during such period under this Section
      4
      with
      respect to the rights of the Holders of the Warrants.

     

    D.  Adjustment
      for Reclassification, Exchange and Substitution.
      In the
      event that at any time or from time to time on or after the Original Issuance
      Date, the Common Stock issuable upon the exercise of the Warrants is changed
      into the same or a different number of shares of any class or classes of stock,
      whether by recapitalization, reclassification or otherwise (other than a
      subdivision or combination of shares or stock dividend or a reorganization,
      merger, consolidation or sale of assets, provided for elsewhere in this
Section 4),
      then
      and in any such event each Holder of Warrants shall have the right thereafter
      to
      exercise such Warrant to receive the kind and amount of stock and other
      securities and property receivable upon such recapitalization, reclassification
      or other change, by holders of the maximum number of shares of Common Stock
      for
      which such Warrants could have been exercised immediately prior to such
      recapitalization, reclassification or change, all subject to further adjustment
      as provided herein.

     

    E. 
      Recapitalization, Reorganization, Reclassification, Consolidation, Merger or
      Sale. 

     

    (i)
      In
      case the Company after the Original Issuance Date shall do any of the following
      (each, a "Triggering
      Event"):
      (a)
      consolidate or merge with or into any other individual or entity (“Person”)and
      the
      Company shall not be the continuing or surviving corporation of such
      consolidation or merger, or (b) permit any other Person to consolidate with
      or
      merge into the Company and the Company shall be the continuing or surviving
      Person but, in connection with such consolidation or merger, any common or
      preferred stock (“Capital
      Stock”)
      of the
      Company shall be changed into or exchanged for Securities of any other Person
      or
      cash or any other property, or (c) transfer all or substantially all of its
      properties or assets to any other Person, or (d) effect a capital reorganization
      or reclassification of its Capital Stock, then, and in the case of each such
      Triggering Event, proper provision shall be made to the Exercise Price and
      the
      number of shares of Warrant Shares that may be purchased upon exercise of this
      Warrant so that, upon the basis and the terms and in the manner provided in
      this
      Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof
      at any time after the consummation of such Triggering Event, to the extent
      this
      Warrant is not exercised prior to such Triggering Event, to receive at the
      Exercise Price as adjusted to take into account the consummation of such
      Triggering Event, in lieu of the Common Stock issuable upon such exercise of
      this Warrant prior to such Triggering Event, the Securities, cash and property
      to which such Holder would have been entitled upon the consummation of such
      Triggering Event if such Holder had exercised the rights represented by this
      Warrant immediately prior thereto (including the right of a shareholder to
      elect
      the type of consideration it will receive upon a Triggering Event), subject
      to
      adjustments (subsequent to such corporate action) as nearly equivalent as
      possible to the adjustments provided
      for elsewhere in this Section
      4,
      and the
      Exercise Price shall be adjusted to equal the product of (A) the closing price
      of the common stock of the continuing or surviving corporation as a result
      of
      such Triggering Event as of the date immediately preceding the date of the
      consummation of such Triggering Event multiplied by (B) the quotient of (i)
      the
      Exercise Price divided by (ii) the per share Fair Market Value of the Common
      Stock as of the date immediately preceding the Original Issuance Date;
provided,
      however,
      the
      Holder at its option may elect to receive an amount in cash equal to the lesser
      of (a) the value of this Warrant calculated in accordance with the Black-Scholes
      formula; and (b) $1.00 (subject to adjustment in the event the Company affects
      a
      stock split) per Warrant Share. Immediately upon the occurrence of a Triggering
      Event, the Company shall notify the Holder in writing of such Triggering Event
      and provide the calculations in determining the number of shares of Warrant
      Shares issuable upon exercise of the new warrant and the adjusted Exercise
      Price. Upon the Holder’s request, the continuing or surviving corporation as a
      result of such Triggering Event shall issue to the Holder a new warrant of
      like
      tenor evidencing the right to purchase the adjusted number of shares of Warrant
      Shares and the adjusted Exercise Price pursuant to the terms and provisions
      of
      this Section
      4(E)(i).
      Notwithstanding the foregoing to the contrary, this Section
      4(E)(i)
      shall
      only apply if the surviving entity pursuant to any such Triggering Event is
      a
      company that has a class of equity securities registered
      pursuant to the Securities Exchange Act of 1934, as amended, and its common
      stock is listed or quoted on a national securities exchange, national automated
      quotation system or the OTC Bulletin Board. In the event that the
      surviving entity pursuant to any such Triggering Event is not a public company
      that is
      registered pursuant to the Securities Exchange Act of 1934, as amended, or
      its
      common stock is not listed or quoted on a national securities exchange, national
      automated quotation system or the OTC Bulletin Board, then the Holder shall
      have
      the right to demand that the Company pay to the Holder an amount in cash equal
      to the value of this Warrant calculated in accordance with the Black-Scholes
      formula.

    
      
        
        

      

      
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    (ii) In
      the
      event that the Holder has elected not to exercise this Warrant prior to the
      consummation of a Triggering Event and has also elected not to receive an amount
      in cash equal to the value of this Warrant calculated in accordance with the
      Black-Scholes formula pursuant to the provisions of Section
      4(E)(i)
      above
      (and subject to the limit described in Section
      4(E)(i),
      above),
      so long as the surviving entity pursuant to any Triggering Event is a company
      that has a class of equity securities registered
      pursuant to the Securities Exchange Act of 1934, as amended, and its common
      stock is listed or quoted on a national securities exchange, national automated
      quotation system or the OTC Bulletin Board,
      the
      surviving entity and/or each Person (other than the Company) which may be
      required to deliver any Securities, cash or property upon the exercise of this
      Warrant as provided herein shall assume, by written instrument delivered to,
      and
      reasonably satisfactory to, the Holder of this Warrant, (A) the obligations
      of
      the Company under this Warrant (and if the Company shall survive the
      consummation of such Triggering Event, such assumption shall be in addition
      to,
      and shall not release the Company from, any continuing obligations of the
      Company under this Warrant) and (B) the obligation to deliver to such Holder
      such Securities, cash or property as, in accordance with the foregoing
      provisions of this subsection
      (ii),
      such
      Holder shall be entitled to receive, and the surviving entity and/or each such
      Person shall have similarly delivered to such Holder an opinion of counsel
      for
      the surviving entity and/or each such Person, which counsel shall be reasonably
      satisfactory to such Holder, or in the alternative, a written acknowledgement
      executed by the President or Chief Financial Officer of the Company, stating
      that this Warrant shall thereafter continue in full force and effect and
      the
      terms hereof (including, without limitation, all of the provisions of this
      subsection
      (ii))
      shall
      be applicable to the Securities, cash or property which the surviving entity
      and/or each such Person may be required to deliver upon any exercise of this
      Warrant or the exercise of any rights pursuant hereto.

    
      
        
        

      

      
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    F.  Sale
      of Shares Below Purchase Price:

     

    (1) 
      If at
      any time or from time to time following the Original Issuance Date, the Company
      issues or sells, or is deemed by the express provisions of this Section 4(F)
      to have
      issued or sold, Additional Shares of Common Stock (as hereinafter defined),
      other than as a dividend or other distribution on any class of stock and other
      than upon a subdivision or combination of shares of Common Stock, in either
      case
      as provided in Section 4(A)
      above,
      for an Effective Price (as hereinafter defined) less than the then existing
      Purchase Price, then and in each such case the then existing Purchase Price
      shall be reduced, as of the opening of business on the date of such issue or
      sale, to a price equal to the Effective Price for such Additional Shares of
      Common Stock.

     

    (2) For
      the
      purpose of making any adjustment required under Section 4(F),
      the
      consideration received by the Company for any issue or sale of securities shall
      (I) to the extent it consists of cash be computed at the amount of cash
      received by the Company, (II) to the extent it consists of property other
      than cash, be computed at the fair value of that property as determined in
      good
      faith by the board of directors of the Company (the “Board”),
      (III) if Additional Shares of Common Stock, Convertible Securities (as
      hereinafter defined) or rights or options to purchase either Additional Shares
      of Common Stock or Convertible Securities are issued or sold together with
      other
      stock or securities or other assets of the Company for a consideration which
      covers both, be computed as the portion of the consideration so received that
      may be reasonably determined in good faith by the Board to be allocable to
      such
      Additional Shares of Common Stock, Convertible Securities or rights or options,
      and (IV) be computed after reduction for all expenses payable by the
      Company in connection with such issue or sale.

     

    (3) For
      the
      purpose of the adjustment required under Section 4(F),
      if the
      Company issues or sells any rights, warrants or options for the purchase of,
      or
      stock or other securities convertible into or exchangeable for, Additional
      Shares of Common Stock (such convertible or exchangeable stock or securities
      being hereinafter referred to as “Convertible
      Securities”)
      and if
      the Effective Price of such Additional Shares of Common Stock is less than
      the
      Purchase Price then in effect, then in each case the Company shall be deemed
      to
      have issued at the time of the issuance of such rights, warrants, options or
      Convertible Securities the maximum number of Additional Shares of Common Stock
      issuable upon exercise, conversion or exchange thereof and to have received
      as
      consideration for the issuance of such shares an amount equal to the total
      amount of the consideration, if any, received by the Company for the issuance
      of
      such rights, warrants, options or Convertible Securities, plus, in the case
      of
      such rights, warrants or options, the minimum amounts of consideration, if
      any,
      payable to the Company upon the exercise of such rights, warrants or options,
      plus, in the case of Convertible Securities, the minimum amounts of
      consideration, if any, payable to the Company (other than by cancellation of
      liabilities or obligations evidenced by such Convertible Securities) upon the
      conversion or exchange thereof. No further adjustment of the Purchase Price,
      adjusted upon the issuance of such rights, warrants, options or Convertible
      Securities, shall be made as a result of the
      actual issuance of Additional Shares of Common Stock on the exercise of any
      such
      rights, warrants or options or the conversion or exchange of any such
      Convertible Securities. If any such rights or options or the conversion or
      exchange privilege represented by any such Convertible Securities shall expire
      without having been exercised, the Purchase Price adjusted upon the issuance
      of
      such rights, warrants, options or Convertible Securities shall be readjusted
      to
      the Purchase Price which would have been in effect had an adjustment been made
      on the basis that the only Additional Shares of Common Stock so issued were
      the
      Additional Shares of Common Stock, if any, actually issued or sold on the
      exercise of such rights, warrants, or options or rights of conversion or
      exchange of such Convertible Securities, and such Additional Shares of Common
      Stock, if any, were issued or sold for the consideration actually received
      by
      the Company upon such exercise, plus the consideration, if any, actually
      received by the Company for the granting of all such rights, warrants, or
      options, whether or not exercised, plus the consideration received for issuing
      or selling the Convertible Securities actually converted or exchanged, plus
      the
      consideration, if any, actually received by the Company (other than by
      cancellation of liabilities or obligations evidenced by such Convertible
      Securities) on the conversion or exchange of such Convertible
      Securities.

     

    
      
        
        

      

      
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    (4) For
      the
      purpose of the adjustment required under Section 4(F),
      if the
      Company issues or sells, or is deemed by the express provisions of this
Section 4 to
      have issued or sold, any rights or options for the purchase of Convertible
      Securities and if the Effective Price of the Additional Shares of Common Stock
      underlying such Convertible Securities is less than the Purchase Price then
      in
      effect, then in each such case the Company shall be deemed to have issued at
      the
      time of the issuance of such rights or options the maximum number of Additional
      Shares of Common Stock issuable upon conversion or exchange of the total amount
      of Convertible Securities covered by such rights or options and to have received
      as consideration for the issuance of such Additional Shares of Common Stock
      an
      amount equal to the amount of consideration, if any, received by the Company
      for
      the issuance of such rights, warrants or options, plus the minimum amounts
      of
      consideration, if any, payable to the Company upon the exercise of such rights,
      warrants or options, plus the minimum amount of consideration, if any, payable
      to the Company (other than by cancellation of liabilities or obligations
      evidenced by such Convertible Securities) upon the conversion or exchange of
      such Convertible Securities. No further adjustment of the Purchase Price,
      adjusted upon the issuance of such rights, warrants or options, shall be made
      as
      a result of the actual issuance of the Convertible Securities upon the exercise
      of such rights, warrants or options or upon the actual issuance of Additional
      Shares of Common Stock upon the conversion or exchange of such Convertible
      Securities. The provisions of paragraph (3) above for the readjustment of
      the Purchase Price upon the expiration of rights, warrants or options or the
      rights of conversion or exchange of Convertible Securities shall apply
mutatis mutandis
      to the
      rights, warrants options and Convertible Securities referred to in this
      paragraph (4).

     

    (5) “Additional
      Shares of Common Stock”
shall
      mean all shares of Common Stock (or any debt or equity securities convertible
      or
      exercisable into Common Stock) issued by the Company on or after the Original
      Issuance Date, whether or not subsequently reacquired or retired by the Company,
      other than (I) the Warrant Shares, (II) the shares of Common Stock issuable
      upon conversion of the Note, (III) shares of Common Stock issuable upon
      exercise of warrants, options and convertible securities outstanding as of
      the
      Original Issuance Date (provided that the terms of such warrants, options and
      convertible securities are not
      modified after the Original Issuance Date to adjust the exercise price),
      (IV) shares of Common Stock issued pursuant to any event for which
      adjustment is made to the Purchase Price under Section 4
      hereof
      or to the exercise price under the anti-dilution provisions of any securities
      outstanding as of the Original Issuance Date (including the Notes), and
      (V) 25,000 shares of common stock which the Company has previously agreed
      to issue to its legal counsel, David M. Loev (as disclosed in its SEC filings,
      which shares have not been issued to date). The “Effective
      Price”
of
      Additional Shares of Common Stock shall mean the quotient determined by dividing
      the total number of Additional Shares of Common Stock issued or sold, or deemed
      to have been issued or sold by the Company under this Section 4F,
      into
      the aggregate consideration received, or deemed to have been received, by the
      Company for such issue under this Section 4F,
      for
      such Additional Shares of Common Stock.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (6) Other
      than a reduction pursuant to its applicable anti-dilution provisions, any
      reduction in the conversion price of any Convertible Security, whether
      outstanding on the Original Issuance Date or thereafter, or the price of any
      option, warrant or right to purchase Common Stock or any Convertible Security
      (whether such option, warrant or right is outstanding on the Original Issuance
      Date or thereafter), to an Effective Price less than the current Purchase Price,
      shall be deemed to be an issuance of such Convertible Security and all such
      options, warrants or rights at such Effective Price, and the provisions of
      Sections 4(F)(3),
      (4)
      and
(5)
      shall
      apply thereto mutatis mutandis.

     

    (7) Any
      time
      an adjustment is made to the Purchase Price pursuant to Section
      4(F),
      a
      corresponding proportionate change shall be made to the number of shares of
      Common Stock issuable upon conversion of this Warrant.

     

    G.  No
      Adjustments in Certain Circumstances.
      No
      adjustment in the Purchase Price shall be required unless such adjustment would
      require an increase or decrease of at least one ($0.01) cent in such price;
      provided,
      however,
      that
      any adjustments which by reason of this Section 4(G)
      are not
      required to be made shall be carried forward and taken into account in any
      subsequent adjustment required to be made hereunder. All calculations under
      this
Section 4(G)
      shall be
      made to the nearest cent or to the nearest one-hundredth of a share, as the
      case
      may be.

     

    5. Notices
      of Record Date.
      In
      case:

     

    A. the
      Company shall take a record of the holders of its Common Stock (or other stock
      or securities at the time receivable upon the exercise of the Warrants) for
      the
      purpose of entitling them to receive any dividend or other distribution, or
      any
      right to subscribe for or purchase any shares of stock of any class or any
      other
      securities, or to receive any other right, or

     

    B. of
      any
      capital reorganization of the Company, any reclassification of the capital
      stock
      of the Company, any consolidation or merger of the Company with or into another
      corporation, or any conveyance of all or substantially all of the assets of
      the
      Company to another corporation, or

     

    C. of
      any
      voluntary dissolution, liquidation or winding-up of the Company; then, and
      in
      each such case, the Company will mail or cause to be mailed to each holder
      of a
      Warrant at the time outstanding a notice specifying, as the case may be,
      (a) the date on which a record is to be
      taken
      for the purpose of such dividend, distribution or right, and stating the amount
      and character of such dividend, distribution or right, or (b) the date on
      which such reorganization, reclassification, consolidation, merger, conveyance,
      dissolution, liquidation or winding-up is expected to take place, and the time,
      if any is to be fixed, as of which the holders of record of Common Stock (or
      such stock or securities at the time receivable upon the exercise of the
      Warrants) shall be entitled to exchange their shares of Common Stock (or such
      other stock or securities) for securities or other property deliverable upon
      such reorganization, reclassification, consolidation, merger, conveyance,
      dissolution, liquidation or winding-up, such notice shall be mailed at least
      ten
      (10) days prior to the date therein specified.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    6. [Intentionally
      removed.]

     

    7. Loss
      or Mutilation.
      Upon
      receipt by the Company of evidence satisfactory to it (in the exercise of
      reasonable discretion) of the ownership of and the loss, theft, destruction
      or
      mutilation of any Warrant and (in the case of loss, theft or destruction) of
      indemnity satisfactory to it (in the exercise of reasonable discretion), and
      (in
      the case of mutilation) upon surrender and cancellation thereof, the Company
      will execute and deliver in lieu thereof a new Warrant of like
      tenor.

     

    8. Reservation
      of Common Stock.
      The
      Company shall at all times reserve and keep available for issue upon the
      exercise of Warrants such number of its authorized but unissued shares of Common
      Stock as will be sufficient to permit the exercise in full of all outstanding
      Warrants. All of the shares of Commons Stock issuable upon the exercise of
      the
      rights represented by this Warrant will, upon issuance and receipt of the
      Purchase Price therefor, be fully paid and nonassessable, and free from all
      preemptive rights, rights of first refusal or first offer, taxes, liens and
      charges of whatever nature, with respect to the issuance thereof.

     

    9. Registration
      Rights Agreement.
      The
      Holder of this Warrant is entitled to have a portion of the Warrant Shares
      registered for resale under the Act, pursuant to and in accordance with the
      Registration Rights Agreement dated as of the date hereof by and between the
      Holder and the Company.

     

    10. No
      Rights as Stockholder Conferred by Warrants.
      The
      Warrant shall not entitle the Holder hereof to any of the rights, either at
      law
      or in equity, of a stockholder of the Company. The Holder shall, upon the
      exercise thereof, not be entitled to any dividend that may have accrued or
      which
      may previously have been paid with respect to shares of stock issuable upon
      the
      exercise of the Warrant, except as may otherwise be provided in Section
      4
      hereof.

     

    11. Notices.
      All
      notices and other communications from the Company to the Holder of this Warrant
      shall be mailed by first class, registered or certified mail, postage prepaid,
      and/or a nationally recognized overnight courier service to the address
      furnished to the Company in writing by the Holder.

     

    12. Change;
      Modifications; Waiver.
      No
      terms of this Warrant may be amended, waived or modified except by the express
      written consent of the Company and the holders of not less than 50.1% of the
      shares of Common Stock then issuable under outstanding Warrants issued in
      connection with the Company’s August, September, and October 2006 warrants, and
      June 2007 warrants;
      provided,
      however,
      that no
      such amendment or waiver shall reduce the Warrant Share Number, increase the
      Purchase Price, shorten the period during which this Warrant may be exercised
      or
      modify any provision of this Section
      12
      without
      the consent of the Holder of this Warrant. Notwithstanding the foregoing
      sentence, the Purchase Price will be subject to adjustment in the event of
      a
      forward or reverse stock split. No consideration shall be offered or paid to
      any
      person to amend or consent to a waiver or modification of any provision of
      this
      Warrant unless the same consideration is also offered to all holders of the
      Warrants.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    13. Endorsement
      of Warrants.
      The
      Warrant when presented or surrendered for exchange, transfer or registration
      shall be accompanied (if so required by the Company) by an assignment in the
      form attached hereto as Exhibit
      B
      or such
      other written instrument of transfer, in form satisfactory to the Company,
      duly
      executed by the registered Holder or by his duly authorized
      attorney.

     

    14. Agreement
      of Warrant Holders.
      The
      Holder, and to the extent that portions of this Warrant are assigned and there
      is more than one Holder of warrants exercisable for the Warrant Shares, every
      holder of a Warrant, by accepting the same, consents and agrees with the Company
      and with all other Warrant holders that: (a) the Warrants are transferable
      only
      as permitted by Section
      3
      above;
      (b) the Warrants are transferable only on the registry books of the Company
      as
      herein provided; and (c) the Company may deem and treat the person in whose
      name
      the Warrant certificate is registered as the absolute owner thereof and of
      the
      Warrants evidenced thereby for all purposes whatsoever, and the Company shall
      not be affected by any notice to the contrary.

     

    15. Payment
      of Taxes.
      The
      Company will pay all stamp, transfer and other similar taxes payable in
      connection with the original issuance of this Warrant and the shares of Common
      Stock issuable upon exercise thereof, provided, however, that the Company shall
      not be required to (i) pay any such tax which may be payable in respect of
      any
      transfer involving the transfer and delivery of this Warrant or the issuance
      or
      delivery of certificates for shares of Common Stock issuable upon exercise
      thereof in a name other than that of the registered Holder of this Warrant
      or
      (ii) issue or deliver any certificate for shares of Common Stock upon the
      exercise of this Warrant until any such tax required to be paid under clause
      (i)
      shall have been paid, all such tax being payable by the holder of this Warrant
      at the time of surrender.

     

    16. Ownership
      Cap and Exercise Restriction.
      Notwithstanding anything to the contrary set forth in this Warrant, at no time
      may a Holder of this Warrant exercise this Warrant if the number of shares
      of
      Common Stock to be issued pursuant to such exercise would exceed, when
      aggregated with all other shares of Common Stock owned by such Holder at such
      time, the number of shares of Common Stock which would result in such Holder
      beneficially owning (as determined in accordance with Section 13(d) of the
      Exchange Act and the rules thereunder) in excess of 9.9% of the then issued
      and
      outstanding shares of Common Stock; provided,
      however,
      that
      upon a holder of this Warrant providing the Company with sixty-one (61) days
      notice (pursuant to Section
      13
      hereof)
      (the "Waiver
      Notice")
      that
      such Holder would like to waive this Section
      7
      with
      regard to any or all shares of Common Stock issuable upon exercise of this
      Warrant, this Section
      7
      will be
      of no force or effect with regard to all or a portion of the Warrant referenced
      in the Waiver Notice; provided,
      further,
      that
      this provision shall be of no further force or effect during the sixty-one
      (61)
      days immediately preceding the expiration of the term of this
      Warrant.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    17. Fractional
      Interest.
      The
      Company shall not be required to issue fractional shares of Common Stock on
      the
      exercise of this Warrant. If more than one Warrant shall be presented for
      exercise at the same time by the Holder, the number of full shares of Common
      Stock which shall be issuable upon such exercise shall be computed on the basis
      of the aggregate number of shares of Common Stock acquirable on exercise of
      the
      Warrants so presented. If any fraction of a share of Common Stock would, except
      for the provisions of this Section
      17,
      be
      issuable on the exercise of any Warrant (or specified portion thereof), the
      Company shall pay an amount in cash calculated by it to be equal to the Purchase
      Price per share multiplied by such fraction computed to the nearest whole cent.
      The Holder by his acceptance of this Warrant expressly waives any and all rights
      to receive any fraction of a share of Common Stock or a stock certificate
      representing a fraction of a share of Common Stock.

     

    18. Entire
      Agreement.
      This
      Warrant constitutes the full and entire understanding and agreement among the
      parties with regard to the subject matter hereof and no party shall be liable
      or
      bound to any other party in any manner by any representations, warranties,
      covenants or agreements except as specifically set forth herein.

     

    19. Successors
      and Assigns.
      All
      covenants and provisions of this Warrant by or for the benefit of the Company
      or
      the Holder of this Warrant shall bind and inure to the benefit of their
      respective successors, permitted assigns, heirs and personal
      representatives.

     

    20. Termination.
      This
      Warrant shall terminate at 5:00 p.m., Eastern Time, on the Expiration Date
      or
      upon such earlier date on which all of this Warrant has been exercised (the
      “Termination
      Date”).

     

    21. Headings.
      The
      headings in this Warrant are for purposes of convenience in reference only,
      and
      shall not be deemed to constitute a part hereof.

     

    22. Governing
      Law, Etc.
      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.

     

    Remainder
      of Page Intentionally Left Blank

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    WARRANT
      SIGNATURE PAGE

     

    

     

    

     

    Dated:
      June 22, 2007

     

    

    
      	 	
              XA,
                INC.

            
	 	 
	 	 
	 	
              By:
                /s/ Joseph Wagner

            
	 	
              Name:
                Joseph Wagner

            
	 	
              Title:
                President & CEO

            

    

    

     

    

     

    

     

    

     

    

     

     

    

     

    

     

    16,000
      Shares

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    SUBSCRIPTION
      FORM

     

    (To
      be
      executed only upon exercise of Warrant)

     

    

     

    The
      undersigned registered owner of this Warrant irrevocably exercises this Warrant
      and purchases _______ shares of the Common Stock of XA, Inc., purchasable with
      this Warrant, and herewith makes payment therefor (either in cash or pursuant
      to
      the cashless exercise provisions set forth in Section
      1
      of the
      Warrant), all at the price and on the terms and conditions specified in this
      Warrant.

     

    Dated:     

    

    

    

    
      	 	 
	 	
              (Signature
                of Registered Owner)

            
	 	 
	 	 
	 	 
	 	
              (Street
                Address)

            
	 	 
	 	 
	 	 
	 	
              (City
                / State / Zip Code)

            

    

    

    

    

     

    
      
        
           

        

        
        

      

      
        14

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      B

     

    FORM
      OF ASSIGNMENT

     

    

     

    FOR
      VALUE RECEIVED
      the
      undersigned registered owner of this Warrant hereby sells, assigns and transfers
      unto the Assignee named below all of the rights of the undersigned under the
      within Warrant, with respect to the number of shares of Common Stock set forth
      below:

     

    
      	
              Name
                of Assignee

            	
              Address

            	
              Number
                of Shares

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 

    

    

     

    and
      does
      hereby irrevocably constitute and appoint __________________________ Attorney
      to
      make such transfer on the books of XA, Inc., maintained for the purpose, with
      full power of substitution in the premises.

     

    Dated:     

     

    

     

    
      	 	 
	 	
              (Signature)

            
	 	 
	 	 
	 	 
	 	
              (Witness)

            
	 	 

    

    

    The
      undersigned Assignee of the Warrant hereby makes to XA, Inc., as of the date
      hereof, with respect to the Assignee, all of the representations and warranties
      made by the Holder, and the undersigned Assignee agrees to be bound by all
      the
      terms and conditions of the Warrant and the XA, Inc. Registration Rights
      Agreement, dated as of ______ __, 2006, by and between XA, Inc. and the
      Holder.

    

    

    Dated:     

    

    

    
      	 	 
	 	 
	 	
              (Signature)

            

    

    

    

    
      
        
        

      

      
        15Exhibit
      10.12

     

    
      EXECUTION
        COPY

       

    

    REGISTRATION
      RIGHTS AGREEMENT

     

     

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of June 22, 2007, by and among XA, Inc., a Nevada
      corporation (the “Company”),
      the
      Holder of the Notes and Warrants issued by the Company pursuant to a Securities
      Purchase Agreement, dated as of the date hereof, by and among the Investor
      and
      the Company (the “SPA”),
      and
      Mastodon Ventures, Inc., and its permitted assigns (“Mastodon”).

     

     

    The
      Underlying Shares and the Prior Underlying Shares held by the Investor (and
      any
      Holder that is a permitted assignee of the Investor) shall have the registration
      rights as set forth herein.

     

     

    The
      Company and the Investor hereby agree as follows (for the avoidance of doubt,
      the Investors other than the Investor (each as defined herein) are subject
      to
      other Registration Rights Agreements):

     

    1. Definitions.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      SPA shall have the meanings given such terms in the SPA. As used in this
      Agreement, the following terms shall have the following meanings:

     

    “Additional
      Effectiveness Date” shall
      have the meaning set forth in Section 2(b).

     

    “Additional
      Filing Date”
shall
      have the meaning set forth in Section 2(b).

     

    “Additional
      Notice”
shall
      have the meaning set forth in Section 2(b).

     

    “Additional
      Registration Statement”
shall
      mean any Registration Statement necessary to register shares of the Registrable
      Securities which at any time after the Initial Effectiveness Date and for any
      reason are not covered by an effective Registration Statement.

     

    “Closing
      Date”
shall
      mean June 22, 2007.

     

    “Commission”
means
      the United States Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the Company’s common stock par value $0.001 per share.

     

    “Conversion
      Shares” means
      all
      shares of Common Stock issuable upon conversion of the Notes.

     

    “Effectiveness
      Period”
shall
      mean from the date hereof until the earlier to occur of the date when all
      Registrable Securities covered by a Registration Statement either (a) have
      been
      sold pursuant to a Registration Statement or an exemption from the registration
      requirements of the Securities Act, and (b) pursuant to a written opinion of
      Company counsel acceptable to the Company’s transfer agent and the legal counsel
      for the Holders, may be sold pursuant to Rule 144(k).

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Holder”
or
      “Holders”
means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities (including any permitted assignee).

     

    “Indemnified
      Party”
shall
      have the meaning set forth in Section 5.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 5.

     

    “Investor”
shall
      mean, collectively, Sands
      Brothers Venture Capital LLC, Sands Brothers Venture Capital II LLC, Sands
      Brothers Venture Capital III LLC, Sands Brothers Venture Capital IV LLC and
      Katie &
      Adam Bridge Partners, L.P.

     

    “Investors”
shall
      mean, collectively, (i) the Investor, and (ii) the other investors in the
      offering the Notes and Warrants issued pursuant to the Purchase Agreements.
      

     

    “Losses”
shall
      have the meaning set forth in Section 5(a).

     

    “Initial
      Effectiveness Date”
means,
      with respect to the Initial Registration Statement required to be filed pursuant
      to Section
      2(a)
      of this
      Agreement.

     

    “Initial
      Filing Date”
shall
      have the meaning set forth in Section 2(a).

     

    “Initial
      Registration Date”
shall
      mean the date that is one hundred and eighty (180) days from the date hereof;
      provided
      that, in
      the event that a Private Offering has been consummated during such 180 day
      period, such date shall refer to the date of the closing of such Private
      Offering.

     

    “Initial
      Registration Statement”
shall
      have the meaning set forth in Section 2(a).

     

    “Notes”
means
      the Senior Secured Convertible Promissory Notes issued pursuant the Purchase
      Agreements between the Company and the applicable Investors.

     

    “Pari
      Passu Registration Rights Holders”
shall
      have the meaning set forth in Section 2(f).

     

    “Person”
shall
      mean an
      individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

    “Prior
      Closings”
shall
      mean the August 8, 2006, September 26, 2006, and October 23, 2006 closing of
      the
      sale of an aggregate of $2,700,000 in 11% Senior Subordinated Secured
      Convertible Promissory Notes by the Company.

     

    “Private
      Offering”
shall
      mean a private placement of the Company’s securities in which the Company
      receives gross proceeds of no less than three million dollars
      ($3,000,000).

     

    “Private
      Offering Investors”
shall
      mean each of the purchasers of securities of the Company in a Private
      Offering.

     

    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

     

    “Prospectus”
means
      the prospectus included in the Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by any prospectus supplement, with respect to the terms of the offering of
      any
      portion of the Conversion Registrable Securities or Exchange Registrable
      Securities covered by the Registration Statement, and all other amendments
      and supplements to the Prospectus, including post-effective amendments, and
      all
      material incorporated by reference or deemed to be incorporated by reference
      in
      such Prospectus.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Purchase
      Agreements”
shall
      mean those certain Securities Purchase Agreements, dated on or around the date
      hereof (including the SPA).

     

    “Registrable
      Securities”
means
      (i) the Underlying Shares and the Prior Underlying Shares, in each case,
held
      by
      the Investor (and any Holder that is a permitted assignee of the Investor),
      and
      (ii) the shares of Common Stock underlying all of the securities held by
      Mastodon. 

     

    “Registration
      Statement”
means
      any registration statement required to be filed hereunder (which, at the
      Company’s option, may be an existing registration statement of the Company
      previously filed with the Commission, but not declared effective), including
      (in
      each case) the Prospectus, amendments and supplements to the registration
      statement or Prospectus, including pre- and post-effective amendments, all
      exhibits thereto, and all material incorporated by reference or deemed to be
      incorporated by reference in the registration statement.

     

    “Rule
      144”
means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Rule 415”
means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as
      such Rule may be amended from time to time, or any similar Rule or
      regulation hereafter adopted by the Commission having substantially the same
      effect as such Rule.

     

    “Rule 424”
means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as
      such Rule may be amended from time to time, or any similar Rule or
      regulation hereafter adopted by the Commission having substantially the same
      effect as such Rule.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Trading
      Day”
means
      (a) a day on which the Common Stock is traded on a Trading Market, or
      (b) if the Common Stock is not quoted on a Trading Market, a day on which
      the Common Stock is quoted in the over-the-counter market as reported by the
      National Quotation Bureau Incorporated (or any similar organization or agency
      succeeding to its functions of reporting price); provided, that in the event
      that the Common Stock is not listed or quoted as set forth in (a), and
      (b) hereof, then Trading Day shall mean a Business Day;

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the OTC Bulletin Board, the American Stock
      Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq
      SmallCap Market.

     

    “Underlying
      Shares” means
      collectively, all Conversion Shares and the Warrant Shares. 

     

    “Warrant
      Shares” means
      all
      shares of Common Stock issuable upon exercise of the Warrants.

     

    “Warrants”
means
      the Common Stock purchase warrants issued pursuant to the Purchase Agreements
      between the Company and the applicable Investors.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    2. Registration.

     

    (a) Initial
      Registration.
      No later
      than forty-five (45) days from the Initial Registration Date (the “Initial
      Filing Date”)
      the
      Company shall file with the Commission a Registration Statement (the
“Initial
      Registration Statement”),
      covering the resale of all of the Registrable Securities for an offering to
      be
      made on a continuous basis pursuant to Rule 415. The Initial Registration
      Statement required hereunder shall be on Form S-1, Form SB-2 or Form S-3 (except
      if the Company is not then eligible to register for resale the Registrable
      Securities on Form S-1, Form SB-2 or Form S-3, in which case the Initial
      Registration Statement shall be on another appropriate form in accordance
      herewith). The Initial Registration Statement required hereunder shall contain
      the Plan of Distribution, attached hereto as Annex
      A
      (which
      may be modified to respond to comments, if any, received by the Commission).
      The
      Company shall cause the Initial Registration Statement to become effective,
      no
      later than ninety (90) days after the Initial Filing Date (the “Initial
      Effectiveness Date”)
      and
      remain effective as provided herein. The Company shall use its best efforts
      to
      cause the Initial Registration Statement to be declared effective under the
      Securities Act and shall use its best efforts to keep the Initial Registration
      Statement continuously effective under the Securities Act until the expiration
      of the Effectiveness Period. 

     

    (b) Additional
      Registration.
      

     

    (i)
      If
      at any
      time and for any reason, an Additional Registration Statement is required to
      be
      filed because at such time the actual number of shares of Registrable Securities
      exceeds the number of shares of Registrable Securities remaining under the
      Initial Registration Statement, the Company shall have thirty (30) days to
      file
      such Additional Registration Statement, and the Company shall use its best
      efforts to cause such Additional Registration Statement to be declared effective
      by the Commission as soon as possible, but in no event later than ninety
      (90) days
      after filing (the
      “Additional
      Effectiveness Date”).
      

     

    (ii)
      Notwithstanding anything to the contrary set forth in this Section
      2,
      in the
      event that the Commission does not permit the Company to register all of the
      Registrable Securities in the Initial Registration Statement because of the
      Commission’s application of Rule 415, the Company shall use its best efforts to
      file Additional Registration Statements to register the Registrable Securities
      that were not registered in the Initial Registration Statement as promptly
      as
      possible and in a manner permitted by the Commission. For purposes of this
      Section
      2(b)(ii),
      “Additional
      Filing Date”
means
      with respect to each Additional Registration Statement filed pursuant hereto,
      the later of (i) sixty (60) days following the sale of substantially all of
      the
      Registrable Securities included in the Initial Registration Statement or any
      Additional Registration Statement and (ii) six (6) months following the
      effective date of the Initial Registration Statement or any Additional
      Registration Statement, as applicable, or such earlier date as permitted by
      the
      Commission. 

     

    (iii)
      Each Additional Registration Statement required under this Section
      2(b)
      shall
      contain the Plan of Distribution, attached hereto as Annex
      A
      (which
      may be modified to respond to comments, if any, received by the Commission).
      The
      Company shall keep the Additional Registration Statement continuously effective
      under the Securities Act until the expiration of the Effectiveness
      Period.

     

    (c) Filing
      Default Damages.
      If an
      Initial Registration Statement or Additional Registration Statement (as the
      case
      may be) is not filed on or prior to the Additional Filing Date or Initial Filing
      Date (as the case may be), then the Company shall pay to the Holders of the
      Registrable Securities, for each thirty (30) day period (or pro rata portion
      thereof) of such failure and until the date an Initial Registration Statement
      or
      Additional Registration Statement (as the case
      may
      be) is filed and/or the Registrable Securities may be sold pursuant to Rule
      144(k), as the case may be, as partial liquidated damages and not as a penalty,
      an amount in cash equal to two (2%) percent of the aggregate gross proceeds
      paid
      by
      the Holders for the Notes.
      If the
      Company fails to pay any partial liquidated damages pursuant to this
Section
      2
      in full
      within five (5) days of the date payable, the Company shall pay interest thereon
      at a rate of 18% per annum (or such lesser maximum amount that is permitted
      to
      be paid by applicable law) to the Holders, accruing daily from the date such
      partial liquidated damages are due until such amounts, plus all such interest
      thereon, are paid in full. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (d) Effectiveness,
      Etc. Default Damages.
      If an
      Initial Registration Statement or Additional Registration Statement (as the
      case
      may be) is not declared effective by the Commission on or prior to the Initial
      Effectiveness Date or the Additional Effectiveness Date (as the case may be),
      or
      the Commission declared any such Registration Statement effective, but the
      Holders of Registrable Securities cannot sell such Registrable Securities
      thereunder, for any reason or no reason, then the Company shall pay to the
      Holder, for each thirty (30) day period until the Registration Statement is
      declared effective (or the Holders of Registrable Securities can sell
      thereunder, as the case may be), an amount in cash equal to two (2%) percent
      of
      the aggregate gross proceeds paid by the Holders for the Notes in the Financing.
      Notwithstanding
      anything to the contrary set forth herein, in
      the
      event the Commission does not permit all of the Registrable Securities to be
      included in the Initial Registration Statement (or any subsequent Additional
      Registration Statements) because of its application of Rule 415, no liquidated
      damages shall be payable pursuant to this Section
      2(d)
      shall be
      payable by the Company to the extent that such delay shall be attributable
      to
      the Commission’s application of Rule 415.

     

    (e) Piggyback
      Registrations.
      If, at
      any time following the date hereof, there is not an effective Registration
      Statement covering the Registrable Securities and the Company shall determine
      to
      prepare and file with the Commission a registration statement relating to an
      offering for its own account or the account of others under the Securities
      Act
      of any of its equity securities, other than on Form S-4 or Form S-8 (each as
      promulgated under the Securities Act) or their then equivalents relating to
      equity securities to be issued solely in connection with any acquisition of
      any
      entity or business or equity securities issuable in connection with stock option
      or other employee benefit plans, then the Company shall send to each Holder
      a
      written notice of such determination at least twenty (20) days prior to the
      filing of any such registration statement and shall automatically include in
      such registration statement all Registrable Securities; provided,
      however,
      that
      (i) if, at any time after giving written notice of is intention to register
      any
      securities and prior to the effective date of the registration statement filed
      in connection with such registration, the Company determines for any reason
      not
      to proceed with such registration, the Company will be relieved of its
      obligation to register any Registrable Securities in connection with such
      registration, and (ii) in case of a determination by the Company to delay
      registration of its securities, the Company will be permitted to delay the
      registration of Registrable Securities for the same period as the delay in
      registering such other securities.

     

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

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    3. Registration
      Procedures.
      In
      connection with the Company’s registration obligations hereunder, and during the
      Effectiveness Period, the Company shall:

     

    (a) Not
      less
      than five (5) business days prior to the filing of the Registration Statement
      or
      any related Prospectus or any amendment or supplement thereto, the Company
      shall
      furnish to Holders, a draft of the Registration Statement, or any related
      Prospectus or any amendment or supplement thereto.

     

    (b) (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to the Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep the Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period; (ii) cause the related Prospectus to be amended or supplemented by
      any
      required Prospectus supplement, and as so supplemented or amended to be filed
      pursuant to Rule 424; and (iii) respond to any comments received from the
      Commission with respect to the Registration Statement or any amendment
      thereto.

     

    (c) Notify
      as
      promptly as reasonably possible, but no later than three (3) business days,
      each
      Holder of Registrable Securities included in the Registration Statement: (i)
      (A)
      when a Prospectus or any Prospectus supplement or post-effective amendment
      to
      the Registration Statement has been filed; (B) when the Commission notifies
      the
      Company whether there will be a “review” of the Registration Statement and
      whenever the Commission comments in writing on the Registration Statement;
      and
      (C) when the Registration Statement or any post-effective amendment has become
      effective; (ii) of any request by the Commission or any other Federal or state
      governmental authority during the period of effectiveness of the Registration
      Statement for amendments or supplements to the Registration Statement or
      Prospectus or for additional information; (iii) of the issuance by the
      Commission or any other federal or state governmental authority of any stop
      order suspending the effectiveness of the Registration Statement covering any
      or
      all of the Registrable Securities or the initiation of any Proceedings for
      that
      purpose; (iv) of the receipt by the Company of any notification with respect
      to
      the suspension of the qualification or exemption from qualification of any
      of
      the Registrable Securities for sale in any jurisdiction, or the initiation
      of
      any Proceeding for such purpose; and (v) of the occurrence of any event or
      passage of time that makes the financial statements included in the Registration
      Statement ineligible for inclusion therein or any statement made in the
      Registration Statement or Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference untrue in any material respect or that
      requires any revisions to the Registration Statement, Prospectus or other
      documents so that, in the case of the Registration Statement or the Prospectus,
      as the case may be, it will not contain any untrue statement of a material
      fact
      or omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (d) Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of
      (i) any order suspending the effectiveness of the Registration Statement, or
      (ii) any suspension of the qualification (or exemption from qualification)
      of
      any of the Registrable Securities for sale in any jurisdiction, at the earliest
      practicable moment.

     

    (e) Promptly
      deliver to each Holder no later than three (3) business days after the
      Effectiveness Date, without charge, two (2) copies of the Prospectus or
      Prospectuses (including each form of prospectus) and each amendment or
      supplement thereto (and, upon the request of the Holder such additional copies
      as such Persons may reasonably request in connection with resales by the Holder
      of Registrable Securities). The Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by the Holder in connection
      with the offering and sale of the Registrable Securities covered by such
      Prospectus and any amendment or supplement thereto, except after the giving
      of
      any notice pursuant to Section 3.

     

    (f) Prior
      to
      any resale of Registrable Securities by a Holder, use its best efforts to
      register or qualify or cooperate with the selling Holders in connection with
      the
      registration or qualification (or exemption from the registration or
      qualification) of such Registrable Securities for the resale by the Holder
      under
      the securities or Blue Sky laws of such jurisdictions within the United States
      as any Holder reasonably requests in writing, to keep such registration or
      qualification (or exemption therefrom) effective during the Effectiveness Period
      and to do any and all other acts or things reasonably necessary to enable the
      disposition in such jurisdictions of the Registrable Securities covered by
      the
      Registration Statement; provided,
      however,
      that
      the Company shall not be required to qualify generally to do business in any
      jurisdiction where it is not then so qualified, subject the Company to any
      material tax in any such jurisdiction where it is not then so subject or file
      a
      general consent to service of process in any such jurisdiction.

     

    (g) Upon
      the
      occurrence of any event contemplated by Section 3(c)(v),
      as
      promptly as reasonably possible, prepare a supplement or amendment, including
      a
      post-effective amendment, to the Registration Statement or a supplement to
      the
      related Prospectus or any document incorporated or deemed to be incorporated
      therein by reference, and file any other required document so that, as
      thereafter delivered, neither the Registration Statement nor such Prospectus
      will contain an untrue statement of a material fact or omit to state a material
      fact required to be stated therein or necessary to make the statements therein,
      in light of the circumstances under which they were made, not
      misleading.

     

    (h) Use
      its
      best efforts to comply with all applicable rules and regulations of the
      Commission relating to the registration of the Registrable Securities pursuant
      to the Registration Statement or otherwise.

     

    (i) The
      Company agrees that the Selling Shareholder Questionnaire attached hereto as
      Exhibit
      A
      satisfies all of the information required to be provided by each Holder in
      connection with the Registration Statement. The Company shall not be required
      to
      include any Holder that does not complete, date and execute a Selling
      Shareholder Questionnaire.

     

    (j) The
      Company shall either (a) cause all the Registrable Securities covered by a
      Registration Statement to be listed on each securities exchange on which
      securities of the same class or series issued by the Company are then listed,
      if
      any, if the listing of such Registrable Securities is then permitted under
      the
      rules of such exchange, or (b) secure designation and quotation of all the
      Registrable Securities covered by the Registration Statement on the Nasdaq
      National Market or the Nasdaq SmallCap Market, or, (c) if the Company is
      unsuccessful in satisfying the preceding clauses (a) or (b), the Company
      shall secure the inclusion for quotation all the Registrable Securities covered
      by the Registration Statement on The American Stock Exchange,
      Inc. or if it is unable to do so, on the NASD Bulletin Board and, without
      limiting the generality of the foregoing, to arrange for at least two (2) market
      makers to register with the National Association of Securities Dealers, Inc.
      (“NASD”)
      as
      such with respect to such Registrable Securities. The Company shall pay all
      fees
      and expenses in connection with satisfying its obligation under this
Section 3(j).

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (k) The
      Company covenants that it shall file the reports required to be filed by it
      under the Securities Act and the Exchange Act and the rules and regulations
      adopted by the SEC thereunder so long as the Holder owns any Registrable
      Securities, but in no event longer than two (2) years; provided,
      however,
      the
      Company may delay any such filing but only pursuant to Rule 12b-25 under
      the Exchange Act, and the Company shall take such further reasonable action
      as
      the Holder may reasonably request (including, without limitation, promptly
      obtaining any required legal opinions from Company counsel necessary to effect
      the sale of Registrable Securities under Rule 144 and paying the related
      fees and expenses of such counsel), all to the extent required from time to
      time
      to enable such Holder to sell Registrable Securities without registration under
      the Securities Act within the limitation of the exemptions provided by
      (a) Rule 144 under the Securities Act, as such Rule may be
      amended from time to time, or (b) any similar rule or regulation hereafter
      adopted by the Commission. Upon the request of any Holder of Registrable
      Securities, the Company will deliver to such Holder a written statement as
      to
      whether it has complied with such requirements.

     

    4. Registration
      Expenses.
      All fees
      and expenses incident to the performance of or compliance with this Agreement
      by
      the Company shall be borne by the Company whether or not any Registrable
      Securities are sold pursuant to the Registration Statement, other than fees
      and
      expenses of counsel or any other advisor retained by the Holders and discounts
      and commissions with respect to the sale of any Registrable Securities by the
      Holders. The fees and expenses referred to in the foregoing sentence shall
      include, without limitation, (i) all registration and filing fees (including,
      without limitation, fees and expenses (A) with respect to filings required
      to be
      made with the Trading Market on which the Common Stock is then listed for
      trading, and (B) in compliance with applicable state securities or Blue Sky
      laws), (ii) printing expenses (including, without limitation, expenses of
      printing certificates for Registrable Securities and of printing prospectuses
      if
      the printing of prospectuses is reasonably requested by the holders of a
      majority of the Registrable Securities included in the Registration Statement),
      (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements
      of
      counsel for the Company, (v) Securities Act liability insurance, if the Company
      so desires such insurance, (vi) fees and disbursements in the amount of $20,000
      to counsel to the Investor, Sadis & Goldberg LLP; and (vii) fees and
      expenses of all other Persons retained by the Company in connection with the
      consummation of the transactions contemplated by this Agreement.

     

    5. Indemnification.

     

    (a) Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless the Holder, the officers, directors, agents and employees of
      it,
      each Person who controls the Holder (within the meaning of Section 15 of
      the Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, agents and employees of each such controlling Person, to the fullest
      extent permitted by applicable law, from and against any and all losses, claims,
      damages, liabilities, costs (including, without limitation, reasonable
      attorneys’ fees) and expenses (including the cost (including without limitation,
      reasonable attorneys’ fees) and expenses relating to an Indemnified Party’s
      actions to enforce the provisions of this Section
      5)
      (collectively, “Losses”),
      as
      incurred, to the extent arising out of or relating to any untrue or alleged
      untrue statement of a material fact contained in the Registration
      Statement, any Prospectus or any form of prospectus or in any amendment or
      supplement thereto or in any preliminary prospectus, or arising out of or
      relating to any omission or alleged omission of a material fact required to
      be
      stated therein or necessary to make the statements therein (in the case of
      any
      Prospectus or form of prospectus or supplement thereto, in light of the
      circumstances under which they were made) not misleading, except to the extent,
      but only to the extent, that (1) such untrue statements or omissions are based
      solely upon information regarding such Holder furnished (or in the case of
      an
      omission, not furnished) in writing to the Company by or on behalf of such
      Holder expressly for use therein, or to the extent that such information relates
      to such Holder or such Holder’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by such Holder
      expressly for use in the Registration Statement, such Prospectus or such form
      of
      Prospectus or in any amendment or supplement thereto (it being understood that
      the Holder has approved Annex A hereto for this purpose), (2) in the case of
      an
      occurrence of an event of the type specified in Section 3(c)(ii)-(v),
      the use
      by such Holder of an outdated or defective Prospectus after the Company has
      notified such Holder in writing that the Prospectus is outdated or defective
      and
      prior to the receipt by such Holder of notice that such event is no longer
      applicable, or (3) the failure of the Holder to deliver a prospectus prior
      to
      the confirmation of a sale. The Company shall notify the Holders promptly of
      the
      institution, threat or assertion of any Proceeding of which the Company is
      aware
      in connection with the transactions contemplated by this
      Agreement.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (b) Indemnification
      by Holder.
      The
      Holder shall indemnify and hold harmless the Company, its directors, officers,
      agents and employees, each Person who controls the Company (within the meaning
      of Section 15 of the Securities Act and Section 20 of the Exchange
      Act), and the directors, officers, agents or employees of such controlling
      Persons, to the fullest extent permitted by applicable law, from and against
      all
      Losses, as incurred, to the extent arising out of or based upon: (x) the
      Holder’s failure to comply with the prospectus delivery requirements of the
      Securities Act or (y) any untrue or alleged untrue statement of a material
      fact
      contained in any Registration Statement, any Prospectus, or any form of
      prospectus, or in any amendment or supplement thereto or in any preliminary
      prospectus, or arising out of or relating to any omission or alleged omission
      of
      a material fact required to be stated therein or necessary to make the
      statements therein not misleading (i) to the extent, but only to the extent,
      that such untrue statement or omission is contained in any information so
      furnished (or in the case of an omission, not furnished) in writing by or on
      behalf of such Holder to the Company specifically for inclusion in the
      Registration Statement or such Prospectus or (ii) to the extent that (1) such
      untrue statements or omissions are based solely upon information regarding
      such
      Holder furnished (or in the case of an omission, not furnished) in writing
      to
      the Company by or on behalf of such Holder expressly for use therein, or to
      the
      extent that such information relates to such Holder or such Holder’s proposed
      method of distribution of Registrable Securities, such Prospectus or such form
      of Prospectus or in any amendment or supplement thereto, or (2) in the case
      of
      an occurrence of an event of the type specified in Section 3(c)(ii)-(v),
      the use
      by such Holder of an outdated or defective Prospectus after the Company has
      notified such Holder in writing that the Prospectus is outdated or defective
      and
      prior to the receipt by such Holder of notice that such event is no longer
      applicable, or (3) the failure of the Holder to deliver a Prospectus prior
      to
      the confirmation of a sale. In no event shall the liability of any selling
      Holder hereunder be greater in amount than the dollar amount of the subscription
      amount paid by the Holder in the SPA (or other purchase agreement to which
      the
      Holder acquired securities convertible or exercisable into the Registrable
      Securities).

     

    (c) Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall have the right to assume the
defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided
      that the
      failure of any Indemnified Party to give such notice shall not relieve the
      Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
      except (and only) to the extent that such failure shall have materially
      prejudiced the Indemnifying Party.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    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.

     

     

    All
      reasonable fees and expenses of the Indemnified Party (including reasonable
      fees
      and expenses to the extent incurred in connection with investigating or
      preparing to defend such Proceeding in a manner not inconsistent with this
      Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
      Trading Days of written notice thereof to the Indemnifying Party; provided
      that the
      Indemnified Party shall promptly reimburse the Indemnifying Party for that
      portion of such fees and expenses applicable to such actions for which such
      Indemnified Party is not entitled to indemnification hereunder, determined
      based
      upon the relative faults of the parties.

     

    (d) Contribution.
      If a
      claim for indemnification under Section 5(a)
      or
Section
      5(b)
      is
      unavailable to an Indemnified Party (by reason of public policy or otherwise),
      then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
      shall contribute to the amount paid or payable by such Indemnified Party as
      a
      result of such Losses, in such proportion as is appropriate to reflect the
      relative fault of the Indemnifying Party and Indemnified Party in connection
      with the actions, statements or omissions that resulted in such Losses as well
      as any other relevant equitable considerations. The relative fault of such
      Indemnifying Party and Indemnified Party shall be determined by reference to,
      among other things, whether any action in question, including any untrue or
      alleged untrue statement of a material fact or omission or alleged omission
      of a
      material fact, has been taken or made by, or relates to information supplied
      by,
      such Indemnifying Party or Indemnified Party, and the parties’’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission. The amount paid or payable by a party as a result
      of any Losses shall be deemed to include, subject to the limitations set forth
      in Section 5(c),
      any
      reasonable attorneys’ or other reasonable fees or expenses incurred by such
      party in connection with any Proceeding to the extent such party would have
      been
      indemnified for such fees or expenses if the indemnification provided for in
      this Section was available to such party in accordance with its
      terms.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (e) Rule
      144.
      As long
      as any Holder owns any Notes, Warrants or Registrable Securities, the Company
      covenants to timely file (or obtain extensions in respect thereof and file
      within the applicable grace period) all reports required to be filed by the
      Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
      Act. As long as any Holder owns any Notes, Warrants or Registrable Securities,
      if the Company is not required to file reports pursuant to Section 13(a) or
      15(d) of the Exchange Act, it will prepare and furnish to the Holders and make
      publicly available in accordance with Rule 144(c) promulgated under the
      Securities Act annual and quarterly financial statements, together with a
      discussion and analysis of such financial statements in form and substance
      substantially similar to those that would otherwise be required to be included
      in reports required by Section 13(a) or 15(d) of the Exchange Act, as well
      as
      any other information required thereby, in the time period that such filings
      would have been required to have been made under the Exchange Act. The Company
      further covenants that it will take such further action as any Holder may
      reasonably request, all to the extent required from time to time to enable
      such
      person to sell Conversion Shares and Warrant Shares without registration under
      the Securities Act within the limitation of the exemptions provided by Rule
      144
      promulgated under the Securities Act, including providing any legal opinions
      relating to such sale pursuant to Rule 144, if such person is deemed by the
      Company’s counsel to be in compliance with the rules and regulations set forth
      in Rule 144. Upon the request of any Holder, the Company shall deliver to such
      Holder a written certification of a duly authorized officer as to whether it
      has
      complied with such requirements.

     

    

    6. Miscellaneous.

     

    (a) Compliance.
      The
      Holder covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it in connection with sales
      of Registrable Securities pursuant to the Registration Statement.

     

    (b) Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and each Holder of the then outstanding Registrable
      Securities. No
      consideration shall be offered or paid to any Holders of the
      Registrable Securities
      to amend
      or consent to a waiver or modification of any provision of any of the
      Transaction Documents unless the same consideration also is offered to all
      of
      the parties to the Transaction Documents or Holders of the Registrable
      Securities, as the case may be. The Company has not, directly or indirectly,
      made any agreements with any Investors relating to the terms or conditions
      of
      the transactions contemplated by the Transaction Documents except as set forth
      in the Transaction Documents. Without limiting the foregoing, the Company
      confirms that, except as set forth in this Agreement, no Purchaser has made
      any
      commitment or promise or has any other obligation to provide any financing
      to
      the Company or otherwise.

     

    (c) Notices.
      Any
      and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (i) the Trading Day following the date of delivery to the
      courier service, if sent by nationally recognized overnight courier service,
      (ii) the third Trading Day following the date of mailing, if sent by
      first-class, registered or certified mail, postage prepaid, (iii) the Trading
      Day following transmission by electronic mail with receipt confirmed or
      acknowledged, or (iv) upon actual receipt by the party to whom such notice
      is
      required to be given. The address for such notices and communications shall
      be
      delivered and addressed as set forth in the SPA (or
      other
      purchase agreement to which the Holder acquired securities convertible or
      exercisable into the Registrable
      Securities)
      or to
      such other address as shall be designated in writing from time to time by a
      party hereto.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (d) Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      the
      Holder.

     

    (e) Execution
      and Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

     

    (f) Governing
      Law.
      This
      Agreement shall be governed by and construed exclusively in accordance with
      the
      internal laws of the State of New York without regard to the conflicts of laws
      principles thereof. The parties hereto hereby irrevocably agree that any suit
      or
      proceeding arising directly and/or indirectly pursuant to or under this
      Agreement, shall be brought solely in a federal or state court located in the
      City, County and State of New York. By its execution hereof, the parties hereby
      covenant and irrevocably submit to the in personam
      jurisdiction of the federal and state courts located in the City, County and
      State of New York and agree that any process in any such action may be served
      upon any of them personally, or by certified mail or registered mail upon them
      or their agent, return receipt requested, with the same full force and effect
      as
      if personally served upon them in New York City. The parties hereto waive any
      claim that any such jurisdiction is not a convenient forum for any such suit
      or
      proceeding and any defense or lack of in
      personam
      jurisdiction with respect thereto. In the event of any such action or
      proceeding, the party prevailing therein shall be entitled to payment from
      the
      other party hereto of its reasonable counsel fees and
      disbursements.

     

    (g) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their commercially reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

     

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

     

    (i) Independent
      Nature of Investors.
      The
      Company acknowledges that the obligations of each Investor under the Transaction
      Documents are several and not joint with the obligations of any other Investor,
      and no Investor shall be responsible in any way for the performance of the
      obligations of any other Investor under the Transaction Documents. The Company
      acknowledges that the decision of each Investor to purchase securities pursuant
      to the SPA (or
      other
      purchase agreement to which the Holder acquired securities convertible or
      exercisable into the Registrable Securities)
      has been
      made by such Investor independently of any other Investor and independently
      of
      any information, materials, statements or opinions as to the business, affairs,
      operations, assets, properties, liabilities, results of operations, condition
      (financial or otherwise) or prospects of the Company or of its subsidiaries
      which may have made or given by any other Investor or by any agent
      or
      employee of any other Investor, and no Investor or any of its agents or
      employees shall have any liability to any Investor (or any other person)
      relating to or arising from any such information, materials, statements or
      opinions. The Company acknowledges that nothing contained herein, or in any
      Transaction Document, and no action taken by any Investor pursuant hereto or
      thereto (including, but not limited to, the (i) inclusion of a Investor in
      a
      Registration Statement and (ii) review by, and consent to, such Registration
      Statement by a Investor) shall be deemed to constitute the Investors as a
      partnership, an association, a joint venture or any other kind of entity, or
      create a presumption that the Investors are in any way acting in concert or
      as a
      group with respect to such obligations or the transactions contemplated by
      the
      Transaction Documents. The Company acknowledges that each Investor shall be
      entitled to independently protect and enforce its rights, including without
      limitation, the rights arising out of this Agreement or out of the other
      Transaction Documents, and it shall not be necessary for any other Investor
      to
      be joined as an additional party in any proceeding for such purpose. The Company
      acknowledges that for reasons of administrative convenience only, the
      Transaction Documents have been prepared by counsel for one of the Investors
      and
      such counsel does not represent all of the Investors. The Company acknowledges
      that it has elected to provide all Investors with the same terms and Transaction
      Documents for the convenience of the Company and not because it was required
      or
      requested to do so by the Investors. The Company acknowledges that such
      procedure with respect to the Transaction Documents in no way creates a
      presumption that the Investors are in any way acting in concert or as a group
      with respect to the Transaction Documents or the transactions contemplated
      hereby or thereby.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (j) This
      Agreement Supersedes All Prior Agreements Between Parties.
      Each of
      the Company and the Investor agree that this Agreement supersedes in its
      entirety all of the terms and provisions of any prior agreements between such
      parties concerning the registration rights and the like pertaining to the Prior
      Underlying Shares. Each of the Company and Mastodon agree that this Agreement
      supersedes in its entirety all of the terms and provisions of any prior
      agreements between such parties concerning the registration rights and the
      like
      pertaining to the shares of Common Stock underlying any securities currently
      held by Mastodon.

     

     

     

    
 

    

    [Remainder
      of page intentionally left blank]

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

     

     

    

     

    
      	 	
              XA,
                INC. 

               

            
	 	
              By:
                /s/ Joseph Wagner

            
	 	
              Name:
                Joseph Wagner

            
	 	
              Title:
                President

            

    

    

    

    

    Other
      Signature Pages Follow

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    OTHER
      SIGNATURE PAGES TO REGISTRATION RIGHTS AGREEMENT

    

    
      	
              Sands
                Brothers Venture Capital LLC 

               

              By:
                /s/ Scott Baily      

               

              Name:
                Scott Baily     

               

              Title:
                COO     

               

              Address:
                90 Park Ave., 31st Floor NY, NY 10016     

               

              Facsimile
                Number: 212-953-4978   

               

               

            	
              Sands
                Brothers Venture Capital IV LLC

               

              
                By:
                  /s/ Scott Baily      

                 

                Name:
                  Scott Baily     

                 

                Title:
                  COO     

                 

                Address:
                  90 Park Ave., 31st Floor NY, NY 10016     

                 

                Facsimile
                  Number: 212-953-4978   

              

            
	
               

              Sands
                Brothers Venture Capital II LLC

               

              
                By:
                  /s/ Scott Baily      

                 

                Name:
                  Scott Baily     

                 

                Title:
                  COO     

                 

                Address:
                  90 Park Ave., 31st Floor NY, NY 10016     

                 

                Facsimile
                  Number: 212-953-4978   

              

               

               

            	
               

              Katie
                & Adam Bridge Partners, L.P.

               

              
                By:
                  /s/ Scott Baily      

                 

                Name:
                  Scott Baily     

                 

                Title:
                  COO     

                 

                Address:
                  90 Park Ave., 31st Floor NY, NY 10016     

                 

                Facsimile
                  Number: 212-953-4978   

              

            
	
               

              Sands
                Brothers Venture Capital III LLC

               

              
                By:
                  /s/ Scott Baily      

                 

                Name:
                  Scott Baily     

                 

                Title:
                  COO     

                 

                Address:
                  90 Park Ave., 31st Floor NY, NY 10016     

                 

                Facsimile
                  Number: 212-953-4978    

              

            	
               

              Mastodon
                Ventures, Inc.

               

              By:
                /s/ Robert Hersch      

               

              Name:
                Robert Hersch     

               

              Title:
                President     

               

              Address:
                     

               

              Facsimile
                Number:    

            
	 	 
	 	 

    

    

    

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

     

    ANNEX
      A

     

    Plan
      of Distribution

    

    

    The
      Selling Stockholders and any of their pledgees, assignees and
      successors-in-interest may, from time to time, sell any or all of their shares
      of Common Stock on any stock exchange, market or trading facility on which
      the
      shares are traded or in private transactions. These sales may be at fixed or
      negotiated prices. The Selling Stockholders may use any one or more of the
      following methods when selling shares:

     

    
      	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker/dealer
                solicits purchasers;

            
	
              ·

            	
              block
                trades in which the broker/dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            
	
              ·

            	
              purchases
                by a broker/dealer as principal and resale by the broker/dealer for
                its
                account;

            
	
              ·

            	
              an
                exchange distribution in accordance with the Rules of the applicable
                exchange;

            
	
              ·

            	
              privately
                negotiated transactions;

            
	
              ·

            	
              settlement
                of short sales;

            
	
              ·

            	
              broker/dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per share;

            
	
              ·

            	
              a
                combination of any such methods of sale; and

            
	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the
      Securities Act, if available, rather than under this prospectus.

     

    Broker/dealers
      engaged by the Selling Stockholders may arrange for other brokers/dealers to
      participate in sales. Broker/dealers may receive commissions from the Selling
      Stockholders (or, if any broker/dealer acts as agent for the purchaser of
      shares, from the purchaser) in amounts to be negotiated. The Selling
      Stockholders do not expect these commissions to exceed what is customary in
      the
      types of transactions involved.

     

    The
      Selling Stockholders may from time to time pledge or grant a security interest
      in some or all of the shares of common stock owned by them and, if they default
      in the performance of their secured obligations, the pledgees or secured parties
      may offer and sell the shares of common stock from time to time under this
      prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
      or other applicable provision of the Securities Act of 1933 amending the list
      of
      Selling Stockholders to include the pledgee, transferee or other successors
      in
      interest as Selling Stockholders under this prospectus.

     

    The
      Selling Stockholders and any broker/dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales. In such event, any commissions
      received by such broker/dealers or agents and any profit on the resale of the
      shares purchased by them may be deemed to be underwriting commissions under
      the
      Securities Act. The Selling Stockholders have informed the Company
      that it does not have any agreement or understanding, directly or indirectly,
      with any person to distribute the Common Stock.
       

      The
        Company is required to pay all fees and expenses incident to the registration
        of
        the shares. The Company has agreed to indemnify the Selling Stockholders
        against
        certain losses, claims, damages and liabilities, including liabilities under
        the
        Securities Act.

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    SELLING
      STOCKHOLDER QUESTIONNAIRE

    XA,
      Inc.

    875
      North
      Michigan Avenue, Suite 2626

    Chicago,
      Illinois 60611

    

    Ladies
      and Gentlemen:

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

     

    
      	 	
              Please
                answer every question.

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

            	 

    

    

    
      	
              1.

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

            	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
              2.

            	
              Manner
                of Ownership of Shares:

            	 
	 	 	 	 
	 	
              Individual
                _______

            	
              Community
                Property ________ 

            	
              Tenants
                in Common _______

            
	 	 	 	 
	 	
              Joint
                Tenants with Rights of Survivorship ________

            	
              Corporate
                ________

            	 
	 	 	 	 
	 	
              Partnership
                ______

            	
              Trust
                ________

            	
              Other___________________________

            
	 	 	 	 
	 	 	 	 
	
              3.

               

            	
              Contact
                Information. Provide
                the address, telephone number and fax number where you can be reached
                during business hours.

               

            	 
	
               

            	Address:
              __________________________________________________________________________	 
	
               

            	
              Phone:
                ___________________________________________________________________________

            	 
	
               

            	
              Fax:
                _____________________________________________________________________________

               

            	 
	
              4.

               

            	
              Relationship
                with the Company. Describe
                the nature of any position, office or other material relationship
                you have
                had with the Company during the past three years.

              _______________________________________________________________________

            
	 	
              _______________________________________________________________________

            	 
	 	
              _______________________________________________________________________

               

            	 
	
              5.

               

            	
              Organizational
                Structure.
                Please indicate or (if applicable) describe how you are organized.
                

               

            

    

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

     

    
      	
               

              (a) Are
                you a natural
                person?

              (if
                so, please mark the box and skip to Question 5)

            	
               

               ̈
                Yes  ̈
                No

            
	
               

              (b) Are
                you a reporting
                company
                under the 1934 Act?

              (if
                so, please mark the box and skip to Question 5)

            	
               

               ̈
                Yes  ̈
                No

            
	
               

              Are
                you a majority-owned
                subsidiary
                of
                a reporting company under the 1934 Act?

              (if
                so, please mark the box and skip to Question 5)

            	
               

               

               ̈
                Yes  ̈
                No

            
	
               

              (d) Are
                you a registered
                investment fund
                under the 1940 Act?

              (if
                so, please mark the box and skip to Question 5)

            	
               

               ̈
                Yes  ̈
                No

            

    

    

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

            
	
              Legal
                Description of Entity: 

            	_____________________________	 
	
              Name
                of Entity(ies) Managing Such Entity (if any): 

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

            	 	 
	 	 	 
	
               

               

            	
              · 
Name(s)
                of Natural Persons
                Having Voting or Investment

               

            	 
	
              Control
                Over the Shares Held by such Entity(ies): 

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

            
	 	 	 
	 No.
              of Shares of Stock _______________________________	
               

               

            
	
              7. 
                Acquisition
                of Shares.
                Please describe below the manner in which you acquired your shares
                of
                Common Stock of the Company including, but not limited to, the date,
                the
                name and address of the seller(s), the purchase price and pursuant
                to
                which documents (the “Acquisition
                Documents”).
                Please forward such documents used to acquire your shares as provided
                below.

               

            
	
              8. 
                Plan
                of Distribution.
                I have reviewed the proposed “Plan of Distribution” attached to this
                Registration Rights Agreement as Annex
                A,
                and agree that the statements contained therein reflect my intended
                method(s) of distribution or, to the extent these statements are
                inaccurate or incomplete, I have communicated in writing to one of
                the
                parties listed above my signature to any changes to the proposed
“Plan of
                Distribution” that are required to make these statements accurate and
                complete.  ̈ (Please
                check the box if you have made any changes to Appendix
                B)

               

            

    

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

    
      	
              9. 
                Reliance
                on Responses.
                I acknowledge and agree that the Company and its legal counsel shall
                be
                entitled to rely on my responses in this Questionnaire in all matters
                pertaining to the registration statement and the sale of any shares
                of
                common stock of the Company pursuant to the registration
                statement.

               

            
	
              10. 
                NASD.
                The National Association of Securities Dealers, Inc. (“NASD”)
                may request, in connection with their review of the Registration
                Statement
                and Prospectus under the Securities Act of 1933, as amended, that
                the
                Company inform them of the names of all persons who purchased securities
                from the Company, together with any affiliations with the NASD of
                such
                purchasers. In order to aid the Company in responding to such request,
                the
                undersigned furnishes the following information:

               

            
	 	 	 

    

     

    PART
      A: DETERMINATION OF RESTRICTED PERSON STATUS:

    Please
      check all appropriate categories.

    The
      undersigned is:

    
      	
              ___

            	
              (i)

            	
              a
                broker-dealer;

            
	 	 	 
	
              ___

            	
              (ii)

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

               

            
	
              ___

            	
              (iii)

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

            
	 	 	 
	
              ___

            	
              (iv)

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

            
	 	 	 
	
              ___

            	
              (v)

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

            
	 	 	 
	
              ___

            	
              (vi)

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

            
	 	 	 
	
              ___

            	
              (vii)

            	
              an
                immediate family member of a person described in (v) or (vi) above
                who
                materially supports5,
                or receives material support from, the undersigned;

            
	 	 	 
	
              ___

            	
              (viii)

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

            
	 	 	 

    

     

      
        

      

    

    1
A
      person “associated with” a broker-dealer
      includes any natural person engaged in the investment banking or securities
      business who is directly or indirectly controlling or controlled by a
      broker-dealer, any partner, director, officer or sole proprietor of a
      broker-dealer.

    2 
      A
      limited business broker-dealer is any broker-dealer whose authorization to
      engage in the securities business is limited solely to the purchase and sale
      of
      investment company/variable contracts securities and direct participation
      program securities.

    3
      The term
      "Immediate family" includes the investor’s: (i) parents, (ii) mother-in-law or
      father-in-law. (iii) husband or wife, (iv) brother or sister, (v) brother-in-law
      or sister-in-law, (vi) son-in-law or daughter-in-law, (vii) children, and (viii)
      any other person who is supported, directly or indirectly, to a material extent
      by an officer, director, general partner, employee, agent of a broker-dealer
      or
      person associated with a broker-dealer.

    4
      A
      "collective investment account" is any hedge fund, investment corporation,
      or
      any other collective investment vehicle that is engaged primarily in the
      purchase and/or sale of securities. investment clubs (groups of individuals
      who
      pool their money to invest in stock or other securities and who are collectively
      responsible for making investment decisions) and family investment vehicles
      (legal entities that are beneficially owned solely by immediate family members
      (as defined above)) are not
      considered collective investment accounts.

    5 
      The
      term “material” support” means directly or indirectly providing more than 25% of
      a person’s income in the prior calendar year or living in the same household
      with a member of one’s Immediate family.

     

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              ___

            	
              (ix)

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

            

    

    

    
      	
              ___
                

            	
              (x)

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

            
	 	 	 
	
              ___

            	
              (xi)

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

            
	 	 	 
	
              ___

            	 	
              None
                of the above categories apply and the undersigned is eligible to
                participate in New Issue
                securities.

            

    

     

       

    

    PART
      B: DETERMINATION OF EXEMPTED ENTITY STATUS:

    The
      undersigned is:

    
      	
              ___
                

            	
              (i)

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

            
	 	 	 
	
              ____
                

            	
              (ii)

            	
              an
                investment company registered under the Investment Company Act of
                1940, as
                amended;

            
	 	 	 
	
              ____

            	
              (iii)

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

            
	 	 	 
	 	
              (A)

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

            
	 	
              (B)

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

            
	 	 	 
	
              ____
                

            	
              (iv)

            	
              an
                investment company organized under the laws of a foreign jurisdiction
                and
                

               

            
	 	
              (A)

            	
              the
                investment company is listed on a foreign exchange or authorized
                for sale
                to the public by a foreign regulatory authority; and

            
	 	
              (B)

            	
              no
                person owning more than 5% of the shares of the investment company
                is a
                Restricted Person;

            
	 	 	 
	
              ____
                

            	
              (v)

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

            
	 	 	 
	
              ___

            	
              (vi)

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

            
	 	 	 

    

     

      
        

      

      6
        The term ‘beneficial interest” means any
        economic interest such as the right to share in gains or losses. The receipt
        of
        a management or performance based fee for operating a collective investment
        account, or other fee for acting in a fiduciary capacity, is not
        considered a beneficial interest in the account; however, if such fee is
        subsequently invested into the account (as a deferred fee arrangement or
        otherwise), it is considered a beneficial interest in that
        account.

      

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    
      	
              ___
                

            	
              (vii)

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

            
	 	 	 
	 	
              (A)

            	
              has
                investments from 1,000 or more accounts, and

            
	 	
              (B)

            	
              does
                not limit beneficial interests in the Company principally to trust
                accounts of Restricted Persons; or

            
	 	 	 
	
              ___

            	
              (viii)

            	
              an
                insurance company general, separate or investment account,
                and

            
	 	
              (A)

            	
              the
                account is funded by premiums from 1,000 or more policyholders, or,
                if a
                general account, the insurance company has 1,000 or more policyholders,
                and

            
	 	
              (B)

            	
              the
                insurance company does not limit the policyholders whose premiums
                are used
                to fund the account principally to Restricted Persons, or, if a general
                account, the insurance company does not limit its policyholders
                principally to Restricted Persons.

            

    

    

    Please
      acknowledge that your answers to the foregoing questions are true and correct
      to
      the best of your information and belief by signing and dating this Questionnaire
      where indicated below. Please return the completed executed questionnaire
via
      fax
      to
The
      Loev Law Firm, PC at (713) 524-4122 as
      soon as possible.

     

    If
      at any
      time you discover that your answer to any question was inaccurate, or if any
      event occurring after your completion hereof would require a change in your
      answer to any questions, please immediately contact The Loev Law Firm, PC at
      (713) 524-4110.

    

     

    

     

    Date:                                          
      ,  2007 

    
      	 	 
	 	
              (Print
                name of selling stockholder)

            
	 	
               

              By:

            
	 	
              (Signature)

            
	 	
               

              Name:

            
	 	
              (Print
                name)

            
	 	
               

              Title:

            

    

     

    
      
        
           

        

        
        

      

      
        21

        
          

        

      

      
        
        

        
        

      

    

     

     

    EXECUTION
      COPY

     

    APPENDIX
      A

     

    
      	
              1.

            	
              Definition
                of “Beneficial
                Ownership”

            

    

    

    
      	 	
              (a)

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

            

    

    

    
      	 	
              (1)

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

            

    

    
      	 	
              (2)

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

            

    

    

    Please
      note that either
      voting
      power or
      investment power, or
      both, is
      sufficient for you to be considered the beneficial owner of shares.

     

    
      	 	
              (b)

            	
              Any
                person who, directly or indirectly, creates or uses a trust, proxy,
                power
                of attorney, pooling arrangement or any other contract, arrangement
                or
                device with the purpose or effect of divesting such person of beneficial
                ownership of a security or preventing the vesting of such beneficial
                ownership as part of a plan or scheme to evade the reporting requirements
                of the federal securities acts shall be deemed to be the beneficial
                owner
                of such security.

               

            

    

    
      	 	
              (c)

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

            

    

    

    

    

    

    
      
        
        

      

      
        22

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