Document:

SECURITY
      AGREEMENT

     

    This
      SECURITY AGREEMENT, dated as of August 1, 2007 (as the same may from time to
      time be amended, supplemented or otherwise modified, this “Security
      Agreement”),
      by
      and between The Intagio Group, Inc., a Delaware corporation (the “Secured
      Party”),
      and
      ITEX Corporation, a Nevada corporation (the “Debtor”).

     

    WITNESSETH:

     

    WHEREAS,
      the Debtor and the Secured Party are parties to the certain Asset Purchase
      Agreement, dated as of July 25, 2007 (the “Purchase
      Agreement”),
      which
      provides for, among other things, the issuance to the Secured Party of
      non-negotiable senior subordinated secured promissory note (the “Note”)
      in the
      aggregate principal amount of _____________________ (subject to adjustment
      as
      provided by the Purchase Agreement); and

     

    WHEREAS,
      it is a condition precedent to the consummation of the transactions contemplated
      by the Purchase Agreement that the Debtor execute and deliver this Security
      Agreement to the Secured Party.

     

    NOW,
      THEREFORE, the parties hereto hereby agree as follows:

     

    ARTICLE
      I

     

    DEFINITIONS

     

    1.1  Defined
      Terms.
      As used
      herein, capitalized terms defined in this Agreement and not otherwise defined
      herein are used herein as so defined.

     

    “Account
      Debtor”
shall
      mean the Person who is obligated on a Receivable.

     

    “Accounts”
shall
      mean “accounts” as such term is defined in Section 9-102(2) of the UCC.

     

    “Chattel
      Paper”
shall
      mean “chattel paper” as such term is defined in Section 9-102(11) of the
      UCC.

     

    “Collateral”
shall
      have the meaning assigned to it in Article II hereof.

     

    “Collateral
      Records”
shall
      mean books, records, computer software, computer printouts, customer lists,
      blueprints, technical specifications, manuals, and similar items which relate
      to
      any Collateral other than such items obtained under license or franchise
      security agreements which prohibit assignment or disclosure of such
      items.

     

    “Contracts”
means
      all contracts, undertakings, franchise agreements or other agreements in or
      under which the Debtor now holds or hereafter acquires any right, title or
      interest, including, without limitation, with respect to an Account, any
      agreement relating to the terms of payment or the terms of performance
      thereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Documents”
shall
      mean “documents” as such term is defined in Section 9-102(30) of the
      UCC.

     

    “Equipment”
shall
      mean “equipment” as such term is defined in Section 9-102(33) of the UCC,
      including, without limitation, machinery, manufacturing equipment, data
      processing equipment, computers, office equipment, furniture, appliances, and
      tools.

     

    “Event
      of Default”
shall
      have the meaning assigned to it in the Note.

     

    “Fixtures”
shall
      mean “fixtures” as such term is defined in Section 9-102(41) of the
      UCC.

     

    “General
      Intangibles”
shall
      mean “general intangibles” as such term is defined in Section 9-102(42) of
      the UCC, including, without limitation, rights to the payment of money (other
      than Receivables), trademarks, copyrights, patents, and contracts, licenses
      and
      franchises (except in the case of licenses and franchises in respect of which
      the Debtor is the licensee or franchisee if the agreement in respect of such
      license or franchise prohibits by its terms any assignment or grant of a
      security interest), limited and general partnership interests and joint venture
      interests, federal income tax refunds, trade names, distributions on
      certificated securities (as defined in § 8-102(a)(4) of the UCC) and
      uncertificated securities (as defined in § 8-102(a)(18) of the UCC),
      computer programs and other computer software, inventions, designs, trade
      secrets, goodwill, proprietary rights, customer lists, supplier contracts,
      sale
      orders, correspondence, advertising materials, payments due in connection with
      any requisition, confiscation, condemnation, seizure or forfeiture of any
      property, reversionary interests in pension and profit-sharing plans and
      reversionary, beneficial and residual interests in trusts, credits with and
      other claims against any Person, together with any collateral for any of the
      foregoing and the rights under any security agreement granting a security
      interest in such collateral.

     

    “Instruments”
shall
      mean “instruments” as such term is defined in Section 9-102(47) of the
      UCC.

     

    “Inventory”
shall
      mean “inventory” as such term is defined in § 9-102(48) of the UCC,
      including without limitation, all goods (whether such goods are in the
      possession of the Debtor or of a bailee or other Person for sale, lease,
      storage, transit, processing, use or otherwise and whether consisting of whole
      goods, spare parts, components, supplies, materials or consigned or returned
      or
      repossessed goods), including without limitation, all such goods which are
      held
      for sale or lease or are to be furnished (or which have been furnished) under
      any contract of service or which are raw materials or work in progress or
      materials used or consumed in the Debtor’s business.

     

    “Investment
      Property”
shall
      mean “investment property” as such term is defined in Section 9-102(49) of
      the UCC.

     

    “Lien”
shall
      mean any mortgage, pledge, hypothecation, assignment, deposit arrangement,
      encumbrance, lien (statutory or other), or preference, priority or other
      security agreement of any kind or nature whatsoever, including, without
      limitation, the filing of any financing statement or similar instrument under
      the UCC or comparable law of any jurisdiction, domestic or foreign.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    “Permitted
      Liens”
shall
      mean any of the following (1) Liens for taxes, fees, assessments or other
      governmental charges which are not yet due and payable or which are being
      contested in good faith with a reserve or other appropriate provision having
      been made therefor; (2) statutory liens of landlords, carriers,
      warehousemen, mechanics, materialmen and other similar liens imposed by law
      which are incurred in the ordinary course of business; (3) Liens incurred
      or deposits made in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security;
      (4) easements, reservations, rights of way, restrictions, minor defects or
      irregularities in title and other similar Liens not interfering in any material
      respect with the ordinary conduct of the business of the Debtor; (5) Liens
      in favor of the Secured Party and the Senior Secured Party (as hereinafter
      defined); (6) Liens existing on the date hereof and set forth on
Schedule A
      hereto;
      (7) Liens (i) upon or in any Equipment acquired or held by the Debtor
      to secure the purchase price of such Equipment or indebtedness incurred solely
      for the purpose of financing the acquisition of such Equipment or
      (ii) existing on such Equipment at the time of its acquisition, provided
      that the Lien is confined solely to the Equipment so acquired, improvements
      thereon and the Proceeds of such Equipment; (8) Liens arising from
      judgments, decrees or attachments; and (9) other Liens not described above
      securing outstanding aggregate indebtedness of less than $50,000.

     

    “Person”
shall
      mean and include any individual, partnership, joint venture, firm, corporation,
      association, trust or other enterprise or any government or political
      subdivision or agency, department or instrumentality thereof. 

     

    “Proceeds”
shall
      mean “proceeds” as such term is defined in Section 9-102(64) of the
      UCC.

     

    “Receivables”
shall
      mean all rights to payment for goods sold or leased or services rendered,
      whether or not earned by performance and all rights in respect of the Account
      Debtor, including, without limitation, all such rights in which the Debtor
      has
      any right, title or interest by reason of the purchase thereof by the Debtor,
      and including, without limitation, all such rights constituting or evidenced
      by
      any Account, Chattel Paper, Instrument, General Intangible, note, contract,
      invoice, purchase order, draft, acceptance, book debt, intercompany account,
      security agreement, or other evidence of indebtedness or security, together
      with
      (1) any collateral assigned, hypothecated or held to secure any of the
      foregoing and the rights under any security agreement granting a security
      interest in such collateral; (2) all goods, the sale of which gave rise to
      any of the foregoing, including, without limitation, all rights in any returned
      or repossessed goods and unpaid seller’s rights; (3) all guarantees,
      endorsements and indemnifications on, or of, any of the foregoing; and
      (4) all powers of attorney for the execution of any evidence of
      indebtedness or security or other writing in connection therewith.

     

    “Receivables
      Records”
shall
      mean (1) all original copies of all documents, instruments or other
      writings evidencing the Receivables; (2) all books, correspondence, credit
      or other files, records, ledger sheets or cards, invoices, and other papers
      relating to Receivables, including, without limitation, all tapes, cards,
      computer tapes, computer discs, computer runs, record keeping systems and other
      papers and documents relating to the Receivables, whether in the possession
      or
      under the control of the Debtor or any computer bureau or agent from time to
      time acting for the Debtor or otherwise; (3) all evidences of the filing of
      financing statements and the registration of other instruments in connection
      therewith and amendments, supplements or other modifications thereto, notices
      to
      other creditors or secured parties, and certificates, acknowledgments, or other
      writings, including without limitation lien search reports, from filing or
      other
      registration officers; (4) all credit information, reports and memoranda
      relating thereto, and (5) all other written or non-written forms of
      information related in any way to the foregoing or any Receivable.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    “Secured
      Obligations”
means
      the indebtedness and obligations of the Debtor evidenced by the Note, including
      all principal and interest, together with all other indebtedness and costs
      and
      expenses for which the Debtor is responsible under this Agreement or the Note.
      

     

    “UCC”
shall
      mean the Uniform Commercial Code as the same may, from time to time, be in
      effect in the State of Nevada; provided, however, in the event that any or
      all
      of the attachment, perfection or priority of the Secured Party’s security
      interest in any Collateral is governed by the Uniform Commercial Code as in
      effect in a jurisdiction other than the state of incorporation of the Debtor,
      the term “UCC” shall mean the Uniform Commercial Code as in effect in such other
      jurisdiction for purposes of the provisions hereof relating to such attachment,
      perfection or priority and for purposes of definitions related to such
      provisions.

     

    ARTICLE
      II

     

    GRANT
      OF
      SECURITY INTERESTS

     

    As
      security for the prompt and complete payment and performance in full of all
      the
      Secured Obligations, the Debtor hereby assigns, conveys, mortgages, and pledges,
      hypothecates and transfers to the Secured Party and hereby grants to the Secured
      Party a security interest in and continuing lien on all of the Debtor’s right,
      title and interest in, to and under the following, whether now owned or existing
      or hereafter acquired or arising, and wherever located (all of which being
      hereinafter collectively called the “Collateral”):

     

    (i)  all
      Accounts;

     

    (ii)  all
      Chattel Paper;

     

    (iii)  all
      Collateral Records;

     

    (iv)  Contracts

     

    (v)  all
      Documents;

     

    (vi)  all
      Equipment;

     

    (vii)  all
      Fixtures;

     

    (viii)  all
      General Intangibles;

     

    (ix)  all
      Instruments;

     

    (x)  all
      Inventory;

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    (xi)  all
      Investment Property;

     

    (xii)  all
      Receivables;

     

    (xiii)  all
      Receivables Records;

     

    (xiv)  all
      other
      tangible and intangible personal property; and 

     

    (xv)  all
      accessions, attachments and additions to any or all of the foregoing, all
      substitutions and replacements for any or all of the foregoing and all Proceeds
      or products of any or all of the foregoing.

     

    The
      Secured Party acknowledges the security interest of U.S. Bank, N.A. (the
      "Senior
      Secured Party")
      in the
      Collateral and agrees and confirms that the security interest granted hereunder
      shall be subordinate in priority to the security interest of the Senior Secured
      Party in the Collateral.

     

    ARTICLE
      III

     

    RIGHTS
      OF
      THE SECURED PARTY; COLLECTION OF ACCOUNTS.

     

    (a)  Notwithstanding
      anything contained in this Security Agreement to the contrary, the Debtor
      expressly agrees that it shall remain liable under each of its Contracts and
      each of its licenses to observe and perform all the conditions and obligations
      to be observed and performed by it thereunder and that it shall perform all
      of
      its duties and obligations thereunder, all in accordance with and pursuant
      to
      the terms and provisions of each such Contract or license. The Secured Party
      shall not have any obligation or liability under any Contract or license by
      reason of or arising out of this Security Agreement or the granting to the
      Secured Party of a lien therein or the receipt by the Secured Party of any
      payment relating to any contract or license pursuant hereto, nor shall the
      Secured Party be required or obligated in any manner to perform or fulfill
      any
      of the obligations of the Debtor under or pursuant to any Contract or license,
      or to make any payment, or to make any inquiry as to the nature or the
      sufficiency of any payment received by it or the sufficiency of any performance
      by any party under any Contract or license, or to present or file any claim,
      or
      to take any action to collect or enforce any performance or the payment of
      any
      amounts which may have been assigned to it or to which it may be entitled at
      any
      time or times.

     

    (b)  The
      Secured Party authorizes the Debtor, upon the occurrence and continuance of
      an
      Event of Default, to collect its Accounts, provided that such collection is
      performed in a prudent and businesslike manner, and the Secured Party may,
      upon
      the occurrence and during the continuation of any Event of Default and without
      notice, limit or terminate said authority at any time. Upon the occurrence
      and
      during the continuance of any Event of Default, at the request of the Secured
      Party, the Debtor shall deliver to the Secured Party all original and other
      documents evidencing and relating to the performance of labor or service which
      created such Accounts, including, without limitation, all original orders,
      invoices and shipping receipts.

     

    (c)  The
      Secured Party may at any time, upon the occurrence and during the continuance
      of
      any Event of Default, after notifying the Debtor of its intention to do so,
      notify Account Debtors of the Debtor, parties to the Contracts of the Debtor,
      obligors in respect of Instruments of the Debtor and obligors in respect of
      Chattel Paper of the Debtor that the Accounts and the right, title and interest
      of the Debtor in and under such Contracts, Instruments and Chattel Paper have
      been assigned to the Secured Party and that payments shall be made directly
      to
      the Secured Party. Upon the request of the Secured Party, the Debtor shall
      so
      notify such Account Debtors, parties to such Contracts, obligors in respect
      of
      such Instruments and obligors in respect of such Chattel Paper. Upon the
      occurrence and during the continuance of any Event of Default, the Secured
      Party
      may, in its name or in the name of others, communicate with such Account
      Debtors, parties to such Contracts, obligors in respect of such Instruments
      and
      obligors in respect of such Chattel Paper to verify with such parties, to the
      Secured Party’s satisfaction, the existence, amount and terms of any such
      Accounts, Contracts, Instruments or Chattel Paper.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV

     

    REPRESENTATIONS
      AND WARRANTIES

     

    The
      Debtor has delivered to the Secured Party a certificate signed by the Debtor
      and
      entitled “Perfection Certificate” (the “Perfection Certificate”) attached as
      Annex A. The Debtor represents and warrants to the Secured Party as follows:
      (a)
      the Debtor’s exact legal name is that indicated on the Perfection Certificate
      and on the signature page hereof, (b) the Debtor is an organization of the
      type,
      and is organized in the jurisdiction set forth in the Perfection Certificate,
      (c) the Perfection Certificate accurately sets forth the Debtor’s organizational
      identification number or accurately states that the Debtor has none, (d) the
      Perfection Certificate accurately sets forth the Debtor’s place of business or,
      if more than one, its chief executive office, as well as the Debtor’s mailing
      address, if different, (e) all other information set forth on the Perfection
      Certificate pertaining to the Debtor is accurate and complete, and (f) that
      there has been no change in any information provided in the Perfection
      Certificate since the date on which it was executed by the Debtor.

     

    ARTICLE
      V

     

    COVENANTS

     

    The
      Debtor covenants and agrees with the Secured Party that from and after the
      date
      of this Security Agreement:

     

    5.1  Further
      Assurances.
      The
      Debtor will from time to time at the expense of the Debtor, promptly execute,
      deliver, file and record all further instruments, endorsements and other
      documents, and take such further action as the Secured Party may deem reasonably
      desirable in obtaining the full benefits of this Security Agreement and of
      the
      rights, remedies and powers herein granted, including, without limitation,
      the
      following:

     

    (i)  The
      filing of any financing statements, in a form reasonably acceptable to the
      Secured Party under the UCC or applicable law, rule or regulation in effect
      in
      any jurisdiction with respect to the Liens and security interests granted
      hereby. The Debtor also hereby authorizes the Secured Party to file any such
      financing statements, including without limitation continuation statements,
      and
      amendments thereto, in all jurisdictions and with all filing offices as the
      Secured Party may determine, in its reasonable discretion are necessary or
      advisable to perfect the security interests granted to the Secured Party in
      connection herewith without the signature of the Debtor to the extent permitted
      by applicable law. Such financing statements may describe the Collateral in
      the
      same manner as described in this Security Agreement or may contain an indication
      or description of Collateral that describes such property in any other manner
      as
      the Secured Party may determine, in its reasonable discretion, is necessary,
      advisable or prudent to ensure the perfection of the security interests in
      the
      Collateral granted to the Secured Party in connection herewith, including,
      without limitation, describing such property as “all assets” or “all personal
      property.” A photocopy or other reproduction of this Security Agreement shall be
      sufficient as a financing statement and may filed in lieu of the original to
      the
      extent permitted by applicable law. The Debtor will pay or reimburse the Secured
      Party for all filing fees and related expenses reasonably incurred in connection
      therewith; and

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    (ii)  Furnish
      to the Secured Party from time to time statements and schedules further
      identifying and describing the Collateral and its location and such other
      reports in connection with the Collateral as the Secured Party may reasonable
      request, all in reasonable detail and in form reasonably satisfactory to the
      Secured Party. 

     

    5.2  Covenants
      Concerning Debtor’s Legal Status.
      Without
      providing at least 30 days’ prior written notice to the Secured Party, the
      Debtor will not change its name, its place of business or, if more than one,
      chief executive office, or its mailing address or organizational identification
      number if it has one. If the Debtor does not have an organizational
      identification number and later obtains one, the Debtor shall forthwith notify
      the Secured Party of such organizational identification number. The Debtor
      will
      not change its type of organization, jurisdiction of organization or other
      legal
      structure.

     

    5.3  Covenants
      Concerning Collateral.
      The
      Collateral, to the extent not delivered to the Secured Party, will be kept
      at
      those locations listed on the Perfection Certificate and the Debtor will not
      remove the Collateral from such locations, without providing at least thirty
      days prior written notice to the Secured Party. Except as previously pledged
      and
      assigned to the Senior Secured Party, and except for the security interest
      herein granted, the Debtor shall be the owner of or have other rights in the
      Collateral free from any right or claim of any other Person, lien, security
      interest or other encumbrance, and the Debtor shall defend the same against
      all
      claims and demands of all Persons at any time claiming the same or any interests
      therein adverse to the Secured Party. The Debtor (i) shall not pledge, mortgage
      or create, or suffer to exist any right of any Person in or claim by any Person
      to the Collateral, or any security interest, lien or encumbrance in the
      Collateral in favor of any Person, other than the Senior Secured Party and
      the
      Secured Party; (ii) will keep the Collateral in good order and repair and will
      not use the same in violation of law or any policy of insurance thereon; (iii)
      will permit the Secured Party, or its designee, to inspect the Collateral at
      any
      reasonable time, wherever located; (iv) will pay promptly when due all taxes,
      assessments, governmental charges and levies upon the Collateral or incurred
      in
      connection with the use or operation of such Collateral or incurred in
      connection with this Agreement; (v) will continue to operate its business in
      compliance with all applicable provisions of the federal Fair Labor Standards
      Act, as amended, and with all applicable provisions of federal, state and local
      statutes and ordinances dealing with the control, shipment, storage or disposal
      of hazardous materials or substances; and (vi) will not sell or otherwise
      dispose, or offer to sell or otherwise dispose, of the Collateral or any
      interest therein except for sales and leases of inventory in the ordinary course
      of business.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    5.4  Maintain
      Records.
      The
      Debtor will keep and maintain at its own cost and expense reasonably
      satisfactory and complete records of the Collateral.

     

    5.5  Other
      Actions as to Any and All Collateral.
      The
      Debtor will, at the request and option of the Secured Party, take any and all
      other actions the Secured Party may determine to be necessary or useful for
      the
      attachment and perfection of, and the ability of the Secured Party to enforce,
      the Secured Party’s security interest in any and all of the Collateral,
      including, without limitation, (i) executing, delivering and, where appropriate,
      filing financing statements and amendments relating thereto under the Uniform
      Commercial Code, to the extent, if any, that the Debtor’s signature thereon is
      required therefor, (ii) causing the Secured Party’s name to be noted as secured
      party on any certificate of title for a titled good if such notation is a
      condition to attachment, perfection or priority of, or ability of the Secured
      Party to enforce, the Secured Party’s security interest in such Collateral,
      (iii) complying with any provision of any statute, regulation or treaty of
      the
      United States as to any Collateral if compliance with such provision is a
      condition to attachment, perfection or priority of, or ability of the Secured
      Party to enforce, the Secured Party’s security interest in such Collateral, (iv)
      obtaining governmental and other third party waivers, consents and approvals
      in
      form and substance satisfactory to Secured Party, including, without limitation,
      any consent of any licensor, lessor or other Person obligated on Collateral,
      (v)
      obtaining waivers from mortgagees and landlords in form and substance
      satisfactory to the Secured Party and (vi) taking all actions under any earlier
      versions of the Uniform Commercial Code or under any other law, as reasonably
      determined by the Secured Party to be applicable in any relevant Uniform
      Commercial Code or other jurisdiction, including any foreign
      jurisdiction.

     

    5.6  Right
      of Inspection.
      The
      Secured Party shall at all times on a confidential basis have full and free
      access during normal business hours to the Collateral and to all the books,
      correspondence and records of the Debtor, and the Secured Party and its
      representatives may examine the same, take extracts therefrom and make
      photocopies thereof, and the Debtor agrees to render the Secured Party, at
      the
      Debtor’s cost and expense, such clerical and other assistance as may be
      reasonably requested with regard thereto. The Secured Party and its
      representatives shall (i) at all times also have the right to enter into and
      upon any premises where any of the Inventory or Equipment is located for the
      purpose of inspecting the same or observing its use, and (ii) after an Event
      of
      Default has occurred, to repossess any or all of the Collateral.

     

    5.7  Payment
      of Obligations.
      The
      Debtor will pay promptly when due all taxes, assessments and governmental
      charges or levies imposed upon the Collateral, as well as all claims of any
      kind
      (including, without limitation, claims for labor, materials, supplies and
      services) against or with respect to the Collateral, except that no such charge
      need be paid if (i) the validity thereof is being contested in good faith by
      appropriate proceedings, (ii) the Debtor has promptly notified the Secured
      Party
      of the existence of such proceedings and such proceedings do not involve, in
      the
      good faith and reasonable opinion of the Secured Party, any material danger
      for
      the sale, forfeiture or loss of any material portion of the Collateral or any
      material interest therein and (iii) such charge is adequately reserved against
      on the Debtor’s books in accordance with generally accepted accounting
      principles.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    5.8  Negative
      Pledge.
      Without
      the consent of the Secured Party, the Debtor will not create, incur or permit
      to
      exist, will defend the Collateral against, and will take such other action
      as is
      necessary to remove, any Lien or claim on or to the Collateral, other than
      the
      Liens created hereby and other than Permitted Liens.

     

    5.9  Limitations
      on Dispositions of Collateral.
      Without
      the express prior written consent of the Secured Party (which consent the
      Secured Party may withhold or delay in its complete and sole discretion), the
      Debtor will not sell, transfer, lease or otherwise dispose of any of the
      Collateral, or attempt, offer or contract to do so, except for sales Inventory
      in the ordinary course of its business and except for, so long as no Event
      of
      Default shall have occurred and be continuing, the disposition in the ordinary
      course of business of items of Equipment which have become worn out or
      obsolete.

     

    5.10  Expenses
      Incurred by Secured Party.
      In the
      Secured Party’s discretion, if the Debtor fails to do so, the Secured Party may
      discharge taxes and other encumbrances at any time levied or placed on any
      of
      the Collateral, maintain any of the Collateral, make repairs thereto and pay
      any
      necessary filing fees or insurance premiums. The Debtor agrees to reimburse
      the
      Secured Party on demand for all expenditures so made. The Secured Party shall
      have no obligation to the Debtor to make any such expenditures, nor shall the
      making thereof be construed as the waiver or cure of any Default or Event of
      Default.

     

    5.11  Secured
      Party’s Obligations and Duties.
      Anything herein to the contrary notwithstanding, the Debtor shall remain
      obligated and liable under each contract or agreement comprised in the
      Collateral to be observed or performed by the Debtor thereunder. The Secured
      Party shall not have any obligation or liability under any such contract or
      agreement by reason of or arising out of this Agreement or the receipt by the
      Secured Party of any payment relating to any of the Collateral, nor shall the
      Secured Party be obligated in any manner to perform any of the obligations
      of
      the Debtor under or pursuant to any such contract or agreement, to make inquiry
      as to the nature or sufficiency of any payment received by the Secured Party
      in
      respect of the Collateral or as to the sufficiency of any performance by any
      party under any such contract or agreement, to present or file any claim, to
      take any action to enforce any performance or to collect the payment of any
      amounts which may have been assigned to the Secured Party or to which the
      Secured Party may be entitled at any time or times. The Secured Party’s sole
      duty with respect to the custody, safe keeping and physical preservation of
      the
      Collateral in its possession, under Section 9-207 of the Uniform Commercial
      Code
      of the State or otherwise, shall be to deal with such Collateral in the same
      manner as the Secured Party deals with similar property for its own
      account.

     

    ARTICLE
      VI

     

    POWER
      OF
      ATTORNEY

     

    6.1  Following
      the occurrence and continuance of an Event of Default, Debtor hereby irrevocably
      constitutes and appoints the Secured Party and any officer or agent thereof,
      with full power of substitution, as its true and lawful attorney-in-fact with
      full irrevocable power and authority in the place and stead of the Debtor and
      in
      the name of the Debtor or in its own name, from time to time in the Secured
      Party’s reasonable discretion, for the purpose of enforcing the Secured Party’s
      rights under Article VII below, to take any and all appropriate action by any
      technologically available means, which may include, without limitation, any
      form
      of electronic data transmission, and to execute in any appropriate manner,
      which
      may include, without limitation, using any symbol that the Secured Party may
      adopt to signify the Debtor’s intent to authenticate, any and all documents and
      instruments which may be reasonably necessary or desirable to enforce Secured
      Party’s rights under Article VII below.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    The
      Debtor hereby ratifies all that said attorneys shall lawfully do or cause to
      be
      done by virtue hereof. This power of attorney is a power coupled with an
      interest and shall be irrevocable. 

     

    ARTICLE
      VII

     

    REMEDIES;
      RIGHTS UPON DEFAULT

     

    7.1  Rights
      and Remedies Generally.
      If an
      Event of Default shall occur and be continuing, then and in every such case,
      the
      Secured Party shall have all the rights and remedies of a secured party under
      the UCC, shall have all rights now or hereafter existing under all other
      applicable laws, and, subject to any mandatory requirements of applicable law
      then in effect, shall have all the rights set forth in this Security Agreement
      or the Note and all the rights set forth with respect to the Collateral or
      this
      Security Agreement in any other security agreement between the
      parties.

     

    7.2  Assembly
      of Collateral.
      If an
      Event of Default shall occur and be continuing, upon five (5) days’ notice to
      the Debtor, the Debtor shall, at its own expense, assemble the Collateral (or
      from time to time any portion thereof) and make it available to the Secured
      Party at any place or places designated by the Secured Party which is reasonably
      convenient to both parties.

     

    7.3  Disposition
      of Collateral.
      The
      Secured Party will give the Debtor reasonable notice of the time and place
      of
      any public sale of the Collateral or any part thereof or the time after which
      any private sale or any other intended disposition thereof is to be made. The
      Debtor agrees that the requirements of reasonable notice to it shall be met
      if
      such notice is mailed, postage prepaid to its address specified in
      Section 7.3 of the Purchase Agreement (or such other address that the
      Debtor may provide to the Secured Party in writing) at least ten (10) days
      before the time of any public sale or after which any private sale may be made.
      The Proceeds of any sale, disposition or other realization upon all or any
      part
      of the Collateral shall be distributed by the Secured Party in the following
      order of priorities: First, to the Secured Party in an amount sufficient to
      pay
      in full the reasonable costs of the Secured Party in connection with such sale,
      disposition or other realization, including all fees, costs, expenses,
      liabilities and advances reasonably incurred or made by the Secured Party in
      connection therewith, including, without limitation, reasonable attorneys’ fees;
      Second, to the Secured Party in an amount equal to the then unpaid Secured
      Obligations; and Finally, upon payment in full of the Secured Obligations,
      to
      the Debtor or its representatives, in accordance with the UCC or as a court
      of
      competent jurisdiction may direct.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    7.4  Recourse.
      The
      Debtor shall remain liable for any deficiency if the proceeds of any sale or
      other disposition of the Collateral are insufficient to satisfy the Secured
      Obligations. The Debtor shall also be liable for all expenses of the Secured
      Party reasonably incurred in connection with collecting such deficiency,
      including, without limitation, the reasonable fees and disbursements of
      attorneys employed by the Secured Party to collect such deficiency.

     

    7.5  Expenses;
      Attorneys’ Fees.
      The
      Debtor shall reimburse the Secured Party for all its reasonable expenses in
      connection with the exercise of its rights under this Article VII, including,
      without limitation, all reasonable attorneys’ fees and legal expenses incurred
      by the Secured Party. Expenses of retaking, holding, preparing for sale, selling
      or the like shall include the reasonable attorneys’ fees and legal expenses of
      the Secured Party. All such expenses shall be secured hereby.

     

    7.6  Limitation
      on Duties Regarding Preservation of Collateral.
      The
      Secured Party’s sole duty with respect to the custody, safekeeping and physical
      preservation of the Collateral in its possession, under Section 9-207 of
      the UCC or otherwise, shall be to deal with it in the same manner as the Secured
      Party deals with similar property for its own account.

     

    (a)  The
      Secured Party shall have no obligation to take any steps to preserve rights
      against prior parties to any Collateral.

     

    (b)  Neither
      the Secured Party nor any of its directors, officers, employees or agents shall
      be liable for failure to demand, collect or realize upon all or any part of
      the
      Collateral or for any delay in doing so or shall be under any obligation to
      sell
      or otherwise dispose of any Collateral upon the request of the Debtor or
      otherwise.

     

    ARTICLE
      VIII

     

    MISCELLANEOUS

     

    8.1  Limitation
      on the Secured Party’s Duty in Respect of Collateral.
      The
      Secured Party shall be deemed to have acted reasonably in the custody,
      preservation and disposition of any of the Collateral if it takes such action
      as
      the Debtor requests in writing, but failure of the Secured Party to comply
      with
      any such request shall not in itself be deemed a failure to act reasonably,
      and
      no failure of the Secured Party to do any act not so requested shall be deemed
      a
      failure to act reasonably.

     

    8.2  Reinstatement.
      This
      Security Agreement shall remain in full force and effect and continue to be
      effective should any petition be filed by or against the Debtor for liquidation
      or reorganization, should the Debtor become insolvent or make an assignment
      for
      the benefit of creditors or should a receiver or trustee be appointed for all
      or
      any significant part of the Debtor’s property and assets, and shall continue to
      be effective or be reinstated, as the case may be, if at any time payment and
      performance of the Secured Obligations, or any part thereof, is, pursuant to
      applicable law, rescinded or reduced in amount, or must otherwise be restored
      or
      returned by any obligee of the Secured Obligations, whether as a “voidable
      preference,” “fraudulent conveyance,” or otherwise, all as though such payment
      or performance had not been made. In the event that any payment, or any part
      thereof, is rescinded, reduced, restored or returned, the Secured Obligations
      shall be reinstated and deemed reduced only by such amount paid and not so
      rescinded, reduced, restored or returned.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    8.3  Governing
      Law; Waiver of Jury Trial.

     

    (i)  This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Washington without regard to the principles of conflicts of law
      thereof.

     

    (ii)  Each
      of
      the parties hereto consents to the jurisdiction of any state or federal court
      located within the county of San Francisco in the State of California, and
      irrevocably agrees that all actions or proceedings relating to this Agreement
      or
      the transactions contemplated hereby shall be litigated in one of such courts,
      and each of the parties waives any objection that it may have based on improper
      venue or forum
      non conveniens
      to the
      conduct of any such action or proceeding in any such court and waives personal
      service of any and all process upon it, and consents to all such service of
      process made in the manner set forth in Section 8.4. Nothing contained in this
      Section 8.3(ii) shall affect the right of any party to serve legal process
      on
      any other party in any other manner permitted by law.

     

    (iii)  Each
      party acknowledges and agrees that any controversy which may arise under this
      Agreement is likely to involve complicated and difficult issues, and therefore
      each such party hereby irrevocably and unconditionally waives any right such
      party may have to a trial by jury in respect of any litigation directly or
      indirectly arising out of or relating to this Agreement or the transactions
      contemplated by this Agreement. Each party certifies and acknowledges that
      (i)
      no representative, agent or attorney of any other party has represented,
      expressly or otherwise, that such other party would not, in the event of
      litigation, seek to enforce the foregoing waiver, (ii) each such party
      understands and has considered the implications of this waiver, (iii) each
      such
      party makes this waiver voluntarily, and (iv) each such party has been induced
      to enter into this agreement by, among other things, the waivers and
      certifications in this Section 8.3(iii).

     

    8.4  Notices.
      Except
      as otherwise expressly provided herein, all notices, requests and demands to
      or
      upon the respective parties hereto to be effective shall be in made in
      accordance with all of the provisions of Section 7.3 of the Purchase
      Agreement. 

     

    8.5  Successors
      and Assigns.
      This
      Security Agreement shall be binding upon and inure to the benefit of the Debtor,
      the Secured Party, all future holders of the Secured Obligations and their
      respective successors and assigns, except that the Debtor may not assign or
      transfer any of its rights or obligations under this Security Agreement without
      the prior written consent of the Secured Party, which consent the Secured Party
      may withhold or delay in its sole and complete discretion.

     

    8.6  Waivers
      and Amendments.
      None of
      the terms or provisions of this Security Agreement may be waived, amended,
      supplemented or otherwise modified except by a written instrument executed
      by
      the party against whom enforcement is sought. In the case of any waiver, the
      Debtor and the Secured Party shall be restored to their former position and
      rights hereunder and under the outstanding Secured Obligations, and any Event
      of
      Default waived shall be deemed to be cured and not continuing, but no such
      waiver shall extend to any subsequent or other Event of Default, or impair
      any
      right consequent thereon.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    8.7  No
      Waiver; Remedies Cumulative.
      No
      failure or delay on the part of the Secured Party in exercising any right,
      power
      or privilege hereunder and no course of dealing between the Debtor and the
      Secured Party shall operate as a waiver thereof; nor shall any single or partial
      exercise of any right, power or privilege hereunder preclude any other or
      further exercise thereof or the exercise of any other right, power or privilege.
      A waiver by the Secured Party of any right or remedy hereunder on any one
      occasion shall not be construed as a bar to any right or remedy which the
      Secured Party would otherwise have on any future occasion. The rights and
      remedies herein expressly provided are cumulative and may be exercised singly
      or
      concurrently and as often and in such order as the Secured Party deems expedient
      and are not exclusive of any rights or remedies which the Secured Party would
      otherwise have whether by security agreement or now or hereafter existing under
      applicable law. No notice to or demand on the Debtor in any case shall entitle
      the Debtor to any other or further notice or demand in similar or other
      circumstances or constitute a waiver of the rights of the Secured Party to
      any
      other or future action in any circumstances without notice or
      demand.

     

    8.8  Termination;
      Release.
      When
      the Secured Obligations have been indefeasibly paid and performed in full this
      Security Agreement shall terminate, and the Secured Party, at the request and
      sole expense of the Debtor, will execute and deliver to the Debtor the proper
      instruments (including UCC termination statements) acknowledging the termination
      of this Security Agreement, and will duly assign, transfer and deliver to the
      Debtor, without recourse, representation or warranty of any kind whatsoever,
      such of the Collateral as may be in the possession of the Secured Party and
      has
      not theretofore been disposed of, applied or released.

     

    8.9  Headings
      Descriptive.
      The
      headings of the several Sections and subsections of this Security Agreement
      are
      inserted for convenience only and shall not in any way affect the meaning or
      construction of any provision of this Security Agreement.

     

    8.10  Severability.
      In case
      any provision in or obligation under this Security Agreement or the Secured
      Obligations shall be invalid, illegal or unenforceable in any jurisdiction,
      the
      validity, legality and enforceability of the remaining provisions or
      obligations, or of such provision or obligation in any other jurisdiction,
      shall
      not in any way be affected or impaired thereby.

     

    8.11  EACH
      OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
      IN
      ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
      AGREEMENT OR ANY OTHER DOCUMENT. 

     

    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Debtor and the Secured Party have caused this Security
      Agreement to be duly executed and delivered as of the date first above
      written.

     

    
      	 	 	 
	 	
              THE
                DEBTOR

              
                ITEX
                  CORPORATION

              

            
	 
 	 
 	 
 
	
            	By:  	 
	 	
              

              Name:
                Steven White

              
                Title:
                  Chief Executive Officer

              

            
	 	
              Address:
                

              
                3326
                  - 160th
                  Ave SE, Suite 100

                
                  Bellevue,
                    WA 98008-6418

                

              

            

    

    
       

      
        	 	 	 
	 	
                
                  SECURED
                    PARTY

                   

                  THE
                    INTAGIO GROUP, INC.

                

              
	 
 	 
 	 
 
	
              	By:  	Eric Jeck
	 	
                
                  
                    Title:
                      President

                  

                

              

      

      

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

    

    ANNEX
      A

     

    PERFECTION
      CERTIFICATE

    (UCC
      Financing Statements)

     

    The
      undersigned, the President of ITEX Corporation, a Nevada corporation (the
“Debtor”), hereby certifies, with reference to a certain Security Agreement
      dated July 25, 2007 (the “Security Agreement”) (terms defined in such Security
      Agreement having the same meanings herein as specified therein), between the
      Debtor and The Intagio Group, Inc., a Delaware corporation (the “Secured
      Party”),
      to
      the Secured Party as follows:

     

    1.  Name.
      The
      exact legal name of the Debtor as that name appears on its Restated Articles
      of
      Incorporation filed with the Nevada Secretary of State is as follows: ITEX
      Corporation.

     

    2.  Other
      Identifying Factors. 

     

    (a)  The
      following is a mailing address for the Debtor: 3326 - 160th
      Ave SE,
      Suite 100, Bellevue, WA 98008-6418.

     

    
      	(b)  	
              If
                different from its indicated mailing address, the Debtor’s place of
                business or, if more than one, its chief executive office is located
                at
                the following address:

            

    

     

    
      	
              Address

            	
              County

            	
              State

            
	 	 	 
	
              Not
                applicable

            	 	 

    

    

    
      	(c)  	
              The
                following is the type of organization of the Debtor:
                Corporation

            

    

     

    
      	(d)  	
              The
                following is the jurisdiction of the Debtor’s organization:
                Nevada

            

    

     

    
      	(e)  	
              The
                following is the Debtor’s state issued organizational identification
                number: C6527-1985

            

    

     

    3.  Other
      Names.

     

    (a)  The
      following is a list of all other names (including trade names or similar
      appellations) used by the Debtor, or any other business or organization to
      which
      the Debtor became the successor by merger, consolidation, acquisition, change
      in
      form, nature or jurisdiction of organization or otherwise, now or at any time
      during the past five years:

     

    ITEX
      Payment Systems

     

    (b)  Attached
      hereto as Schedule
      3
      is the
      information required in Section 2 for any other business or organization to
      which the Debtor became the successor by merger, consolidation, acquisition
      of
      assets, change in form, nature or jurisdiction of organization or otherwise,
      now
      or at any time during the past five years: None

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.  Other
      Current Locations. 

     

    (a)  The
      following are all other locations in the United States of America in which
      the
      Debtor maintains any books or records relating to any of the Collateral
      consisting of accounts, instruments, chattel paper, general intangibles or
      mobile goods:

     

    
      	
              Address

            	
              County

            	
              State

            
	
               

              None

            	 	 

    

    (b)  The
      following are all other places of business of the Debtor in the United States
      of
      America:

     

    
      	
              Address

            	
              County

            	
              State

            
	
               

              None

            	 	 

    

    (c)  The
      following are all other locations in the United States of America where any
      of
      the Collateral consisting of inventory or equipment is located:

     

    
      	
              Address

            	
              County

            	
              State

            
	
               

              None

            	 	 

    

    (d)  The
      following are the names and addresses of all Persons or entities other than
      the
      Debtor, such as lessees, consignees, warehousemen or purchasers of chattel
      paper, which have possession or are intended to have possession of any of the
      Collateral consisting of instruments, chattel paper, inventory or
      equipment:

     

    
      	
              Name

            	
              Mailing
                Address

            	
              County

            	
              State

            
	
               

              None

            	 	 	 

    

    5.  Prior
      Locations. 

     

    (a)  Set
      forth
      below is the information required by Section 4 (a) or (b) with respect to each
      location or place of business previously maintained by the Debtor at any time
      during the past five years in a state in which the Debtor has previously
      maintained a location or place of business at any time during the past four
      months:

     

    
      	
              Address

            	
              County

            	
              State

            
	
               

              Not
                applicable

            	 	 

    

    (b)  Set
      forth
      below is the information required by Section 4(c) or (d) with respect to each
      other location at which, or other Person or entity with which, any of the
      Collateral consisting of inventory or equipment has been previously held at
      any
      time during the past twelve months:

     

    
      	
              Name

            	
              Mailing
                Address

            	
              County

            	
              State

            
	
               

              Not
                applicable

            	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.  Fixtures.
      Attached
      hereto as Schedule
      6 is
      the
      information required by UCC Section 9-502(b) or Section 9-402(5) of each state
      in which any of the Collateral consisting of fixtures are or are to be located
      and the name and address of each real estate recording office where a mortgage
      on the real estate on which such fixtures are or are to be located would be
      recorded.

     

    7.  Unusual
      Transactions.
      Except
      for those purchases, acquisitions and other transactions described on
Schedule
      3
      or on
Schedule
      7
      attached
      hereto, all of the Collateral has been originated by the Debtor in the ordinary
      course of the Debtor’s business or consists of goods which have been acquired by
      the Debtor in the ordinary course from a Person in the business of selling
      goods
      of that kind.

     

    8.  UCC
      Filings. A
      duly
      authorized financing statement, in a form acceptable to the Secured Party and
      containing the indication of the Collateral set forth on Schedule
      8(A)
      has
      been, or will be as of the Closing Date, duly filed in the central Uniform
      Commercial Code filing office in the jurisdiction identified in Section 2(d)
      and
      in each real estate recording office referred to on Schedule
      6
      hereto.

     

    IN
      WITNESS WHEREOF, I have hereunto signed this Certificate on August 1,
      2007.

     

    
      ITEX
        Corporation

       

        
          

        

      

      
        By:  Steven
          White

        
          Chief
            Executive Officer

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    Schedule
      3 - Other Names

    

    None

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      6 - Fixtures

    

    None

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      7 - Unusual Transactions

    

    None

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      8(A) - Collateral Description

     

    Debtor:
        ITEX
      Corporation

     

    Secured
      Party:  The
      Intagio Group, Inc.

     

    The
      collateral covered by this Financing Statement is all of the Debtor’s right,
      title and interest in, to and under the following, whether now owned or existing
      or hereafter acquired or arising, and wherever located (all of which being
      hereinafter collectively called the “Collateral”):

     

    (i)  all
      Accounts;

     

    (ii)  all
      Chattel Paper;

     

    (iii)  all
      Collateral Records;

     

    (iv)  Contracts

     

    (v)  all
      Documents;

     

    (vi)  all
      Equipment;

     

    (vii)  all
      Fixtures;

     

    (viii)  all
      General Intangibles;

     

    (ix)  all
      Instruments;

     

    (x)  all
      Inventory;

     

    (xi)  all
      Investment Property;

     

    (xii)  all
      Receivables;

     

    (xiii)  all
      Receivables Records;

     

    (xiv)  all
      other
      tangible and intangible personal property; and 

     

    (xv)  all
      accessions, attachments and additions to any or all of the foregoing, all
      substitutions and replacements for any or all of the foregoing and all Proceeds
      or products of any or all of the foregoing.Exhibit
      10.1

    

    Intra−Asia
      Entertainment Corporation

    07
      Floor
      E-Wing Center

    No.
      113
      Zhichunlu, Haidian District

    Beijing,
      China 100086

    

     

    July
      24,
      2007

     

    To
      the
      Investors Listed on the Signature Page hereof. 

    

    Re: Limited
      Waiver and Modification of Securities Purchase Agreement

    

    Ladies
      and Gentlemen:

    

    Reference
      is hereby made to that certain Securities Purchase Agreement, dated as of May
      14, 2007 (as amended, supplemented or otherwise modified from time to time,
      the
“Purchase
      Agreement”),
      among
      Intra−Asia Entertainment Corporation, a Nevada corporation, and all predecessors
      thereto (collectively, the “Company”),
      Cabowise International Ltd., a British Virgin Islands company, PKU Chinafront
      High Technology Co., Ltd., a company organized under the laws of the People's
      Republic of China, the selling stockholders identified on the signature pages
      thereto and the investors identified on the signature pages thereto (each,
      an
“Investor”
and
      collectively, the “Investors”).
      Initially capitalized terms used but not defined in this letter have the
      meanings given to them in the Purchase Agreement. Unless otherwise indicated,
      Section references used in this letter are references to those Sections in
      the
      Purchase Agreement.

     

    The
      Company acknowledges that Section 4.15 of the Purchase Agreement provides,
      in
      part, that the Company shall obtain approval of its stockholders for a 1 for
      6
      reverse stock split of the Company’s Common Stock within 60 days of the Closing
      and shall take all actions to effectuate the Reverse Stock Split within 5
      Business Days following such stockholder approval. The Company and the
      undersigned Investors acknowledge that the Company has obtained the approval
      of
      holders of a majority of outstanding shares of voting stock of the Company
      for
      the Reverse Stock Split and has filed on June 18, 2007, a Definitive Information
      Statement on Schedule 14C with the Securities and Exchange Commission (the
      “Information
      Statement”),
      as
      required by the Securities Exchange Act of 1934, as amended, and Regulation
      14C
      promulgated thereunder.

     

    The
      Company and the undersigned Investors have discussed increasing the ratio of
      the
      Reverse Stock Split in an effort to, among other things, increase the price
      per
      share of Common Stock to an amount sufficient to satisfy certain Nasdaq listing
      requirements. The Company and the undersigned Investors, by their execution
      hereof, wish to modify and amend certain post-closing obligations of the Company
      set forth in the Purchase Agreement related to increasing the ratio of the
      Reverse Stock Split. 

     

    1. The
      Company hereby requests that the undersigned Investors consent to, and the
      undersigned Investors by their signatures set forth below consent to, the
      amendment and modification of the Purchase Agreement as follows: 

     

    a. The
      definition of “Reverse Stock Split” in the Purchase Agreement shall be deleted
      in its entirety and replaced with the following:

     

    
      	 	
              i.

            	
              “Reverse
                Stock Split”
                means a 1 for 7.5 reverse stock split of the Company’s Common
                Stock.”

            

    

     

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    b. Section
      4.15(a) of the Purchase Agreement is hereby deleted in its entirety and replaced
      with the following:

     

    
      	 	
              i.

            	
              As
                soon as practicable, but in any event within 10 Business Days following
                July 24, 2007, the Company covenants and agrees to obtain the approval
                of
                the holders of a majority of its outstanding shares of voting stock
                in
                order to effectuate the Reverse Stock Split (the “Stockholder
                Approval”).

            

    

     

    c. Section
      4.15(b) of the Purchase Agreement is hereby deleted in its entirety and replaced
      with the following:

     

    
      	 	
              i.

            	
              In
                furtherance of the obligations of the Company under Section 4.15(a),
                the
                Company shall obtain Stockholder Approval in connection with this
                Section
                4.15, and in pursuit thereof (a) the Board of Directors of the Company
                shall adopt proper resolutions authorizing the actions set forth
                in
                subsection (a) above and (b) as soon as practicable after obtaining
                Stockholder Approval, but in any event by the earlier of (i) 45 days
                after
                obtaining Stockholder Approval and (ii) the expiration of the 20
                day
                period set forth in Rule 14c-2(b) of Regulation 14C as promulgated
                under
                the Exchange Act, the Company shall take all actions necessary to,
                and
                actually effectuate, the Reverse Stock Split, which actions shall
                include,
                without limitation, the filing within 5 Business Days of obtaining
                Stockholder Approval of an amendment (solely to reflect the Reverse
                Stock
                Split) to that certain Definitive Information Statement on Schedule
                14C as
                filed with the Commission on June 18,
                2007.

            

    

     

    2. The
      undersigned Investors acknowledge and agree that the amended Information
      Statement must be filed with the Commission, mailed to shareholders of the
      Company and the actions described therein may not be effectuated for at least
      20
      days thereafter pursuant to Rule 14c-2(b) of Regulation 14C as promulgated
      under
      the Exchange Act. The Company acknowledges and agrees that other than as
      contemplated herein no other terms of the Information Statement shall be amended
      or modified.

     

    3. The
      undersigned Investors hereby waive any claims that they may have under the
      terms
      of the Purchase Agreement arising out of or based on any failure by the Company
      to effectuate the 1 for 6 reverse stock split of the Company’s Common Stock as
      previously contemplated by the Purchase Agreement prior to the date hereof.
      

     

    4. The
      undersigned Investors acknowledge that the Company provides no assurance that
      effectuating the Reverse Stock Split (as revised by this letter) will result
      in
      an increase of the Company’s stock price sufficient to satisfy applicable
      listing requirements of Nasdaq or other stock exchange. 

     

    Except
      as
      expressly provided in this letter, all of the terms and conditions of the
      Purchase Agreement remain in full force and effect and none of such terms and
      conditions are, or shall be construed as, otherwise amended or modified.
      Notwithstanding anything contained herein, the consents and limited waiver
      contained in this letter (a) are limited as specified, (b) are
      effective only with respect to the transactions described in this letter for
      the
      specific instance and the specific purpose for which they are given,
      (c) shall not be effective for any other purpose or transaction, and
      (d) do not constitute an amendment or basis for a subsequent consent or
      waiver of any of the provisions of the Purchase Agreement.

     

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    This
      letter contains the entire understanding of the parties with respect to the
      subject matter hereof and supersedes all prior agreements, understandings,
      discussions and representations, oral or written, with respect to such matters,
      which the parties acknowledge have been merged into this letter.

     

    This
      letter may be executed in one or more duplicate counterparts and by different
      parties hereto in separate counterparts, each of which when so executed and
      delivered shall be deemed an original, but all such counterparts together shall
      constitute but one and the same instrument. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid and
      binding obligation of the party executing (or on whose behalf such signature
      is
      executed) with the same force and effect as if such facsimile signature page
      were an original thereof.

     

    This
      letter shall be governed by, and construed under, the laws of the State of
      New
      York, without reference to conflicts of laws (other than Section 5-1401 and
      Section 5-1402 of the New York General Obligations Law). To the fullest extent
      permitted by applicable law, the parties irrevocably submit to the non-exclusive
      jurisdiction of any New York State court or federal court sitting in New York
      City in respect of any suit, action or proceeding arising out of or relating
      to
      the provisions of this letter and irrevocably agree that all claims in respect
      of any such suit, action or proceeding may be heard and determined in any such
      court. The parties hereto hereby waive, to the fullest extent permitted by
      applicable law, any objection that they may now or hereafter have to the laying
      of venue of any such suit, action or proceeding brought in any such court,
      and
      any claim that any such suit, action or proceeding brought in any such court
      has
      been brought in an inconvenient forum. The parties hereto hereby waive, to
      the
      fullest extent permitted by applicable law, any right to trial by jury with
      respect to any action or proceeding arising out of or relating to this
      letter.

     

    [Remainder
      of page intentionally left blank]

     

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

     

    Please
      indicate your agreement to and granting of the foregoing consents and limited
      waiver by executing this letter in the space provided below and delivering
      this
      letter to us.

     

    
      	 	
              Very
                truly yours,

            
	 	 
	 	
              INTRA−ASIA
                ENTERTAINMENT CORPORATION

            
	 	 
	 	 
	 	 	 
	 	
              By:

            	
               /s/
                Shudong Xia

            
	 	
              Name:
                Shudong Xia

            
	 	
              Title:
                CEO and President 

            

    

     

     

    Accepted
      and agreed to as of July 24, 2007:

    

     

      
        	
                INVESTORS:

                 

                Pinnacle
                  China Fund, LP

                 

                By:
                  /s/
                  Barry Kitt

                Name:
                  

                Title:
                  

                 

                 

                The
                  Pinnacle Fund, LP

                 

                By:
                  /s/
                  Barry Kitt

                Name:

                Title:

                 

                 

              	 

      

      

       

      

    

    

     

    
      
         

      

      
        4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]