Document:

Exhibit
      10.17           

     

    EXECUTION
      COPY

    REGISTRATION
      RIGHTS AGREEMENT

     

     

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of June 29, 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”).

     

    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 29, 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
      Vision
      Opportunity Master Fund, Ltd.

     

    “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.
      

     

    “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. 

    
      
         

        
        

      

      
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    (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 Ventures, Inc. or its permitted assigns (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.

    
      
         

        
        

      

      
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      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.

     

    
      
         

        
        

      

      
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    (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).

    
      
         

        
        

      

      
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    (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.

     

    
      
         

        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    

      (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.

    

     

    (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. 

    

    

    [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

    

    
      	
              Vision
                Opportunity Master Fund, Ltd.

               

              By:
                /s/ Adam
                Benowitz                                                     
                      

               

              Name:
                Adam
                Benowitz                                                       
                     

               

              Title:
                Portfolio
                Mgr.                                                            
                     

               

              Address: 20 W.
                55th St. 5th floor, New York, NY 10019     

               

              Facsimile
                Number:
                212-867-1416                                       
                   

               

               

            	 
	 	 
	 	 
	 	 
	 	 

    

    

    

    

    
      
         

        
        

      

      
        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.

     

    
      
         

        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    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.

     

    
      
         

        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    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. 

     

    
      
         

        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      	
               

              (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

            
	
              (c) 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)

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	
              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.

         

        
          
            
            

          

          
            20

            
              

            

          

          
            
            

          

        

      

       

      

        
          	
                  ___
                    

                	
                  (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;

              
	 	 	 

      

       

      
        
          

        

        
          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.

        

      

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

       

      
        	
                ___

              	
                (vi)

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

              
	 	 	 
	
                ___
                  

              	
                (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:___________________________________________________

    
      
      

    

    
      
        
           

          

        

        
        

      

      
        22

        
          

        

      

      
        
        

        
          

        

      

    

    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.

            

    

    

    

    

    
      
        
        

      

      
        23Security Agreement with Vision Master Fund, Ltd. (June 29, 2007)

    Exhibit
      10.18

      SECURITY
        AGREEMENT

       

      THIS
        SECURITY AGREEMENT
        (the
“Security
        Agreement”)
        is
        dated as of the 29th day of June 2007 by and among XA, Inc., a Nevada
        Corporation (“XA”),
        The
        Experiential Agency, Inc., XA Scenes, Inc., XA Interactive, Inc., and Fiori
        XA,
        Inc. (collectively the with XA, the “Debtor”)
        and
        Vision Opportunity Master Fund, Ltd. (the “Secured
        Party”).

       

      W I T N E S S E T H

       

      WHEREAS,
        pursuant
        to a Securities Purchase Agreement, dated as of the date hereof, as may be
        amended or supplemented from time to time (the “SPA”),
        the
        Debtor is selling to the Secured Party an 11% Senior Secured Convertible
        Promissory Note, in the principal amount of $200,000, which is part of $500,000
        in 11% Senior Secured Convertible Promissory Note financing (the “Follow
        On Notes”),
        which
        is in addition to an aggregate of $2,700,000 in 11% Senior Secured Convertible
        Promissory Notes previously sold by the Debtor to certain parties (the
“Prior
        Purchasers”)
        in
        August, September and October 2006 (the “Prior
        Notes”)
        and
        along with the Follow On Notes, each, a “Note”:
        and
        collectively, the “Notes”)
        sold
        to certain parties (collectively with the “Prior
        Purchasers,”
the
        “Purchasers”);
        and

       

      WHEREAS,
        Debtor
        has agreed, pursuant to the terms and conditions of the SPA, in connection
        with
        the Financing described therein, to secure the repayment of the Note, as
        more
        specifically provided herein;

       

      NOW,
        THEREFORE,
        in
        consideration of the foregoing, Debtor and the Secured Party agree as
        follows:

       

      SECTION
        1. Definitions.
        

       

      1.1 
Certain
        Defined Terms.
        The
        following terms, as used herein, have the meanings set forth below:

       

      “Accounts”
means
        all “accounts” (as defined in the UCC) now owned or hereafter created or
        acquired by Debtor including all of the following now owned or hereafter
        created
        or acquired by Debtor: (a) accounts receivable, contracts, contract rights,
        book debts, notes, drafts and other obligations or indebtedness owing to
        Debtor
        arising from the sale, lease or exchange of goods or other property or the
        performance of services; (b) Debtor’s rights in, to and under all purchase
        orders for goods, services or other property; (c) Debtor’s rights to any
        goods, services or other property represented by any of the foregoing (including
        returned or repossessed goods and unpaid sellers’ rights of rescission,
        repletion, reclamation and rights to stoppage in transit); (d) monies due
        to or to become due to Debtor under all contracts for the sale, lease or
        exchange of goods or other property or the performance of services (whether
        or
        not yet earned by performance on the part of Debtor); and (e) Proceeds of
        any of the foregoing and all collateral security and guaranties of any kind
        given by any Person with respect to any of the foregoing.

       

      “Collateral”
has
        the
        meaning assigned to that term in Section 2.

       

      
        
           

          

          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      “Computer
        Software”
or
        “Software”
means
        a
        computer program and any supporting information provided in connection with
        a
        transaction relating to the program.

       

      “Contracts”
means
        all contracts and agreements (as defined in the UCC).

       

      “Copyrights”
means
        collectively all of the following now owned or hereafter created or acquired
        by
        Debtor: (a) all literary works, derivative works, works for hire,
        compositions, compilations of all or some of the foregoing, whether published
        or
        unpublished, all registrations or recordings thereof, and all applications
        in
        connection therewith including registrations, recordings and applications
        in the
        Copyright Office of the United States, or any other country; (b) all
        reissues, extensions or renewals thereof; (c) all income, royalties,
        damages and payments now or hereafter due or payable under any of the foregoing
        or with respect to any of the foregoing including damages or payments for
        past
        or future infringements of any of the foregoing; (d) the right to sue for
        past, present and future infringements or any of the foregoing; and (e) all
        rights corresponding to any of the foregoing throughout the world.

       

      “Debtor”
has
        the
        meaning assigned to that term in the introduction to this Security
        Agreement.

       

      “Documents”
means
        all “documents” (as defined in the UCC) or other receipts covering, evidencing
        or representing goods now owned or hereafter acquired by Debtor.

       

      “Equipment”
means
        all “equipment” (as defined in the UCC) now owned or hereafter acquired by
        Debtor including all machinery, motor vehicles, trucks, trailers, vessels,
        aircraft and rolling stock and all parts thereof and all additions and
        accessions thereto and replacements therefor.

       

      “Event
        of Default”
has
        the
        meaning assigned to that term in Section 8(a).

       

      “Fixtures”
means
        all of the following now owned or hereafter acquired by Debtor: plant fixtures;
        business fixtures; other fixtures and storage office facilities, wherever
        located; and all additions and accessions thereto and replacements therefor.
        

       

      “General
        Intangibles”
means
        all “general intangibles” (as defined in the UCC) now owned or hereafter
        acquired by Debtor including all right, title and interest of Debtor in and
        to:
        (a) all Software of the Debtor, including all source code and object code
        thereto; (b) all agreements, leases, licenses and contracts to which Debtor
        is or may become a party; (c) all obligations or indebtedness owing to
        Debtor (other than Accounts) from whatever source arising; (d) all tax
        refunds; (e) Intellectual Property; and (f) all trade secrets and
        other confidential information relating to the business of Debtor.

       

      “Instruments”
means
        all “instruments” “chattel paper” or “letters of credit” (each as defined in the
        UCC) including promissory notes, drafts, bills of exchange and trade
        acceptances, now owned or hereafter acquired by Debtor.

       

      
        
           

          

          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      “Intellectual
        Property”
means
        collectively all of the following: Copyrights, Copyright Licenses, Patents,
        Trademarks and Trademark Licenses.

       

      “Inventory”
means
        all “inventory” (as defined in the UCC), now owned or hereafter acquired by
        Debtor, wherever located including finished goods, raw materials, work in
        process and other materials and supplies (including packaging and shipping
        materials) used or consumed in the manufacture or production thereof and
        goods
        which are returned to or repossessed by Debtor.

       

      “Permitted
        Senior Indebtedness”
shall
        mean the prior first priority security interest of LaSalle Bank National
        Association (“LaSalle”), and/or any other bank or institutional lending source
        which shall replace and/or supersede the LaSalle loan and debt ; provided,
        however,
        that in
        no case shall the aggregate amount of such Permitted Senior Indebtedness
        exceed
        seven hundred and fifty thousand dollars ($750,000).

       

      “Proceeds”
means
        all proceeds of, and all other profits, rentals or receipts, in whatever
        form,
        arising from the collection, sale, lease, exchange, assignment, licensing
        or
        other disposition of, or realization upon, any Collateral including all claims
        of Debtor against third parties for loss of, damage to or destruction of,
        or for
        proceeds payable under, or unearned premiums with respect to, policies of
        insurance with respect to any Collateral, and any condemnation or requisition
        payments with respect to any Collateral, in each case whether now existing
        or
        hereafter arising.

       

      “Secured
        Obligations”
has
        the
        meaning assigned to that term in Section 3.

       

      “Security
        Agreement”
means
        this Security Agreement as it may be amended, supplemented or otherwise modified
        from time to time.

       

      “Security
        Interests”
means
        the security interest granted pursuant to Section 2,
        as well
        as all other security interests created or assigned as additional security
        for
        the Secured Obligations pursuant to the provisions of this Security
        Agreement.

       

      “Subsidiaries”
has
        the
        meaning assigned to that term in the introduction to this Security
        Agreement.

       

      “Trademarks”
means
        collectively all of the following now owned or hereafter created or acquired
        by
        Debtor: (a) all trademarks, trade names, corporate names, company names,
        business names, fictitious business names, trade styles, service marks, logos,
        domain names and domain name registrations, other business identifiers, prints
        and labels on which any of the foregoing have appeared or appear, all
        registrations and recordings thereof (to the extent Debtor can register such
        corporate, company or business name as a trademark), and all applications
        in
        connection therewith including registrations, recordings and applications
        in the
        Trademark Office or in any similar office or agency of the United States,
        any
        State thereof or any other country or any political subdivision thereof;
        (b) all reissues, extensions or renewals thereof; (c) all income,
        royalties, damages and payments now or hereafter due or payable under any
        of the
        foregoing or with respect to any of the foregoing including damages or payments
        for past or future infringements of any of the foregoing; (d) the right to
        sue for past, present and future infringements of any of the foregoing;
        (e) all rights corresponding to any of the foregoing throughout the world;
        and (f) all goodwill associated with and symbolized by any of the
        foregoing. 

      
        
           

          

          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      “UCC”
means
        the Uniform Commercial Code as in effect on the date hereof in the State
        of
        Illinois, Nevada, California, New Jersey and New York or such state as property
        and/or fixtures may be located, as the case may be, as amended from time
        to
        time, and any successor statute; provided
        that if
        by reason of mandatory provisions of law, the perfection or the effect of
        perfection or non-perfection of the Security Interest in any Collateral is
        governed by the Uniform Commercial Code as in effect on or after the date
        hereof
        in any other jurisdiction, “UCC”
means
        the Uniform Commercial Code as in effect in such other jurisdiction for purposes
        of the provision hereof relating to such perfection or effect of perfection
        or
        non-perfection.

       

      1.2 
Other
        Definition Provisions.
        References to “Sections”
        “subsections,”
        “Exhibits”
and
        “Schedules”
shall
        be to Sections, subsections, Exhibits and Schedules, respectively, of this
        Security Agreement unless otherwise specifically provided. References to
        the
        words “including,” “includes” and “include” shall be deemed to be followed by
        the words “without limitation;” and the term “or” has, except where otherwise
        indicated, the inclusive meaning represented by the phrase “and/or.” Any of the
        terms defined in subsection 1.1 may, unless the context otherwise requires,
        be used in the singular or the plural depending on the reference. All references
        to statutes and related regulations shall include any amendments of same
        and any
        successor statutes and regulations.

       

      SECTION
        2. Grant
        of Security Interest.
        

       

      In
        order
        to secure the payment and performance of the Secured Obligations in accordance
        with the terms thereof, except as otherwise specifically provided in this
        Security Agreement, the Debtor hereby grants to the Secured Party, a continuing
        first priority security interest and lien in and to all right, title and
        interest of Debtor in the following property, whether now owned or existing
        or
        hereafter acquired or arising and regardless of where located, which first
        priority security interest shall be pari passu to the first priority security
        interest of the Purchasers and the other purchasers who invest during the
        offering to which this Security Agreement is a part), and subject only to
        the
        Permitted Senior Indebtedness (all being collectively referred to as the
        “Collateral”).

       

      (a) 
Accounts;

       

      (b)            
         Inventory;

       

      (c)            
         Computer
        Software;

       

      (d)            
         General
        Intangibles;

       

      
        
           

          

          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      (e) 
Documents;

       

      (f) 
Instruments;

       

      (g)            
         Equipment;

       

      (h) 
Fixtures;

       

      (i) 
Contracts;

       

      (j) 
All
        deposit accounts of Debtor maintained with any bank or financial
        institution;

       

      (k)            
         All
        books, records, ledger cards, files, correspondence, computer programs, tapes,
        disks and related data processing software that at any time evidence or contain
        information relating to any of the property described in subparts (a)
        - (j)
        above or
        are otherwise necessary or helpful in the collection thereof or realization
        thereon; 

       

      (l) 
any
        and
        all other assets of the Debtor, whether currently held or hereafter acquired;
        and

       

      (m)          
         Proceeds
        of all or any of the property described in subparts (a)
        - (l)
        above.

       

      Notwithstanding
        the foregoing, so long as no Event of Default has occurred and is continuing,
        Debtor shall have the exclusive, non-transferable right and license to use
        the
        Collateral and the exclusive right to sell, transfer, convey, rent, lease,
        and
        grant to third parties licenses and sublicenses with respect to the Collateral,
        provided that any such sale, transfer, conveyance, rental, lease, license
        or
        sublicense is effected in the Debtor’s ordinary course of business. In the event
        that the Debtor sells any of its inventory in the ordinary course of business,
        such shall be transferred without any liens under the terms of this Security
        Agreement. 

       

      SECTION
        3. Security
        for Obligations.
        

       

      This
        Security Agreement secures the payment and performance of all obligations,
        liabilities, duties and covenants of Debtor to the Secured Party with respect to
        the Notes, plus any and all accrued (and accruing) but unpaid interest on
        all
        such indebtedness (all such debts, obligations and liabilities of Debtor
        being
        collectively called the “Secured
        Obligations”).

       

      SECTION
        4. Debtor
        Remains Liable.
        

       

      Anything
        herein to the contrary notwithstanding: (a) Debtor shall remain liable
        under the contracts and agreements included in the Collateral to the extent
        set
        forth therein to perform all of its duties and obligations thereunder to
        the
        same extent as if this Security Agreement had not been executed; (b) the
        exercise by the Secured Party of any of the rights hereunder shall not release
        Debtor from any of its duties or obligations under the contracts and agreements
        included in the Collateral; and (c) the Secured Party shall not have any
        obligation or liability under the contracts and agreements included in the
        Collateral by reason of this Security Agreement, nor shall the Secured Party
        be
        obligated to perform any of the obligations or duties of Debtor thereunder
        or to
        take any action to collect or enforce any claim for payment assigned
        hereunder.

      
        
           

          

          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      SECTION
        5. Representations
        and Warranties.
        Debtor
        represents and warrants as follows:

       

      5.1. 
Binding
        Obligation; Authorization.
        This
        Security Agreement and the Note are legally valid and binding obligations
        of
        Debtor, enforceable against it in accordance with their terms, except as
        limited
        by applicable bankruptcy, insolvency, reorganization, moratorium and other
        laws
        of general application affecting enforcement of creditors’ rights generally. The
        execution, delivery and performance of this Security Agreement and the Note
        by
        the Debtor has been duly approved by the Board of Directors of the Debtor
        and
        all other actions required to authorize and effect the granting of the Security
        Interests and the issuance of the Note has been duly taken and approved by
        the
        Debtor.

       

      5.2. 
Location
        of Equipment and Inventory.
        All of
        the Equipment and Inventory is located at the places specified on Schedule I.

       

      5.3. 
Ownership
        of Collateral; Outstanding Loans.
        The
        Company owns the Collateral free and clear of any liens, security interests,
        charges or other encumbrances (collectively, “Liens”).
        No
        financing statement or other form of Lien notice covering all or any part
        of the
        Collateral is on file in any recording office, except for those in favor
        of the
        Secured Party. 

       

      5.4. 
Office
        Locations; Fictitious Names. The
        chief
        place of business, the chief executive office and the office where Debtor
        keeps
        its books and records are located at the places specified on Schedule I.

       

      5.5. 
Perfection.
        This
        Security Agreement creates a valid and perfected security interest in the
        Collateral, securing the payment of the Secured Obligations, and all filings
        and
        other actions necessary or desirable to perfect and protect such security
        interest have been duly taken (or will be taken immediately after the Closing
        ,
        as defined in the SPA, by the Debtor at the request of the Secured Party);
        provided,
        nothing
        herein constitutes a representation as to actions that must be taken, if
        any, to
        perfect a security interest in any item of Equipment, the ownership of which
        is
        evidenced by a certificate of title.

       

      5.6. 
Governmental
        Authorizations.
        No
        authorization, approval or other action by, and no notice to or filing with,
        any
        governmental authority or regulatory body is required either (a) for the
        grant by Debtor of the Security Interests granted hereby or for the execution,
        delivery or performance of this Security Agreement and/or the Note by Debtor
        or
        (b) for the perfection of or the exercise by the Secured Party of its
        rights and remedies hereunder (except as may have been taken by or at the
        direction of Debtor or the Secured Party).

       

      5.7.            
         Accurate
        Information.
        All
        information heretofore, herein or hereafter supplied to the Secured Party
        by or
        on behalf of Debtor with respect to the Collateral is and will be accurate
        and
        complete in all material respects.

       

      
        
           

          

          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      SECTION
        6. Further
        Assurances; Covenants.
        

       

      6.1. 
Other
        Documents and Actions.
        Debtor
        will, from time to time, at its expense, immediately execute and deliver
        all
        further instruments and documents and take all further action that may be
        necessary or desirable, or that the Secured Party may request, in order to
        perfect and protect any security interest granted or purported to be granted
        hereby or to enable the Secured Party to exercise and enforce their rights
        and
        remedies hereunder with respect to any Collateral. Without limiting the
        generality of the foregoing, Debtor will immediately upon request of the
        Secured
        Party: (a) execute and file such financing or continuation statements, or
        amendments thereto, and such other instruments or notices, as may be necessary
        or desirable, or as the Secured Party may request, in order to perfect and
        preserve the security interests granted or purported to be granted hereby
        (in
        such jurisdictions and with such officers as the Secured Party so request);
        (b) upon demand by the Secured Party exhibit the Collateral to allow
        inspection of the Collateral by the Secured Party or persons designated by
        the
        Secured Party; and (c) upon the Secured Party’s request, appear in and
        defend any action or proceeding that may affect Debtor’s title to or the Secured
        Party’s security interest in the Collateral.

       

      6.2. 
Business
        Locations.
        Debtor
        will keep the Collateral at the locations specified on Schedule I
        hereto.

       

      6.3. 
Insurance.
        At
        its
        sole expense, the Debtor shall insure the Collateral at all times for the
        full
        insurable value thereof against casualty and theft and against such other
        risks,
        in such form and with such insurers, as may be satisfactory to the Secured
        Party
        from time to time. In addition, each such policy shall (i) name the Secured
        Party as mortgagee and loss payee as its interest may appear and name the
        Secured Party as an additional insured relating to liability risks,
        (ii) provide that no act of omission or commission or misrepresentation or
        breach of warranty by the Debtor shall affect the Secured Party’s rights
        thereunder, (iii) provide that the Secured Party shall not be liable for
        any premiums or other amounts and (iv) upon the agreement of the insurer,
        at the Debtor’s request, provide that the insurer shall give the Secured Party
        not less than twenty (20) days’ prior written notice of cancellation or lapse.
        If the Debtor shall fail at any time to maintain such insurance, the Secured
        Party may obtain such insurance coverage and the Debtor agrees to reimburse
        the
        Secured Party therefor on demand with interest thereon at the rate specified
        in
        the Note. The Debtor shall notify the Secured Party promptly if any loss
        or
        casualty relating to the Collateral occurs.

       

      6.4. 
Taxes
        and Claims.
        Debtor
        will pay promptly when due all property and other taxes, assessments and
        governmental charges or levies imposed upon, and all claims against, the
        Collateral (including claims for labor, materials and supplies), except to
        the
        extent the validity thereof is being contested in good faith. 

       

      6.5. 
Use
        of Collateral.
        Debtor
        will not use or permit any Collateral to be used unlawfully or in violation
        of
        any provision of this Security Agreement or any applicable statute, regulation
        or ordinance or any policy of insurance covering any of the
        Collateral.

       

      
        
           

          

          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      6.6. 
Condition
        of Collateral.
        The
        Debtor shall maintain the Collateral in good condition and operate the
        Collateral with reasonable care and caution and the Debtor hereby indemnifies
        and holds the Secured Party harmless from any and all loss, damage and liability
        suffered, incurred or asserted by or against the Secured Party as a result
        of
        the use and operation of the Collateral.

       

      6.7. 
Records
        Relating to Collateral.
        The
        Debtor will keep its records concerning the Collateral at its address designated
        on Schedule
        I
        hereof
        or at such other place or places of which the Secured Party shall have been
        notified in writing upon no less than ten (10) days’ advance written notice. The
        Debtor (a) will hold and preserve such records and will permit representatives
        of the Secured Party at any time during normal business hours without disrupting
        the Debtor’s business to examine, inspect and to make abstracts from such
        records and (b) will furnish to the Secured Party such information and reports
        regarding the Collateral as the Secured Party may from time to time
        request.

       

      6.8. 
Other
        Information.
        Debtor
        will, promptly upon request, provide to the Secured Party all information
        and
        evidence they may reasonably request concerning the Collateral, and in
        particular the Accounts, to enable the Secured Party to enforce the provisions
        of this Security Agreement.

       

      SECTION
        7. Transfers
        and Other Liens.
        

       

      Except
        in
        the ordinary course of business, Debtor shall not:

       

      (a) 
Sell,
        assign (by operation of law or otherwise) or otherwise dispose of, or grant
        any
        option with respect to, any of the Collateral; or

       

      (b) 
Create
        or
        suffer to exist any Liens with respect to any of the Collateral to secure
        indebtedness of any Person except for (i) the Security Interests created
        by this
        Security Agreement, (ii) any Liens and/or security interests existing prior
        to
        the date of this Security Agreement; (iii) any security interests that are
        junior and subordinate to the Security Interests created by this Security
        Agreement, and (iv) any purchase money security interests required in connection
        with Debtor’s purchase or lease of Equipment.

       

      
        
           

          

          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      SECTION
        8. Events
        of Default; Remedies

       

      (a)            
         Each
        of
        the following events shall be an “Event
        of Default”
        (i) the non-payment of any of the Secured Obligations; (ii) the
        failure of the Debtor to observe or perform any other term, provision or
        condition of the Transaction Documents (as defined in the SPA), or this Security
        Agreement, after receipt of notice from the Secured Party of such failure
        to
        observe or perform and the failure of the Debtor to cure such non-performance
        or
        non-observance within fifteen (15) days after receipt thereof;
        (iii) dissolution or termination of existence of, or the suspension or
        termination of operations of the Debtor; (iv) the inability of the Debtor,
        or the Debtor’s admission that it is unable, to pay its debts as they become due
        or any petition in bankruptcy is filed by or against the Debtor, or any
        proceeding in bankruptcy, or under any other laws of any jurisdiction relating
        to the relief of debtors is commenced against the Debtor for the relief or
readjustment
        of any indebtedness of the Debtor, either through reorganization, composition,
        extension or otherwise, (v) the appointment of a receiver of any property
        of the Debtor, (vi) the making by the Debtor of any assignment for the
        benefit of creditors or the taking advantage of any insolvency law;
        (vii) any seizure, vesting, or intervention by or under authority of a
        government, by which the management of the Debtor is displaced or its authority
        in the conduct of its business is curtailed; (viii) any representation or
        warranty contained the Note or this Security Agreement, shall prove to be
        materially false when made; or (ix) if an event of default shall occur for
        whatever reason under the any of the Notes.
         

        (b) 
If
          any
          Event of Default shall have occurred and be continuing, the Secured Party
          may
          exercise in respect of the Collateral, in addition to all other rights
          and
          remedies provided for herein or otherwise available to them, all the right
          and
          remedies of a secured party on default under the UCC (whether or not the
          UCC
          applies to the affected Collateral) and also may: (a) require Debtor to,
          and Debtor hereby agrees that it will, at its expense and upon request
          of the
          Secured Party forthwith, assemble all or part of the Collateral as directed
          by
          the Secured Party and make it available to the Secured Party at a place
          to be
          designated by the Secured Party which is reasonably convenient to the Debtor;
          (b) without notice or demand or legal process, enter upon any premises of
          Debtor and take possession of the Collateral; and (c) 
          without notice except as specified below, sell the Collateral or any part
          thereof in one or more parcels at public or private sale, at such time
          or times,
          for cash, on credit or for future delivery, and at such price or prices
          and upon
          such other terms as the Secured Party may deem commercially reasonable.
          Debtor
          agrees that, to the extent notice of sale shall be required by law, at
          least two
          (2) days’ notice to Debtor of the time and place of any public sale or the time
          after which any private sale is to be made shall constitute reasonable
          notification. At any sale of the Collateral, if permitted by law, the Secured
          Party may bid (which bid may be, in whole or in part, in the form of
          cancellation of indebtedness) for the purchase of the Collateral or any
          portion
          thereof for the account of the Secured Party. The Secured Party shall not
          be
          obligated to make any sale of Collateral regardless of notice of sale having
          been given. The Secured Party may adjourn any public or private sale from
          time
          to time by announcement at the time and place fixed therefor, and such
          sale may,
          without further notice, be made at the time and place to which it was so
          adjourned. To the extent permitted by law, Debtor hereby specifically waives
          all
          rights of redemption, stay or appraisal which it has or may have under
          any law
          now existing or hereafter enacted. All cash proceeds received by the Secured
          Party resulting from the disposition of or collection from the Collateral
          may be
          held by the Secured Party as collateral for the Secured Obligations and/or
          then
          or at any time thereafter applied in payment of all or any of the Secured
          Obligations in such order as the Secured Party shall elect. The balance
          of such
          cash proceeds held by the Secured Party and remaining after payment in
          full of
          the Secured Obligations shall be paid over to the Debtor or to the person
          who
          may be lawfully entitled to such balance. The remedies provided in this
          Security
          Agreement are cumulative and not exclusive of any other remedies provided
          by law
          including, without limitation, any rights of setoff available to the Secured
          Party.

      

       

      
        
           

          

          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      SECTION
        9. Limitation
        on Duty of the Secured Party with Respect to Collateral.
        

       

        
        Beyond the safe custody thereof, the Secured Party shall have no duty with
        respect to any Collateral in their possession or control (or in the possession
        or control of the Secured Party or bailee)
        or with respect to any income thereon or the preservation of rights against
        prior parties or any other rights pertaining thereto. The Secured Party shall
        be
        deemed to have exercised reasonable care in the custody and preservation
        of the
        Collateral in their possession if the Collateral is accorded treatment
        substantially equal to that which they accord their own property. The Secured
        Party shall not be liable or responsible for any loss or damage to any of
        the
        Collateral, or for any diminution in the value thereof, by reason of the
        act or
        omission of any warehouseman, carrier, forwarding agency, consignee or other
        agent or bailee selected by the Secured Party in good faith.

       

      SECTION
        10. Secured
        Party Appointed Attorney-In-Fact.

       

        
        Debtor hereby irrevocably appoints the Secured Party as Debtor’s
        attorney-in-fact, with full authority in the place and stead of Debtor and
        in
        the name of Debtor to take any action and to execute any instrument that
        the
        Secured Party may deem necessary and/or advisable as follows: 

       

      (a) 
to
        obtain
        and adjust insurance required to be paid to the Secured Party if Debtor has
        not
        done so in the ordinary course of its business;

       

      (b)            
         to
        ask,
        demand, collect, sue for, recover, compound, receive and give receipts for
        moneys due and to become due under or in respect of any of the Collateral
        upon
        the occurrence of an Event of Default;

       

      (c) 
to
        receive, endorse, and collect any drafts or other instruments, documents
        and
        chattel paper, in connection with clauses (a) and (b) above upon the
        occurrence of an Event of Default;

       

      (d) 
to
        file
        any claims or take any action or institute any proceedings that the Secured
        Party may deem necessary or desirable for the collection of any of the
        Collateral or otherwise to enforce the rights of the Secured Party with respect
        to any of the Collateral if Debtor has not done so in the ordinary course
        of its
        business;

       

      (e)             
         to
        pay or
        discharge taxes or liens, levied or placed upon or threatened against the
        Collateral, the legality or validity thereof and the amounts necessary to
        discharge the same to be determined by the Secured Party in its sole discretion,
        and such payments made by the Secured Party to become obligations of Debtor
        to
        the Secured Party, due and payable immediately without demand if Debtor has
        not
        done so in the ordinary course of its business;

       

      (f)             
         to
        sign
        and endorse any invoices, freight or express bills, bills of lading, storage
        or
        warehouse receipts, assignments, verifications and notices in connection
        with
        Accounts and other documents relating to the Collateral upon the occurrence
        of
        an Event of Default;

       

      (g) 
generally
        to sell, transfer, pledge, make any agreement with respect to or otherwise
        deal
        with any of the Collateral as fully and completely as though the Secured
        Party
        were the absolute owner thereof for all purposes, and to do, at the Secured
        Party’s option and Debtor’s expense, at any time or from time to time, all acts
        and things that the Secured Party deems necessary to protect, preserve or
        realize on the Collateral upon the occurrence of an Event of Default;
        and

       

      
        
           

          

          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      (h)            
         to
        accomplish the purposes of this Security Agreement if Debtor has not done
        so in
        the ordinary course of its business.

       

        
        Neither the Secured Party nor any person designated by the Secured Party
        shall
        be liable for any acts or omissions or for any error of judgment or mistake
        of
        fact or law. This power, being coupled with an interest, is irrevocable so
        long
        as this Security Agreement shall remain in force.

       

      SECTION
        11. Expenses.
        

       

        
        Debtor shall pay all insurance expenses and all expenses of protecting, storing,
        warehousing, appraising, insuring, handling, maintaining and shipping the
        Collateral, all costs, fees and expenses of perfecting, and maintaining the
        Security Interest, any and all excise, property, sales and use taxes imposed
        by
        any state, federal or local authority on any of the Collateral, or with respect
        to periodic appraisals and inspections of the Collateral, or with respect
        to the
        sale or other disposition thereof. If Debtor fails to promptly pay any portion
        of the above expenses when due or to perform any other obligation of Debtor
        under this Security Agreement, the Secured Party may, at their option, but
        shall
        not be required to, pay or perform the same and charge Debtor’s account for all
        costs and expenses incurred therefor, and Debtor agrees to reimburse the
        Secured
        Party therefor on demand. All sums so paid or incurred by the Secured Party
        for
        any of the foregoing, any and all other sums for which Debtor may become
        liable
        hereunder and all costs and expenses (including reasonable and documented
        attorneys’ fees, legal expenses and court costs) incurred by the Secured Party
        in enforcing or protecting the Security Interests or any of their rights
        or
        remedies under this Security Agreement, the Notes, the Warrants and/or other
        Transaction Documents shall be payable on demand, shall constitute Secured
        Obligations and shall be secured by the Collateral.

       

      SECTION
        12. Termination
        of Security Interests; Release of Collateral.
        

       

        
        Upon payment in full of all Secured Obligations, including the aggregate
        principal amount of the Notes, including all Interest, the Security Interests
        shall immediately terminate and all rights to the Collateral shall revert
        to
        Debtor automatically and without the need for further action to be taken
        on the
        part of the Debtor or the Secured Party. Upon such termination of the Security
        Interests or release of any Collateral, the Secured Party will, at the expense
        of Debtor, execute and deliver to Debtor such documents as Debtor shall
        reasonably request to evidence the termination of the Security Interests
        or the
        release of such Collateral, as the case may be.

       

      SECTION
        13. Notices.
        

       

        
        All notices, requests, demands and other communications provided for hereunder
        shall be in writing and directed to the applicable party at the addresses
        set
        forth on the signature page hereof or, as to each party, at such other address
        as shall be designated by such party in a written notice to the other parties
        complying as to delivery with the terms of this Section. Notice to the Secured
        Party on terms designated in this Section
        13
        shall be
        deemed proper notice the Secured Party. All such notices, requests, demands
        and
        other communication shall be deemed given upon the earlier to occur of (i)
        the
        third day following deposit thereof with the United States Postal Service
        for
        mailing via certified or registered mail, return receipt requested, or (ii)
        the
        actual receipt by the party to whom such notice is directed.

      
        
           

          

          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      SECTION
        14. Waivers,
        Non-Exclusive Remedies. 

       

        
        No failure on the part of the Secured Party to exercise, and no delay in
        exercising and no course of dealing with respect to, any right under the
        Note or
        this Security Agreement shall operate as a waiver thereof; nor shall any
        single
        or partial exercise by the Secured Party of any right under the Note or this
        Security Agreement preclude any other or further exercise thereof or the
        exercise of any other right. The rights in this Security Agreement and/or
        the
        Note are cumulative and are not exclusive of any other remedies provided
        by
        law.

       

      SECTION
        15. Successors
        and Assigns. 

       

        
        This Security Agreement is for the benefit of the Secured Party and each
        of its
        successors and assigns, and in no event shall the Debtor without the prior
        express written consent of the Secured Party, assign all or any portion of
        the
        Secured Obligations, the rights hereunder, or the Note. This Security Agreement
        shall be binding on Debtor and its successors and all permitted
        assigns.

       

      SECTION
        16. Severability. 

       

       
If
        any provisions hereof are invalid or unenforceable in any jurisdiction, the
        other provisions hereof shall remain in full force and effect in such
        jurisdiction and shall be liberally construed in favor of the Secured
        Party.

       

      SECTION
        17. Changes
        in Writing.

       

        
        No amendment, modification, termination or waiver of any provision of this
        Security Agreement or consent to any departure by Debtor therefrom, shall
        in any
        event be effective without the written concurrence of the Secured Party,
        and the
        Debtor.

       

      SECTION
        18. Applicable
        Law, Etc.

       

        
        This Security Agreement will be governed by and construed exclusively under
        the
        laws of the State of New York as applied to agreements among New York
        residents entered into and to be performed entirely within New York. Each
        of the parties hereto (1) agree that any legal suit, action or proceeding
        arising out of or relating to this Agreement will be instituted exclusively
        in
        New York State Supreme Court, County of New York, or in the United
        States District Court for the Southern District of New York, (2) waive
        any objection which the Company may have now or hereafter to the venue of
        any
        such suit, action or proceeding, and (3) irrevocably consent to the
        jurisdiction of the New York State Supreme Court, County of New York,
        and the United States District Court for the Southern District of New York
        in any such suit, action or proceeding. Each of the parties hereto further
        agrees to accept and acknowledge service of any and all process which may
        be
        served in any such suit, action or proceeding in the New York State Supreme
        Court, County of New York, or in the United States District Court for the
        Southern District of New York and agree that service of process upon it
        mailed by certified mail to its address will be deemed in every respect
        effective service of process upon it, in any such suit, action or proceeding.
        

       

      
        
           

          

          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      SECTION
        19. Actions
        by Secured Party;
        Distributions.
        

       

      Unless
        otherwise specifically provided herein, wherever this Security Agreement
        provides for actions to be taken by the Secured Party, or any determination
        to
        be made by the Secured Party, the actions of those Holders representing,
        in the
        aggregate, more than 50% of the outstanding Notes shall represent the actions
        or
        agreement of the Secured Party. In addition, whenever the Secured Party is
        entitled to the distribution of monies, Collateral or any other property,
        pursuant to the terms of this Security Agreement, such monies, Collateral
        and/or
        other property shall be distributed to the Secured Party, on a pro-rata basis,
        based on the outstanding principal amounts under the Note.

       

      SECTION
        20. Headings.
        

       

      Section and
        subsection headings in this Security Agreement are included herein for
        convenience of reference only and shall not constitute a part of this Security
        Agreement for any other purpose or be given any substantive effect.

       

      SECTION
        21. Execution.
        

       

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

       

      SECTION
        22. Waiver
        of Jury Trial.

       

      DEBTOR
        AND SECURED PARTY HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
        ANY
        CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SECURITY AGREEMENT.
        DEBTOR AND SECURED PARTY ALSO WAIVE ANY BOND OR INDEMNITY OR SECURITY UPON
        SUCH
        BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF DEBTOR OR THE SECURED
        PARTY HERETO. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING
        OF ANY
        AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
        MATTER OF THIS TRANSACTION INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH
        OF
        DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. DEBTOR AND SECURED
        PARTY ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO
        A
        BUSINESS RELATIONSHIP THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING
        INTO THIS SECURITY AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
        IN THEIR RELATED FUTURE DEALINGS. DEBTOR AND SECURED PARTY FURTHER WARRANT
        AND
        REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND
        EACH
        KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
        WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
        MODIFIED EITHER ORALLY OR IN WRITING AND THE WAIVER SHALL APPLY TO ANY
        SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS SECURITY
        AGREEMENT. IN THE EVENT OF LITIGATION. THIS SECURITY AGREEMENT MAY BE FILED
        AS A
        WRITTEN CONSENT TO A TRIAL BY THE COURT.

       

      Signature
        Page Follows

       

      
        
           

          

          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      

       

      WITNESS
        the due
        execution hereof by the respective duly authorized officers of the undersigned
        as of the day first above written.

       

       

      
 

      
        
          	 	
                  DEBTORS:

                
	 	 
	 	
                  XA,
                    Inc.

                
	 	 
	 	
                  By:
                    /s/ Joseph Wagner

                
	 	
                  Name:
                    Joseph
                    Wagner

                
	 	
                  Title:
                    President and CEO

                
	 	 
	 	
                  XA
                    Scenes, Inc.

                
	 	 
	 	
                  By:
                    /s/ Joseph Wagner

                
	 	
                  Name:
                    Joseph
                    Wagner

                
	 	
                  Title:
                    President and CEO

                
	 	 
	 	
                  The
                    Experiential Agency, Inc.

                
	 	 
	 	 
	 	
                  By:
                    /s/ Darren Andereck

                
	 	
                  Name:
                    Darren
                    Andereck

                
	 	
                  Title:
                    President 

                
	 	 
	 	
                  XA
                    Interactive, Inc.

                
	 	 
	 	
                  By:
                    /s/ Joseph Wagner

                
	 	
                  Name:
                    Joseph
                    Wagner

                
	 	
                  Title:
                    President and CEO

                
	 	 
	 	
                  Fiori
                    XA, Inc.

                
	 	 
	 	 
	 	
                  By:
                    /s/ Darren Andereck

                
	 	
                  Darren
                    Andereck

                
	 	
                  President

                

        

        

      

       

       

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      

      

      

      

      SECURED
        PARTY:

      

      

      

      Vision
        Opportunity Master Fund, Ltd.

      

      By:
        /s/ Adam
        Benowitz                                                      

       

      Name:
        Adam
        Benowitz                                      

       

      Title:
        Portfolio
        Mgr.                                           

      

      

       

      

       

      

       

      

       

      
        
          
             

          

          
          

        

        
          15

          
            

          

        

        
          
          

          
          

        

      

      SCHEDULE
        I TO SECURITY AGREEMENT

       

      

      Locations
        of Equipment, Inventory, Books and Records, Chief Executive Officer

      

       

      Locations
        of Equipment and Inventory:

       

      ●
         
        Chicago,
        Illinois - Event decor, furniture and fixtures

       

      
        	 	
                ○

              	
                Office
                  - John Hancock Center, 875 North Michigan Avenue, Suite 2626,

                 Chicago,
                  Illinois 60611 - The Experiential Agency,
                  Inc.

              

      

       

      
        	 	
                ○

              	
                Design
                  Center - 3524 North Halsted, 

                Chicago,
                  IL 60657 - Fiori, XA, Inc.

              

      

       

      ●
         
        Bergen,
        New Jersey (warehouse) - Event decor, furniture and fixtures

               
        1435 51st Street

               
        North Bergen, NJ - The Experiential Agency, Inc.

      

       

      ●
         
        New
        York,
        New York and Manhattan, New York - (office space and warehouse),- Event decor,
        furniture and fixtures

       

      
        	 	
                ○

              	
                New
                  York Office and venue - 636 West 28th Street, Floor 9, 

                New
                  York, NY 10001 - XA Scenes, Inc.

              

      

      

      ●            
         Los
        Angeles, California (office equipment)

      

      ○ 
110
        S.
        Fairfax, Suite 210, Los Angeles, CA  90036 

       The
        Experiential Agency, Inc.

      

      Location
        of Books and Records and Chief Executive Officer:

       

      ●
         
        John
        Hancock Center, 875 North Michigan Avenue, Suite 2626, Chicago, Illinois
        60611 -
        The Experiential Agency, Inc.

       

      
        
          
          

        

        
          16

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