Document:

ex10-9.htm

    Exhibit 10.9

      REGISTRATION
        RIGHTS
        AGREEMENT

       

       

      This
        Registration Rights Agreement (this “Agreement”)
        is
        made and entered into as of December 21 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 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 December 21, 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.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “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
        all of 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 and the
        June
        2007 closing of the sale of an aggregate of $450,000 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.

       

      
        
          
          

        

        
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      “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, 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.

       

      
        
          
          

        

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

       

       

      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.

       

      
        
          
          

        

        
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      (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 or 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.

       

                 (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.

       

      
        
          
          

        

        
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      (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. (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.

       

      

      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.

       

      
        
          
          

        

        
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                 (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).

       

                 (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; 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; and (vi)
        fees
        and expenses of all other Persons retained by the Company in connection with
        the
        consummation of the transactions contemplated by this
        Agreement.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      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.

       

                 (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.

       

       

      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.

       

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      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.

       

      (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.

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      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.

       

                 (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.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

      (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 Underlying
        Shares.

      

      

      

      [Remainder
        of page intentionally
        left blank]

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      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

      

      

       

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      OTHER
        SIGNATURE PAGES TO
        REGISTRATION RIGHTS AGREEMENT

      

      
        	 
	
                 

                Vision
                  Opportunity Master Fund,
                  Ltd.

                By:   /s/
                  Adam
                  Benowitz                                                            

                     Name:    Adam
                  Benowitz                                                            

                     Title:      Director                                                        

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

                     Facsimile
                  Number:  212-867-1416                                                                         

                 

              
	 
	 

      

      

      

      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      
         

        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.

         

        
          
            
            

          

          
            15

            
              

            

          

          
            
            

          

        

        
          	
                  (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)

        

         

        
          
            
            

          

          
            16

            
              

            

          

          
            
            

          

        

         

         

        
          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;

        

         

        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.

        

        
          
            
            

          

          
            17

            
              

            

          

          
            
            

          

        

        
        

        

        
          ___
            (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;

        

        

        
          ___
            (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

        

        

          

        

          
          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.

        

          
          6The
            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.

        

        
          
            
            

          

          
            18

            
              

            

          

          
            
            

          

        

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

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

        

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

        

        

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

        

        
          ____(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)
          524-4122as
          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:                                                                           

        
          
            
            

          

          
            19

            
              

            

          

          
            
            

          

        

        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.

                

        

        

        

        

        

        

         

        
          
            
            

          

          
            20ex10-10.htm

    
       

      Exhibit
        10.10

      SECURITY
        AGREEMENT

       

      THIS
        SECURITY AGREEMENT (the
“Security
        Agreement”) is dated as of the ____ day of December 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”).

       

      WITNESSETH

       

      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 11% Senior Secured Convertible
        Promissory Notes, in the principal amount of $200,000 in 11% Senior Secured
        Convertible Promissory Note are being sold on the date hereof, (the “Second
        Follow On Notes”), which is in addition to an aggregate of $3,150,000 in
        11% Senior Secured Convertible Promissory Notes previously sold by the Debtor
        to
        certain parties (the “Prior
        Purchasers”) in August, September and October 2006 and June 2007 (the
“Prior
        Notes”) and along with the Follow On Notes, each, a “Note”:
        and collectively, the “Notes”)
        sold to certain parties (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.

         

        
          
            
            

          

          
            -1-

            
              

            

          

          
            
            

          

        

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

         

        “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.

         

        
          
            
            

          

          
            -2-

            
              

            

          

          
            
            

          

        

        “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.

         

        “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 eight hundred and seventy-five thousand dollars
          ($875,000).

         

        “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 foregoinghave
          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”).

         

        
          
            
            

          

          
            -4-

            
              

            

          

          
            
            

          

        

        (a)           
          Accounts;

         

        (b)           
          Inventory;

         

        (c)           
          Computer Software;

         

        (d)           
          General Intangibles;

         

        (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”).

         

        
          
            
            

          

          
            -5-

            
              

            

          

          
            
            

          

        

        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.

         

        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.

         

        
          
            
            

          

          
            -6-

            
              

            

          

          
            
            

          

        

        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.

         

        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 theNote.
          The
          Debtor shall notify the Secured Party promptly if any loss or casualty
          relating
          to the Collateral occurs.

         

        
          
            
            

          

          
            -7-

            
              

            

          

          
            
            

          

        

        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.

         

        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 Interestscreated
          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 toenforce
          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;

         

        
          
            
            

          

          
            -10-

            
              

            

          

          
            
            

          

        

        (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

         

        (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, theWarrants
          and/or other Transaction Documents shall be payable on demand, shall constitute
          Secured Obligations and shall be secured by the Collateral.

         

      

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

      
        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.

        

        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.

         

        
          
            
            

          

          
            -12-

            
              

            

          

          
            
            

          

        

        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.

         

      

       

      
        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.

         

        
          
            
            

          

          
            -13-

            
              

            

          

          
            
            

          

        

        

         

        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

         

        

        
          
            
            

          

          
            -14-

            
              

            

          

          
            
            

          

        

         

        WITNESS
          the due execution
          hereof by the respective duly authorized officers of theundersigned
          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

                

        

      

    

     

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    
      SECURED
        PARTY:

      

      

      

      Vision
        Opportunity Master Fund, Ltd.

      

      By:/s/
        Adam
        Benowitz

      Name:
        Adam Benowitz

      Title:
        Director

    

     

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    
      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.

              

      

       

      

    

    
      
        
        

      

      
        -17-

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