Document:

Exhibit
      10.27

    EXECUTION
      COPY

    REGISTRATION
      RIGHTS AGREEMENT

     

     

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into on July 3, 2007, to be effective as of June 11, 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 effective date hereof, by and among the
      Investor and the Company (the “SPA”).

     

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

     

    This
      Agreement replaces and supersedes the prior Registration Rights Agreement
      entered into between the Investor and the Company dated on or around June 11,
      2007.

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Closing
      Date”
shall
      mean June 11, 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).

     

    
      
        
        

      

      
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    “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
      Paul M.
      Higbee.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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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 and the Prior Underlying Shares, in each case,
held
      by
      the Investor (and any Holder that is a permitted assignee of the Investor.
      

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    2. Registration.

     

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

     

    (b) Additional
      Registration.
      

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    5. Indemnification.

     

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

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; (2) the Indemnifying Party shall have failed promptly to assume the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and such Indemnified Party shall have been advised
      by counsel that a conflict of interest is likely to exist if the same counsel
      were to represent such Indemnified Party and the Indemnifying Party (in which
      case, if such Indemnified Party notifies the Indemnifying Party in writing
      that
      it elects to employ separate counsel at the expense of the Indemnifying Party,
      the Indemnifying Party shall not have the right to assume the defense thereof
      and the reasonable fees and expenses of one separate counsel for all Indemnified
      Parties in any matters related on a factual basis shall be at the expense of
      the
      Indemnifying Party). The Indemnifying Party shall not be liable for any
      settlement of any such Proceeding affected without its written consent, which
      consent shall not be unreasonably withheld. No Indemnifying Party shall, without
      the prior written consent of the Indemnified Party, effect any settlement of
      any
      pending Proceeding in respect of which any Indemnified Party is a party, unless
      such settlement includes an unconditional release of such Indemnified Party
      from
      all liability on claims that are the subject matter of such
      Proceeding.

     

     

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

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

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

    6. Miscellaneous.

     

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

     

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

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (j) This
      Agreement Supersedes All Prior Agreements Between Parties.
      Each of
      the Company and the Investor agree that this Agreement supersedes in its
      entirety all of the terms and provisions of any prior agreements between such
      parties concerning the registration rights and the like pertaining to the Prior
      Underlying Shares. The Company and Investor further agree that this Agreement
      amends, restates, replaces and supersedes in its entirety that certain
      Registration Rights Agreement entered into on or about June 11, 2007, executed
      by the Company and the Investor relating to the subject matter
      hereof.

    

    

    [Remainder
      of page intentionally left blank]

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties have executed this Registration Rights Agreement as of July 3, 2007,
      to
      be effective as of the date first written above.

     

    
      	 	 
	 	
              XA,
                INC. 

               

            
	 	 
	 	
              By:
                Joseph Wagner

            
	 	
              Name:
                Joseph Wagner

            
	 	
              Title:
                President

            

    

    

    
      	
              Paul
                M. Higbee

               

              /s/
                Paul M.
                Higbee                                              
                

               

              Address:
                175 Einsley Ct. Ridgewood, NJ 07540

               

              Facsimile
                Number: 212-842-1540

               

            	 
	 	 
	 	 
	 	 
	 	 

    

    

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

     

    ANNEX
      A

     

    Plan
      of Distribution

    

    

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

     

    
      	
              ·

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

            
	
              ·

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

            
	
              ·

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

            
	
              ·

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

            
	
              ·

            	
              privately
                negotiated transactions;

            
	
              ·

            	
              settlement
                of short sales;

            
	
              ·

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

            
	
              ·

            	
              a
                combination of any such methods of sale; and

            
	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    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.

               

              ______________________________________________________                                                                                                                                                                       
  

               

              ______________________________________________________                                                                                                                                                                          

               

            

      	 	 

    

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

     

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

    

     

    
      	
               

              (a) Are
                you a natural
                person?

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

            	
               

               ̈
                Yes  ̈
                No

            
	
               

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

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

            	
               

               ̈
                Yes  ̈
                No

            
	
               

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

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

            	
               

               

               ̈
                Yes  ̈
                No

            
	
               

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

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

            	
               

               ̈
                Yes  ̈
                No

            

    

    

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

    Legal
      Description of Entity:                
       

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

     

     

      
        

      

    

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

     

     

    
      
        

      

    

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

     

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

     

    
      
        

      
  

     

      
        

      

    

     

     

     

    
      	
              6.
                

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

            

    

     

    

    No.
      of Shares of
      Stock                                                                                                                                                                               

     

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

            

    

     

    
      	
              8.

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

            

    

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      	
              9.

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

            

    

     

    
      	
              10.

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

            

    

    

    
    

    
      PART
        A: DETERMINATION OF RESTRICTED PERSON STATUS:

      Please
        check all appropriate categories.

      The
        undersigned is:

       

      
        	
                ___

              	
                (i)

              	
                a
                  broker-dealer;

              
	 	 	 
	
                ___

              	
                (ii)

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

                 

              
	
                ___

              	
                (iii)

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

              
	 	 	 
	
                ___

              	
                (iv)

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

              
	 	 	 
	
                ___

              	
                (v)

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

              
	 	 	 
	
                ___

              	
                (vi)

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

              
	 	 	 
	 	
                (vii)

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

              
	 	 	 
	 	
                (viii)

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

              

      

       

        
          

        

      

      

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

        

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

        

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

        

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

        

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

      

      
 

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      
        	
                ___
                  

              	
                (ix)

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

              
	 	 	 
	
                ___
                  

              	
                (x)

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

              
	 	 	 
	
                ___
                  

              	
                (xi)

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

              
	 	 	 
	
                ___

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

              
	 	 	 

      

      PART
        B: DETERMINATION OF EXEMPTED ENTITY STATUS:

      The
        undersigned is:

      
        	
                ___
                  

              	
                (i)

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

              
	 	 	 
	
                ___
                  

              	
                (ii)

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

              
	 	 	 
	
                ___
                  

              	
                (iii)

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

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

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

              
	 	 	 
	
                ____
                  

              	
                (iv)

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

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

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

              
	 	 	 
	
                ____
                  

              	
                (v)
                  

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

              
	 	 	 
	
                ____
                  

              	
                (vi)

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

              
	 	 	 

      

       

      
        
          

        

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

      

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      
        	
                ___
                  

              	
                (vii)

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

              
	 	 	
                (A)
                  has investments from 1,000 or more accounts, and

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

              
	 	 	 
	
                ___

              	
                (viii)

              	
                an
                  insurance company general, separate or investment account,
                  and

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

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

              

      

      

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

       

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

      

       

      

       

      Date:                                                
        , 2007

       

      

      
        	 	 
                                                                                                                                                       
	 	
                (Print
                  name of selling stockholder)

              
	 	
                 

                By:          
                                                                                                                                                      
                  

              
	 	
                (Signature)

              
	 	
                 

                Name:     
                                                                                                                                                      
                  

              
	 	
                (Print
                  name)

              
	 	
                 

                Title:                                                                                                                                             
                  

              

      

       

      

       

      

      
        
          
             

          

          
          

        

        
          20

          
            

          

        

        
          
          

          
          

        

      

      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.

              

      

      

      

      

      

      

      
        
          
          

        

        
          21Security Agreement with Paul M. Higbee (effective June 11, 2007)

Exhibit
    10.28

    SECURITY
      AGREEMENT

     

    THIS
      SECURITY AGREEMENT
      (the
“Security
      Agreement”)
      effective as of the 11th day of June 2007 by and among XA, Inc., a Nevada
      Corporation (“XA”),
      The
      Experiential Agency, Inc., XA Scenes, Inc., XA Interactive, Inc., and Fiori
      XA,
      Inc. (collectively the with XA, the “Debtor”)
      and
      Paul M. Higbee (the “Secured
      Party”).

     

    W I T N E S S E T H

     

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

     

    WHEREAS,
      this
      Security Agreement executed this 3rd day of July 2007, replaces and supersedes
      the prior Security Agreement entered into between the Secured Party and the
      Company dated on or around June 11, 2007; 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
      seven hundred and fifty thousand dollars ($750,000).

     

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

     

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

     

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

     

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

     

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

    
      
         

        

        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    SECTION
      2. Grant
      of Security Interest.
      

     

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

     

    
      	
              (a)

               

            	
              Accounts;

               

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              (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
      the Note. 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 Interests created by this Security
      Agreement, and (iv) any purchase money security interests required in connection
      with Debtor’s purchase or lease of Equipment.

    
    

    
      
         

        

        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      SECTION
        8. Events
        of Default; Remedies

       

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

    

     

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

     

    
      
         

        

        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    
      	
              (a)

               

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

               

            
	
              (b)

               

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

               

            
	
              (c)

               

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

               

            
	
              (d)

               

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

               

            
	
              (e)

               

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

               

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    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.

     

    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.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    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.

     

    SECTION
      23. Amendment
      and Restatement. 

    

    This
      Security Agreement amends, restates, replaces and supersedes in its entirety
      that certain Security Agreement entered into on or about June 11, 2007, executed
      by the Company and the Secured Party relating to the subject matter hereof.
      

    

     

    Signature
      Page Follows

     

    
      
         

        

        
        

      

      
        14

        
          

        

      

      
        
        

      

    

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

     

    undersigned
      on July 3, 2007, as of the effective 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

            
	 	 
	
              SECURED
                PARTY:

            	 
	 	 
	
              Paul
                M. Higbee

               

              /s/
                Paul M. Higbee

               

            	 

    

    

     

     

    

     

    

     

    
      
        
           

        

        
        

      

      
        15

        
          

        

      

      
        
        

        
        

      

    

    SCHEDULE
      I TO SECURITY AGREEMENT

     

    

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

    

     

    Locations
      of Equipment and Inventory:

     

    ●
       Chicago,
      Illinois - Event decor, furniture and fixtures

     

    
      	 	
              ○

            	
              Office
                - John Hancock Center, 875 North Michigan Avenue, Suite 2626, Chicago,
                Illinois 60611 

              -
                The Experiential Agency, Inc.

            

    

     

    
      	 	
              ○

            	
              Design
                Center - 3524 North Halsted, Chicago, IL 60657 - Fiori, XA,
                Inc.

            

    

     

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

    1435
      51st
      Street

    North
      Bergen, NJ - The Experiential Agency, Inc.

    

     

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

     

    
      	 	
              ○

            	
              New
                York Office and venue - 636 West 28th Street, Floor 9, New York,
                NY 10001
                

              -
                XA Scenes, Inc.

            

    

    

    ● Los
      Angeles, California (office equipment)

    

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

    The
      Experiential Agency, Inc.

    

    Location
      of Books and Records and Chief Executive Officer:

     

    ●
       John
      Hancock Center, 875 North Michigan Avenue, Suite 2626, Chicago, Illinois
      60611

     -
      The Experiential Agency, Inc.

     

    
      
        
        

      

      
        16

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