Document:

Exhibit 10.11

                               SECURITY AGREEMENT
                               ------------------

     THIS SECURITY AGREEMENT (the "SECURITY AGREEMENT") is dated as of the 23th
                                   ------------------
day  of  October,  2006  by and among XA, Inc., a Nevada Corporation ("XA"), The
                                                                      ----
Experiential  Agency, Inc., XA Scenes, Inc., XA Interactive, Inc., and Fiori XA,
Inc.  (collectively  the  with  XA,  the "DEBTOR") and Vision Opportunity Master
Fund,  Ltd.  (the  "SECURED  PARTY").
                    --------------

                              W I T N E S S E T H

     WHEREAS,  pursuant to a Securities Purchase Agreement, dated as of the date
hereof,  as  may  be  amended or supplemented from time to time (the "SPA"), the
                                                                      ----
Debtor  is  selling  to  the  Secured  Party  an  11% Senior Secured Convertible
Promissory  Note,  in  the  principal  amount  of  $1,250,000,  which is part of
$1,500,000  in 11% Senior Secured Convertible Promissory Note financing (each, a
"NOTE":  and  collectively,  the  "NOTES");  and
 ----                              -----

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

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

SECTION  1.  DEFINITIONS.
             -----------

     1.1  CERTAIN  DEFINED  TERMS. The following terms, as used herein, have the
          -----------------------
meanings  set  forth  below:

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

     "COLLATERAL"  has  the  meaning  assigned  to  that  term  in  SECTION  2.
      ----------                                                    ----------

     "COMPUTER  SOFTWARE"  or  "SOFTWARE"  means  a  computer  program  and  any
      ----------------------------------
supporting information provided in connection with a transaction relating to the
program.

<PAGE>

     "CONTRACTS"  means  all  contracts  and agreements (as defined in the UCC).
      ---------

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

     "DEBTOR"  has the meaning assigned to that term in the introduction to this
      ------
Security  Agreement.

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

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

     "EVENT  OF  DEFAULT" has the meaning assigned to that term in SECTION 8(A).
      ------------------                                           -----------

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

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

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

     "INTELLECTUAL  PROPERTY"  means  collectively  all  of  the  following:
      ----------------------
Copyrights,  Copyright  Licenses,  Patents,  Trademarks  and Trademark Licenses.

<PAGE>

     "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.

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

     "SECURED  OBLIGATIONS"  has the meaning assigned to that term in SECTION 3.
      --------------------

     "SECURITY  AGREEMENT"  means  this Security Agreement as it may be amended,
      -------------------
supplemented  or  otherwise  modified  from  time  to  time.

     "SECURITY  INTERESTS"  means  the  security  interest  granted  pursuant to
      -------------------
SECTION  2,  as  well  as  all  other  security interests created or assigned as
additional  security  for  the Secured Obligations pursuant to the provisions of
this  Security  Agreement.

     "SUBSIDIARIES" has the meaning assigned to that term in the introduction to
      ------------
this  Security  Agreement.

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

     "UCC"  means the Uniform Commercial Code as in effect on the date hereof in
      ----
the  State of Illinois, Nevada, 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

<PAGE>

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  Prior  Purchasers  (as  defined  in  the  SPA)  and the other
purchasers  who invest during the offering to which this Security Agreement is a
part), and subject only to the prior first priority security interest of LaSalle
Bank  National  Association  (all  being  collectively  referred  to  as  the
"COLLATERAL").

          (a)  Accounts;

          (b)  Inventory;

          (c)  Computer  Software;

          (d)  General  Intangibles;

          (e)  Documents;

          (f)  Instruments;

          (g)  Equipment;

          (h)  Fixtures;

          (i)  Contracts;

<PAGE>

          (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) - (k) above or are otherwise necessary or helpful
     in  the  collection  thereof  or  realization  thereon;

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

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

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

SECTION  3.  SECURITY  FOR  OBLIGATIONS.
             --------------------------

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

SECTION  4.  DEBTOR  REMAINS  LIABLE.
             -----------------------

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

SECTION  5.  REPRESENTATIONS  AND  WARRANTIES. Debtor represents and warrants as
             --------------------------------
follows:

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

     5.2.  LOCATION  OF  EQUIPMENT  AND  INVENTORY.  All  of  the  Equipment and
           ---------------------------------------
Inventory  is  located  at  the  places  specified  on  SCHEDULE  I.

     5.3.  OWNERSHIP  OF  COLLATERAL;  OUTSTANDING  LOANS.  The Company owns the
           ----------------------------------------------
Collateral  free  and  clear  of any liens, security interests, charges or other
encumbrances  (collectively,  "LIENS").  No financing statement or other form of
Lien  notice  covering  all  or  any  part  of  the Collateral is on file in any
recording  office,  except  for  those  in  favor  of  the  Secured  Party.

     5.4.  OFFICE  LOCATIONS; FICTITIOUS NAMES. The chief place of business, the
           -----------------------------------
chief  executive  office and the office where Debtor keeps its books and records
are  located  at  the  places  specified  on  SCHEDULE  I.

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

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

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

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

<PAGE>

Collateral.  Without  limiting  the  generality  of  the  foregoing, Debtor will
immediately  upon  request  of  the  Secured  Party:  (a)  execute and file such
financing  or  continuation  statements,  or  amendments thereto, and such other
instruments  or  notices,  as  may  be necessary or desirable, or as the Secured
Party  may  request,  in  order  to  perfect and preserve the security interests
granted  or  purported to be granted hereby (in such jurisdictions and with such
officers  as the Secured Party so request); (b) upon demand by the Secured Party
exhibit  the  Collateral  to  allow  inspection of the Collateral by the Secured
Party  or  persons  designated  by  the  Secured Party; and (c) upon the Secured
Party's  request,  appear in and defend any action or proceeding that may affect
Debtor's  title  to  or the Secured Party's security interest in the Collateral.

     6.2.  BUSINESS  LOCATIONS. Debtor will keep the Collateral at the locations
           -------------------
specified  on  SCHEDULE  I  hereto.
               -----------

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

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

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

     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
                                                         ----------

<PAGE>

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.

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
     SPA,  the  Notes,  the  Warrants  (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

<PAGE>

     the  management  of the Debtor is displaced or its authority in the conduct
     of  its  business  is  curtailed;  or (viii) any representation or warranty
     contained the Note or this Security Agreement, shall prove to be materially
     false  when  made.

          (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.

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

<PAGE>

which  they  accord their own property. The Secured Party shall not be liable or
responsible  for  any  loss  or  damage  to  any  of  the Collateral, or for any
diminution  in  the  value  thereof,  by  reason  of  the act or omission of any
warehouseman,  carrier,  forwarding  agency,  consignee or other agent or bailee
selected  by  the  Secured  Party  in  good  faith.

SECTION  10.  SECURED  PARTY  APPOINTED  ATTORNEY-IN-FACT.
              -------------------------------------------

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

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

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

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

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

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

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

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

<PAGE>

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

SECTION  13.  NOTICES.
              -------

     All  notices,  requests,  demands  and  other  communications  provided for
hereunder  shall  be  in  writing  and  directed  to the applicable party at the
addresses  set  forth on the signature page hereof or, as to each party, at such
other  address  as  shall be designated by such party in a written notice to the
other parties complying as to delivery with the terms of this Section. Notice to
the  Secured Party on terms designated in this SECTION 14 shall be deemed proper
                                               ----------
notice  the  Secured  Party.  All  such  notices,  requests,  demands  and other

<PAGE>

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.

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

<PAGE>

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 Note shall
represent  the  actions or agreement of the Secured Party. In addition, whenever
the  Secured  Party is entitled to the distribution of monies, Collateral or any
other  property,  pursuant to the terms of this Security Agreement, such monies,
Collateral and/or other property shall be distributed to the Secured Party, on a
pro-rata  basis,  based  on  the  outstanding  principal amounts under the Note.

SECTION  20.  HEADINGS.
              --------

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

SECTION  21.  EXECUTION.
              ---------

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

SECTION  22.  WAIVER  OF  JURY  TRIAL.
              -----------------------

     DEBTOR  AND  SECURED  PARTY  HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SECURITY
AGREEMENT. DEBTOR AND SECURED PARTY ALSO WAIVE ANY BOND OR INDEMNITY OR SECURITY
UPON  SUCH  BOND  WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF DEBTOR OR THE
SECURED  PARTY  HERETO.  THE  SCOPE  OF  THIS  WAIVER  IS  INTENDED  TO  BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION INCLUDING CONTRACT CLAIMS, TORT
CLAIMS,  BREACH  OF  DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.

<PAGE>

DEBTOR  AND  SECURED PARTY ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT
TO ENTER INTO A BUSINESS RELATIONSHIP THAT EACH HAS ALREADY RELIED ON THE WAIVER
IN  ENTERING INTO THIS SECURITY AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON
THE  WAIVER  IN  THEIR RELATED FUTURE DEALINGS. DEBTOR AND SECURED PARTY FURTHER
WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL,
AND  EACH  KNOWINGLY  AND  VOLUNTARILY  WAIVES  ITS  JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT  BE  MODIFIED  EITHER ORALLY OR IN WRITING AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT  AMENDMENTS,  RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS SECURITY
AGREEMENT. IN THE EVENT OF LITIGATION. THIS SECURITY AGREEMENT MAY BE FILED AS A
WRITTEN  CONSENT  TO  A  TRIAL  BY  THE  COURT.

                             SIGNATURE PAGE FOLLOWS
<PAGE>

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

                                         DEBTORS:

                                         XA, INC.

                                         By: /s/ Joseph Wagner
                                            ----------------------------------
                                                Name:  Joseph Wagner
                                                Title:  President and CEO

                                         XA SCENES, INC.

                                         By: /s/ Joseph Wagner
                                            ----------------------------------
                                                Name:  Joseph Wagner
                                                Title:  President and CEO

                                         THE EXPERIENTIAL AGENCY, INC.

                                         By: /s/ Joseph Wagner
                                            ----------------------------------
                                                Name:  Joseph Wagner
                                                Title:  President and CEO

                                         XA INTERACTIVE, INC.

                                         By: /s/ Joseph Wagner
                                            ---------------------------------
                                                 Name:  Joseph Wagner
                                                 Title:  President and CEO

                                         FIORI XA, INC.

                                         By: /s/ Darren Andereck
                                            ---------------------------------
                                                  Name: Darren Andereck
                                                  Title: President

<PAGE>

                                 SECURED PARTY:

                                 Vision Opportunity Master Fund, Ltd.
                                 ------------------------------------

                              By: /s/ Adam Benowitz
                                 ----------------------------
                                  Name: Adam Benowitz
                                  Title: Portfolio Manager

<PAGE>

                        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.

<PAGE>Exhibit 10.12

                           WAIVER OF RIGHTS AGREEMENT

     This  Waiver of Rights Agreement (the "AGREEMENT") is made and entered into
                                            ---------
as  of  October  ___,  2006  (the  "EFFECTIVE DATE"), by and between XA, INC., a
                                    --------------
Nevada  corporation  ("XA")  and  ALPHA  CAPITAL AKTIENGESELLSCHAFT, STONESTREET
LIMITED PARTNERSHIP, WHALEHAVEN FUNDS LIMITED, GREENWICH GROWTH FUND LIMITED and
GENESIS  MICROCAP  INC.  (the  "PURCHASERS"),  each  individually  a "PARTY" and
                                ----------
collectively  the  "PARTIES."
                    -------

                              W I T N E S S E T H:
                              - - - - - - - - - -

     WHEREAS,  pursuant  to  a  Subscription  Agreement  entered  into  with the
Purchasers  on  June  30,  2004  (the  "SUBSCRIPTION  AGREEMENT"),  XA  sold the
                                        -----------------------
Purchasers  an aggregate of $2,500,000 in two tranches of Convertible Promissory
Notes  (the  "NOTES"  or the "PURCHASER NOTES"), with an aggregate of $1,250,000
             ------           ---------------
sold  on  June  30, 2004, which amount has been paid in full to date (the "FIRST
TRANCHE")  and  an aggregate of $1,250,000 sold on September 13, 2004, which has
since been reduced to $1,012,500 (not including any accrued and unpaid interest,
the  "SECOND  TRANCHE,"  as  described in the Schedule of payments due under the
      ---------------
Second  Tranche,  attached  hereto  as  Exhibit  A),  due to the conversion of a
                                        ----------
portion  of  the  Notes into shares of XA's common stock which amount is due and
payable  on September 13, 2006 as well as 5,000,000 Class A Warrants to purchase
shares  of  XA's  common  stock,  which were reduced to 250,000 Class A Warrants
pursuant  to  XA's reverse stock split affected December 9, 2004 (the "PURCHASER
                                                                       ---------
WARRANTS");
--------

     WHEREAS,  the  Purchasers and XA previously entered into a Waiver of Rights
Agreement  on  July  17,  2006,  effective as of June 30, 2006, and extended via
email  on  August  3,  2006,  to  August  9,  2006, to waive XA's default of the
repayment  of the First Tranche and certain Reset Provisions which may have come
into  effect  in  connection  with  the sale of $1,250,000 in 11% Senior Secured
Convertible Promissory Notes and warrants to various third party purchasers (the
"FIRST  WAIVER"),  which  funding  closed  August 8, 2006 and a Waiver of Rights
 -------------
Agreement  on  September  13,  2006, to waive the Reset Provisions in connection
with  the  previous  sale  of  $1,250,000  in  11%  Senior  Secured  Convertible
Promissory  Notes  (the  "FIRST  FUNDING  NOTES")  and  the  issuance of 175,000
                          ---------------------
warrants  to purchase shares of XA's common stock at $1.10 per share (the "FIRST
                                                                           -----
FUNDING  WARRANTS"  and  collectively  the  entire  August  8,  2006  funding
-----------------
transaction,  the  "PRIOR  FUNDING");
                    --------------

     WHEREAS,  the  Parties  have  previously  entered into a First Amendment to
Waiver  Agreement,  which  extends  the payment terms of the Second Tranche (the
"FIRST  AMENDMENT");
 ----------------

     WHEREAS,  XA  plans  to raise $1,500,000 of additional capital to repay the
Second  Tranche,  and  provide  working capital for XA subsequent to the Parties
entry  into  this  Agreement  in the form of 11% Senior Secured Promissory Notes
(the  "FUNDING NOTES") and certain other Warrants, including 225,000 warrants to
       -------------
purchase  shares  of  XA's common stock at an exercise price of $1.10 per share,
and  100,000  warrants  to  purchase  shares of XA's common stock at an exercise
price  of  $0.30  per share (collectively the "FUNDING WARRANTS"), pursuant to a
                                               ----------------
Securities  Purchase  Agreement  to be entered into between XA and certain third
parties  subsequent  to  the  Parties  entry  into this Agreement (the "PURCHASE
                                                                        --------
AGREEMENT,"  and  together  with the Funding Warrants, Funding Notes and any and
---------
all  other agreements and documents entered into in connection with the Funding,
the  "FUNDING"  and  the  "FUNDING  DOCUMENTS");
      -------              ------------------

<PAGE>

     WHEREAS,  XA plans to affect a private offering of up to $10,000,000 of its
debt  or  equity  securities (the "PRIVATE OFFERING"), which the Purchasers have
                                   ----------------
previously  waived  the Reset Provisions in connection with, as set forth in the
term sheet that XA received in connection with the Funding, which was previously
waived  by  the  Prior  Waivers.

     WHEREAS,  the Parties desire to enter into this Agreement in furtherance of
the  terms and conditions of the Prior Waivers; however, both Parties agree that
none of the terms or provisions of the Prior Waivers shall be revised or amended
by  this  Agreement other than as provided below in connection with the Funding.

     NOW,  THEREFORE,  in  consideration  for the promises and pledges contained
below  and other good and valuable consideration, which consideration XA and the
Purchasers  acknowledge  receipt  of, and the premises and the mutual covenants,
agreements,  and  considerations  herein  contained, the Parties hereto agree as
follows:

     1.   PURCHASERS'  WAIVER  OF  THE  RESET  AND  ANTI-DILUTION  RIGHTS OF THE
          ----------------------------------------------------------------------
          NOTES,  PURCHASER  WARRANTS  AND  SUBSCRIPTION  AGREEMENT.
          ---------------------------------------------------------

          Assuming  the  Final  Payment  (as  defined  in  the Prior Waivers) is
          paid in full on or prior to October 18, 2006, the Purchasers agree to:

          a)   Waive the  Favored  Nations  Provision,  Section  12(c)  of  the
               Subscription  Agreement;  Section  3.4 of the Purchaser Warrants;
               Section  2.1(c)D  of  the  Purchaser  Notes; as well as any other
               reset,  anti-dilution  or  re-pricing  rights  in  connection
               (collectively  the  "RESET  PROVISIONS")  with:
                                    -----------------

               i)   the Funding  and  the  Private  Offering;  and

               ii)  certain  other  securities  issuable  by  XA  included  and
                    detailed  in  the  Funding  Documents and previously waived,
                    including:

                    a.   the First  Funding  Notes  and  First  Funding Warrants
                         issued  in  connection  with the First Funding, and the
                         issuance  of  common  stock  in  connection  with  the
                         conversion  of the First Funding Notes and the exercise
                         of  the  First  Funding Warrants, the issuance of which
                         was previously waived by the Purchasers pursuant to the
                         Prior  Waivers,  and  is  herein  reaffirmed;

                    b.   the issuance  of  up  to  250,000  shares  of XA common
                         stock  for  professional  services;

<PAGE>

                    c.   the issuance  of  1,000,000  warrants  to  purchase
                         shares  of  XA's  common  stock at an exercise price of
                         $0.30  per  share;

                    d.   the Funding  Notes  and  the  shares  of  common  stock
                         issuable  in  connection  with  the  conversion  of the
                         Funding  Notes;

                    e.   the Funding  Warrants  and  the  shares  of  common
                         stock  issuable  in connection with the exercise of the
                         Funding  Warrants;

                    f.   certain  shares  of  XA  common  stock  issuable,
                         convertible  and/or  exercisable in connection with the
                         Private  Offering, which shares, as originally detailed
                         on  a  Term  Sheet  attached as an exhibit to the First
                         Waiver,  were  previously  waived pursuant to the First
                         Waiver;  and

                    g.   all of  the  previously  waived  Excepted  Issuances
                         (waived  pursuant  to  Section  3.4  of  the  Purchaser
                         Warrants  and  2.1(c)D of the Purchaser Notes), as such
                         term  is  defined  in Section 12(a) of the Subscription
                         Agreement.

               iii) the Purchasers  further  affirm  all  previous  waivers
                    granted  to  XA  pursuant to the Prior Waivers and the First
                    Amendment  (collectively  with  i  and  ii,  the  "FUNDING
                                                                       -------
                    WAIVER").
                    ------

          PROVIDED,  HOWEVER,  that  in  the  event  that  XA  fails to make the
          --------   -------
          required  Final  Payment  on  or  prior  to  the  Final  Payment Date:

          a)   The Funding  Waiver  shall  be  automatically  revoked;  and

          b)   All of  the  Purchasers'  rights  and  remedies  under  the
               Subscription  Agreement,  the  September 2004 Purchaser Notes and
               Purchaser  Warrants  will  automatically  be restored, other than
               those  rights  waived  pursuant  to the December 29, 2004, Waiver
               Agreement  between  the  Parties.

     2.   PURCHASERS'  CERTIFICATION.
          --------------------------

          Subject  to  the  waiver  granted  in  Section  1(a),  each  of  the
          Purchasers  hereby certify that all of the Purchasers own an aggregate
          of  250,000  Class  A Warrants to purchase shares of XA's common stock
          which  represent  all  of the warrants of XA held by any Purchaser and
          such Class A Warrants have an exercise price per share equal to $9.60.
          Other than the Class A Warrants and upon payment in full of the Notes,
          neither  Purchaser  will  own  or  hold any other securities or claims
          issued  by  XA.

<PAGE>

     3.   MISCELLANEOUS.
          -------------

          (a)  Assignment.  All  of  the  terms,  provisions  and  conditions of
               ----------
               this  Agreement  shall  be  binding  upon  and shall inure to the
               benefit  of  and  be  enforceable by the Parties hereto and their
               respective  successors  and  permitted  assigns.

          (b)  Applicable  Law.  This  Agreement  shall  be  construed  in
               ---------------
               accordance  with  and  governed  by  the laws of the State of New
               York,  excluding  any  provision  of  this  Agreement which would
               require  the  use  of  the  laws  of  any  other  jurisdiction.

          (c)  Entire  Agreement,  Amendments  and  Waivers.  This  Agreement
               --------------------------------------------
               constitutes  the  entire  agreement  of  the  Parties  hereto and
               expressly supersedes all prior and contemporaneous understandings
               and  commitments,  whether  written  or oral, with respect to the
               subject  matter  hereof,  other  than the Prior Waivers and First
               Amendment,  which shall remain in effect and be fully enforceable
               against  the  Parties.  No  variations, modifications, changes or
               extensions  of  this Agreement or any other terms hereof shall be
               binding upon any Party hereto unless set forth in a document duly
               executed  by  such  Party  or  an authorized agent or such Party.

          (d)  Waiver.  No  failure  on  the  part  of  any Party to enforce any
               ------
               provisions of this Agreement will act as a waiver of the right to
               enforce  that  provision.

          (e)  Section  Headings.  Section  headings  are  for  convenience only
               -----------------
               and  shall  not define or limit the provisions of this Agreement.

          (f)  Effect  of  Facsimile  and  Photocopied  Signatures.  This
               ---------------------------------------------------
               Agreement  may be executed in several counterparts, each of which
               is an original. It shall not be necessary in making proof of this
               Agreement or any counterpart hereof to produce or account for any
               of the other counterparts. A copy of this Agreement signed by one
               Party  and  faxed  to  another Party shall be deemed to have been
               executed  and  delivered  by  the  signing  Party  as  though  an
               original.  A photocopy of this Agreement shall be effective as an
               original  for  all  purposes.

     [Remainder of page left intentionally blank.  Signature page follows.]

<PAGE>

     This Agreement has been executed by the Parties on the date first written
above, with an Effective Date as provided above.

XA, INC.
--------

/s/ Joseph Wagner
-----------------------
JOSEPH WAGNER
CHIEF EXECUTIVE OFFICER

                                  PURCHASERS:
                                  -----------

ALPHA CAPITAL AKTIENGESELLSCHAFT      STONESTREET LIMITED PARTNERSHIP
--------------------------------      -------------------------------

BY: /s/ Konrad Ackerman               BY: /s/ Michael Finkelstein
   ----------------------------          ------------------------------
ITS:                                  ITS:
    ---------------------------           -----------------------------
PRINTED NAME: Konrad Ackerman         PRINTED NAME: Michael Finkelstein
             ------------------                    --------------------

WHALEHAVEN FUNDS LIMITED             GREENWICH GROWTH FUND LIMITED
------------------------             -----------------------------

BY: /s/ Evan Schemanauer             BY: /s/ Derek Wood
   ---------------------                 --------------------------
ITS:                                 ITS: Director
    -------------------                  --------------------------
PRINTED NAME: Evan Schemanauer       PRINTED NAME: Derek Wood
              ----------------                     ----------------

GENESIS MICROCAP INC.
---------------------

BY: /s/ Larry Gibbons
   ---------------------------
ITS: Authorized Signatory
    --------------------------
PRINTED NAME: Larry Gibbons
             -----------------

<PAGE>

                                                                       EXHIBIT A

               Schedule of payments due under the Second Tranche

                                                       Late Payments Per Day 15%
                                       Amount Due       Interest per day, if the
                                    October 18, 2006  Second Tranche is not paid
                                                          on October 18, 2006)
--------------------------------------------------------------------------------
Alpha Capital Aktiengesellschaf     $    585,302.74   $                   236.30
Stonestreet Limited Partnership     $    356,271.23   $                   143.84
Whalehaven Funds Limited            $     89,000.63   $                    35.93
Greenwich Growth Fund Limited       $             -   $                        -
Genesis Microcap Inc.               $             -   $                        -
                                    ---------------   --------------------------
                        Total Due   $  1,030,574.60   $                   416.07
                                    ===============   ==========================

<PAGE>

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