Exhibit
10.12
WAIVER OF RIGHTS AGREEMENT
This
Waiver of Rights
Agreement (the "AGREEMENT") is made and entered into
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as of October ___, 2006 (the "EFFECTIVE DATE"), by and between
XA, INC., a
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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
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collectively the
"PARTIES."
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W I T N E S S E T H:
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WHEREAS, pursuant
to a Subscription Agreement entered into with the
Purchasers on
June 30, 2004 (the "SUBSCRIPTION AGREEMENT"), XA sold the
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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
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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
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Second Tranche,
attached hereto as Exhibit A), due to the conversion of a
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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
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WARRANTS");
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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
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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
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warrants to purchase
shares of XA's common stock at $1.10 per share (the "FIRST
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FUNDING WARRANTS"
and collectively the entire August 8, 2006 funding
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transaction, the
"PRIOR FUNDING");
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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");
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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
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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
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Securities Purchase
Agreement to be entered into between XA and
certain third
parties subsequent
to the Parties entry into this Agreement (the
"PURCHASE
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AGREEMENT," and
together with the Funding Warrants, Funding
Notes and any and
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all other agreements
and documents entered into in connection with the Funding,
the "FUNDING"
and the "FUNDING DOCUMENTS");
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<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
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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'
WAI
