**EXHIBIT10.5**

 

NEITHER THIS WARRANT NOR ANY SHARES ACQUIRED UPONEXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933(THE “*ACT*”)OR UNDER ANY STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR ANY SUCH SHARESMAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF ANEFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND STATE SECURITIES LAWS OR THEAVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION.

 

# **For the Purchase of 10,000 Shares**

 

 

**AXCESS INC.**

 

**Voting Common Stock Purchase Warrant**

 

**               **The following recitals are true and constitute thebasis for this Warrant:

 

A.                                                   This Warrant is issued to JPMorgan Investment Corporation, a Delaware corporation, or its successors ininterest, assigns or transferees (collectively, the “*Warrant Holder*”), inconsideration for extending the term of indebtedness owed to the Warrant Holderby AXCESS Inc., a Delaware corporation (the “*Company*”) pursuant to theterms of that certain Senior Promissory Note, of even date herewith, executedby the Company payable to the Warrant Holder in the stated principal amount ofup to $400,000 (the “*Note*”);

 

B.                                                     The total number of shares ofthe Company’s Voting Common Stock (as defined in Section 9(a) hereof) (the “*WarrantShares*”) to be issued to the Warrant Holder is 10,000 shares(subject to the antidilution provisions of this Warrant); and

 

C.                                                     This Warrant shall beexercisable at any time and from time to time on or prior to the December 31,2003.

 

                THIS CERTIFIESTHAT, for value received, the Warrant Holder is entitled to purchase from theCompany, 10,000 Warrant Shares at the exercise price of Three Dollars and NoCents ($3.00) per share (the “*Exercise Price*”).  The number of Warrant Shares and theExercise Price shall be adjusted and readjusted or changed from time to time inaccordance with Section 4 hereof.

 

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                **Section1.     Exercise of Warrant.**

 

                The rightsrepresented by this Warrant may be exercised by the Warrant Holder, in whole orin part, by (a) delivering to the Company a duly executed notice of exercise inthe form of Annex A hereto and (b) at the Warrant Holder’s option, either (i)delivering a check payable to (or wire transfer to the account of) the Companyin an amount equal to the product of (x) the Exercise Price times (y) the numberof Warrant Shares as to which this Warrant is being exercised (such product,the “*TotalExercise Price*”) or (ii) delivering to the Company a letter (the “*ConversionLetter*”) requesting conversion or exchange of a portion of anyindebtedness owed by the Company to the Warrant Holder in an amount equal tothe Total Exercise Price or (iii) surrendering to the Company a portion of thisWarrant with a “Value” (as defined below) equal to the Total Exercise Price.For the purpose of clause (b) (iii) above, “*Value*” shall mean the product of (I) theamount by which the average closing price per share of the Company’s CommonStock over the ten trading days preceding the date of exercise, as reported in TheWall Street Journal, exceeds the Exercise Price and (II) the number ofWarrant Shares as to which this Warrant is surrendered for the purpose ofeffecting payment for Warrant Shares. This Warrant shall be deemed to have been exercised immediately prior tothe close of business on the date of delivery of a duly executed notice ofexercise together with the amount (in cash or by delivering the ConversionLetter or by surrender of a portion of this Warrant) payable upon exercise ofthis Warrant and, as of such moment, (i) the rights of the Warrant Holder, assuch, with respect to the number of Warrant Shares as to which this Warrant isbeing exercised (and, if applicable, surrendered as payment of the TotalExercise Price) shall cease, and (ii) such Warrant Holder shall be deemed to bethe record holder of the shares of Voting Common Stock issuable upon suchexercise. As soon as practicable after the exercise, in whole or in part, ofthis Warrant, and in any event within 5 business days thereafter, the Companyat its expense (including the payment by it of any applicable issuance or stamptaxes) will cause to be issued in the name of and delivered to the WarrantHolder, or as the Warrant Holder (upon payment by the Warrant Holder of anyapplicable transfer taxes) may direct, a certificate or certificates for thenumber of fully paid and nonassessable shares of Voting Common Stock to whichthe Warrant Holder shall be entitled upon such exercise. In the event ofpartial exercise of this Warrant and, if applicable, partial surrender of thisWarrant pursuant to clause (b)(iii) of this Section, the Warrant need not bedelivered to the Company; provided that the Warrant Holder agrees to make anotation of such partial exercise and, if applicable, surrender on the Warrant.If this Warrant is delivered to the Company, the Company shall issue anddeliver to the Warrant Holder a new Warrant evidencing the rights to purchasethe remaining Warrant Shares, which new Warrant shall in all other respects beidentical to this Warrant.

 

                Notwithstandingthe foregoing or any other term or provision of this Warrant, the WarrantHolder shall not be permitted, without the prior written consent of theCompany, to exercise its rights to acquire Warrant Shares hereunder until suchtime as the Company shall have received the authorization of its stockholdersto issue Warrant Shares to the Warrant Holder upon the exercise of all or anyportion of this Warrant by the Warrant 

 

 

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Holder.  The Company herebyagrees to submit such a proposal to its stockholders for approval at theCompany’s 2002 annual meeting of stockholders and to use its best efforts toobtain such approval.

 

**                Section 2.              Investment Representation.**

 

                By accepting thisWarrant, the Warrant Holder represents that the Warrant Holder is acquiringthis Warrant for investment purposes and will not sell or otherwise dispose ofthis Warrant or the underlying Warrant Shares in violation of applicablesecurities laws. The Warrant Holder acknowledges that the certificatesrepresenting any Warrant Shares will bear a legend indicating that they havenot been registered under the Act, and may not be sold by the Warrant Holderexcept pursuant to an effective registration statement or pursuant to anexemption from registration.

 

                **Section 3.              Validity of Warrant and Issueof Shares.**

 

                The Companyrepresents and warrants that this Warrant has been duly authorized and validlyissued and covenants and agrees that all shares of Common Stock that may beissued upon the exercise of the rights represented by this Warrant will, whenissued upon such exercise, be duly authorized, validly issued, fully paid andnonassessable and free from all taxes, liens and charges with respect to theissue thereof.  The Company furthercovenants and agrees that during the period within which the rights representedby this Warrant may be exercised, the Company will at all times have authorizedand reserved a sufficient number of shares of Common Stock to provide for theexercise of the rights represented by this Warrant.

 

                **Section 4.              Antidilution Provisions.**

 

                The terms of this Warrant shallbe subject to adjustment as follows:

 

                (a)           If the Company shall (i) pay a stockdividend or make a distribution to holders of Common Stock or common stock inshares of its  Common Stock or common stock,as the case may be, (ii) subdivide its outstanding shares of  Common Stock or common stock, (iii) combineits outstanding shares of  Common Stockor common stock into a smaller number of shares, or (iv) issue byreclassification of its shares of  CommonStock or common stock any shares of capital stock of the Company, (A) theExercise Price shall be increased or decreased as the case may be, to an amountwhich shall bear the same relation to the Exercise Price in effect immediatelyprior to such action as the total number of shares outstanding immediatelyprior to such action shall bear to the total number of shares outstandingimmediately after such action and (B) this Warrant automatically shall beadjusted so that it shall thereafter evidence the right to purchase the kindand number of Warrant Shares or other securities which the Warrant Holder wouldhave owned and would have been entitled to receive after such action if thisWarrant had been exercised immediately prior to such action or any record datewith respect thereto. An adjustment made pursuant to this subsection shallbecome effective retroactively immediately after the record date in the case ofa dividend or distribution of Common

 

 

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Stock or common stock and shall become effective immediately after theeffective date in the case of a subdivision, combination or reclassification.

 

                (b)           If the Company shall fix a recorddate for the making of a distribution to all holders of Common Stock or itscommon stock (including any such distribution made in connection with aconsolidation or merger in which the Company is the continuing corporation) of(i) assets (other than cash dividends or cash distributions payable out ofconsolidated net income or retained earnings or dividends payable in  Common Stock or common stock), (ii)evidences of indebtedness or other debt or equity securities of the Company, orof any corporation other than the Company (except for the Non-Voting CommonStock or common stock of the Company) or (iii) subscription rights, options orwarrants to purchase any of the foregoing assets or securities, whether or notsuch rights, options or warrants are immediately exercisable (hereinaftercollectively called “*Distributions on Common Stock*”), theCompany shall make provisions for the Warrant Holder to receive upon exerciseof this Warrant, a proportional amount (depending upon the extent to which thisWarrant is exercised) of such assets, evidences of indebtedness, securities orsuch other rights, as if such Warrant Holder had exercised this Warrant on orbefore such record date.

 

                (c)           In the case of any consolidation ormerger of the Company with or into another corporation or the sale of all orsubstantially all the assets of the Company to another person or entity, thisWarrant thereafter shall be exercisable for the kind and amount of shares ofstock or other securities or property to which a holder of the number of sharesof Non-Voting Common Stock of the Company deliverable upon exercise of thisWarrant would have been entitled upon such consolidation, merger or sale; and,in such case, appropriate adjustment shall be made in the application of theprovisions in this Section 4, to the end that the provisions set forth in thisSection 4 (including provisions with respect to changes in and adjustments ofthe exercise price) shall thereafter be applicable, as nearly as reasonably maybe, in relation to any shares of stock or other securities or propertythereafter deliverable upon the exercise of this Warrant.

 

                (d)           Upon the occurrence of eachadjustment or readjustment of the exercise price or any change in the number ofWarrant Shares or in the shares of stock or other securities or propertydeliverable upon exercise of this Warrant pursuant to this Section 4, theCompany at its expense shall promptly compute such adjustment or readjustmentand change in accordance with the terms hereof and furnish to each holderhereof a certificate signed by the Chief Financial Officer of the Company,setting forth such adjustment or readjustment and change and showing in detailthe facts upon which such adjustment or readjustment and change is based. TheCompany shall, upon the written request at any time of the Warrant Holder,furnish or cause to be furnished to such Holder, a similar certificate settingforth (i) such adjustment or readjustment and change, (ii) the Exercise Pricethen in effect, and (iii) the number of Warrant Shares and the amount, if any,of other shares of stock and other securities and property which would bereceived upon the exercise of the Warrant.

 

 

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                (e)           The Company shall not be requiredupon the exercise of this Warrant to issue any fraction of shares, but shallmake any adjustment therefor by rounding the number of shares obtainable uponexercise to the next highest whole number of shares.

 

                **Section 5.              Transfer of Rights.**

 

                This Warrant is transferable inwhole or in part, at the option of the Warrant Holder, upon delivery of a dulyexecuted Warrant Assignment Form in the form annexed as Annex B hereto.  The Company shall execute and deliver a newWarrant or Warrants in the form of this Warrant with appropriate changes toreflect the issuance of subsequent Warrants in the name of the assignee orassignees named in such instrument of assignment, and if the Warrant Holder’sentire interest is not being transferred or assigned, in the name of theWarrant Holder, and this Warrant shall promptly be canceled. Any transfer orexchange of this Warrant shall be without charge to the Warrant Holder, and anynew Warrant or Warrants issued shall be dated the date hereof.  The term “*Warrant*” as used hereinincludes any Warrants into which this Warrant may be divided or for which itmay be exchanged. The Warrant Holder (and not the Company) will be responsiblefor any stamp, transfer or other taxes payable on any such transfer.

 

                **Section 6.              Lost, Mutilated or MissingWarrant.**

 

                Upon receipt bythe Company of evidence satisfactory to it of the loss, theft, destruction ormutilation of this Warrant, and upon surrender and cancellation of thisWarrant, if mutilated, the Company shall execute and deliver a new Warrant oflike denomination and date.

 

                **Section 7.              Rights of Warrant Holder.**

 

                TheWarrant Holder shall not, by virtue hereof, be entitled to any voting or otherrights of a shareholder of the Company, either at law or equity, and the rightsof the Warrant Holder are limited to those expressed in this Warrant.

 

**                                               ****Section 8.              Successors.**

 

                All the provisions of thisWarrant by or for the benefit of the Company or the Warrant Holder shall bindand inure to the benefit of their respective successors and assigns.

 

                **Section 9.              Miscellaneous.**

 

                (a)           As used herein, the term “*Non-VotingCommon Stock*” shall mean and include the Company’s currentlyauthorized non-voting common stock, $.01 par value per share, and stock of anyother class or other consideration into which such currently authorizedNon-Voting Common Stock may hereafter have been changed.

 

 

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                (b)           This Warrant shall be construed inaccordance with and governed by the laws of the State of Delaware.

 

                (c)           The caption headings used in thisWarrant are for convenience of reference only and shall not be construed in anyway to affect the interpretation of any provisions of this Warrant.

 

                **Section 10.            Notices.**

                Any noticepursuant to this Warrant shall be effective if sent by first class mail,postage prepaid, or delivered by facsimile transmission, addressed as follows:

 

                Ifto the Company, then to it at:

 

                                AXCESSInc.

                                3208Commander Drive

                                Dallas,Texas 75006

                                Attention:Chief Financial Officer

                                FacsimileNo.: (972) 407-9085

 

                (or to such otheraddress as the Company may have furnished in writing to the Warrant Holder forthis purpose); and

 

                If to the WarrantHolder, then to it at such address as such Warrant Holder may have furnished inwriting to the Company for this purpose.

 

                IN WITNESSWHEREOF, the Company, intending to be legally bound hereby, has caused thisWarrant to be signed by its President and Chief Executive Officer and attestedby its Secretary or Assistant Secretary as of the date set forth below.

 
|   |   | **AXCESS  INC.** |
|--------|--------|------------------|
|   |   |             |   |
|   |   |             |   |
|   |   |             |   |
|   |   | By:              | /s/ Allan Griebenow |
|   |   |             | Allan Griebenow, Chief Executive Officer |

 

 

**IssuanceDate: July 5, 2002**

 

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