Document:

EXHIBIT 10.4

Form of

BRIDGE FINANCING

AGREEMENT

This BRIDGE FINANCING AGREEMENT (the “Agreement”) is

made as of this

               

day of July, 2002, by and among AXCESS Inc., a Delaware corporation (the

“Company”), and                               ,

(the “Investor”).

W I T N E S S E T H

WHEREAS, the Company desires to obtain bridge

financing for general working capital purposes until such time as the Company

obtains permanent financing; and

WHEREAS, the Investor is willing to provide such

bridge financing pursuant to the terms and conditions contained herein.

NOW, THEREFORE, in consideration of the foregoing and

the mutual covenants and agreements hereinafter set forth, the parties hereto

agree as follows:

A.            Purchase

and Sale of Units.

1.             Units.

The Company hereby issues and sells to the Investor

(          ) units (“Units”),

each Unit consisting of (i) a convertible promissory note (the “Note”) in an

aggregate principal amount of one hundred thousand dollars ($100,000) and (ii)

twenty five thousand (25,000) unregistered shares of common stock (the

“Shares”) of the Company.  The Note

shall be delivered to the Investor in the form attached hereto as Exhibit A

and the Shares shall be issued to the Investor as soon as reasonably

practicable upon the execution of this Agreement.

2.             The

Shares.  In addition to the

restrictions on transferability set forth below, the Shares issued in

connection herewith cannot be resold by the holder hereof without registration

under the Securities Act and compliance with the prospectus delivery

requirements thereof, or the availability of an exemption therefrom.  The Shares shall be stamped or otherwise

imprinted with a legend substantially similar to that set forth in Section D.3

below (in addition to any legend required under applicable state securities

laws).  The Company will use reasonable

efforts to register the Shares issued hereby within sixty (60) days of the

execution of this Agreement or as soon as practicable thereafter.  Notwithstanding the foregoing, the Investor

hereby agrees that it will not sell more than one-third of the total number of

Shares issued to Investor hereby in any given calendar month.

3.             Purchase

Price.  In consideration of the

issuance and sale by the Company to the Investor of the

(          ) Units, and

subject to the terms and conditions hereof, the Investor hereby pays to the

Company the aggregate purchase price of

$               

($100,000 multiplied by the number of Unites purchased hereby) by wire transfer

in immediately available funds.

 

 

B.            Obligations

Upon Conversion and Exercise.  In

connection with any conversion of the Note, the Investor will execute such

documents as are reasonably requested by the Company, including such documents

as may restrict the Investor’s voting rights and/or the Investor’s rights to

transfer the Conversion Shares (as defined in the Note).

C.            Representations

and Warranties of the Company.  The

Company hereby represents and warrants to the Investor as follows:

1.             Organization,

Standing Power.  The Company is a corporation

duly organized, validly existing and in good standing under the laws of the

State of Delaware.  The Company has all

requisite power and authority to own, lease and operate its properties and

assets and to conduct its business as now being conducted and is duly qualified

to do business in good standing in those foreign jurisdictions in which such

qualification is required except where the absence of any such qualification

could not reasonably be expected to have a Material Adverse Effect (as defined

below).

2.             Authority;

Enforceability; No Conflict.  The

Company has all requisite power and authority to enter into this Agreement and

to issue the Note and Shares and to carry out its obligations hereunder and

thereunder.  The execution, delivery and

performance of this Agreement and the issuance of the Note and the Shares by

the Company have been duly and validly authorized by all requisite proceedings

on the part of the Company.  This

Agreement and the Note when executed and delivered by the Company are valid and

binding obligations of the Company, enforceable against the Company in

accordance with their terms, except that (i) such enforcement may be

subject to bankruptcy, insolvency, reorganization, moratorium, rehabilitation,

liquidation, conservatorship, receivership or other similar laws now or

hereafter in effect relating to creditors’ rights generally and (ii) the

remedy of specific performance and injunctive and other forms of equitable

relief may be subject to equitable defenses and to the discretion of the court

before which any proceeding therefor may be brought.  The execution and delivery of this Agreement and the Note by the

Company do not, and the consummation by the Company of the transactions contemplated

hereby and thereby will not, result in or constitute:  (i) a material default, breach or violation of or under any

material mortgage, deed of trust, indenture, note, bond, license, lease

agreement or other material instrument or obligation to which the Company is a

party or by which any of its respective properties or assets are bound,

(ii) a material violation of any material statute, rule, regulation,

order, judgment or decree of any court, public body or authority by which the

Company or any of its respective properties or assets are bound, (iii) an

event which (with notice or lapse of time or both) would permit any Person (as

defined below) to terminate, accelerate the performance required by, or

accelerate the maturity of any material indebtedness or obligation of the

Company under any agreement or commitment to which the Company is a party or by

which the Company is bound or by which any of its properties or assets are

bound, (iv) the creation or imposition of any material lien, charge or

encumbrance on any property of the Company under any material agreement or

commitment to which the Company is a party or by which the Company is bound or

by which any of its properties or assets are bound, or (v) an event which

would require any material consent under any agreement to which the Company is

a party or by which the Company is bound or by which any of its properties or

assets are bound.

2

 

3.             Securities

Act of 1933.  Based upon the

representations made by the Investor in Section D of this Agreement:  (i) the Company has complied and will

comply with all applicable federal and state securities laws in connection with

the offer, issuance and sale of the Note and the Shares hereunder and

(ii) neither the Company nor anyone acting on its behalf has or will sell,

offer to sell or solicit offers to buy the Note and Shares or similar

securities to, or solicit offers with respect thereto from, or enter into any

preliminary conversations or negotiations relating thereto with, any Person, so

as to bring the issuance and sale of the Note and the Shares under the

registration provisions of the Securities Act (as defined below) and applicable

state securities laws.

D.            Representations

and Warranties of the Investor.  The

Investor hereby represents and warrants to the Company as follows:

1.             Organization

and Standing of the Investor.  If

not a natural person, the Investor is a corporation, partnership, limited

liability company or other entity duly organized, validly existing and in good

standing under the laws of the jurisdiction of its organization.

2.             Authority;

Enforceability; No Conflict.  If not

a natural person, the Investor has all requisite corporate, partnership,

limited liability company or other, as applicable, power and authority to enter

into this Agreement and to carry out its obligations hereunder.  The execution, delivery and performance of

this Agreement to which it is a party have been duly and validly authorized by

all requisite proceedings on the part of the Investor.  This Agreement to which it is a party when

executed and delivered by the Investor is a valid and binding obligation of the

Investor, enforceable against it in accordance with its terms, except that

(i) such enforcement may be subject to bankruptcy, insolvency, reorganization,

moratorium, rehabilitation, liquidation, conservatorship, receivership or other

similar laws now or hereafter in effect relating to creditors’ rights generally

and (ii) the remedy of specific performance and injunctive and other forms

of equitable relief may be subject to equitable defenses and to the discretion

of the court before which any proceeding therefor may be brought.

3.             Acquisition

for Investment.  The Investor is an

“accredited investor” as defined in Regulation D under the Securities Act,

and is acquiring the Note and Shares solely for its own account for the purpose

of investment and not with a view to or for sale in connection with any

distribution thereof, and it has no present intention or plan to effect any

distribution of the Note or the Shares. 

The Investor acknowledges that (i) by reason of its (or its

management’s) business and financial experience, it has such knowledge,

sophistication and experience in business and financial matters as to be

capable of evaluating the merits and risks of its investment in the Note and

the Shares, (ii) it was not formed for the specific purpose of purchasing

the Note or the Shares, (iii) it is able to bear the financial risks (including

a complete loss of the Note or the Share) associated with an investment in the

Note and the Shares, (iv) it has been given full access to such records of

the Company and to the officers of the Company as it has deemed necessary and

appropriate to conducting its due diligence investigation and (v) buying

securities is a substantial portion of its business.  The Note and the Shares may bear a legend substantially similar

to the following:

THIS SECURITY AND THE SECURITIES RECEIVABLE UPON THE

CONVERSION HEREOF HAVE NOT BEEN 

3

 

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS

AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER

JURISDICTION.  THE OFFERING OF THIS

SECURITY AND THE SECURITIES RECEIVABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN

REVIEWED OR APPROVED BY ANY STATE’S SECURITIES ADMINISTRATOR.  THIS SECURITY AND THE SECURITIES RECEIVABLE

UPON THE CONVERSION HEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED

UNLESS REGISTERED OR QUALIFIED UNDER THE ACT AND APPLICABLE STATE SECURITIES

LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO COUNSEL

FOR THE COMPANY STATING THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS

ARE NOT REQUIRED UNDER ANY SUCH LAWS.

The Investor understands and acknowledges that the

Note and the Shares may not be sold, transferred or otherwise disposed of

without registration under the Securities Act or an exemption therefrom and

hereby agrees not to sell, transfer or otherwise dispose of any Note or Shares

other than pursuant to an effective registration statement under the Securities

Act or unless and until the Investor shall have furnished to the Company, at

the Investor’s expense, an opinion of counsel reasonably satisfactory to the

Company to the effect that such sale, transfer or disposition may be made without

registration under the Securities Act.

4.             Financing.  The Investor has sufficient funds to

consummate the transactions contemplated hereby.  The Investor will not be rendered insolvent by reason of its

investments in the Company nor will it be left with unreasonably small capital

for purposes of operating its businesses.

5.             Access

to Information; Independent Advice. 

The Company has made available to the Investor all documents that the

Investor has requested relating to the Note and the Shares, has afforded the

Investor the opportunity to discuss this investment with and to ask questions

of the Company and has provided answers to the Investor’s questions concerning

the Company and the offering of the Note and the Shares.  In evaluating the suitability of the

purchase of the Note and the Shares, the Investor has not relied upon any

representations or other information (whether oral or written), other than as

set forth in this Agreement relating to the Company.  The Investor acknowledges that the Company is experiencing a

financial resource shortage and the Investor recognizes that an investment in

the Company involves certain risks and it has taken full cognizance of and

understands the risk factors related to the purchase of the Note and the

Shares.  The Investor has consulted, to

the extent necessary, its own advisors with respect to the investment, tax,

ERISA and other legal and financial aspects of an acquisition of the Note and

the Shares.

E.             Definitions.  As used in this Agreement, the following terms

shall have the following meanings:

4

 

“Material Adverse Effect”

shall mean any material adverse effect on the business, profits, properties or

condition of the Company and its subsidiaries, taken as a whole.

“Person” shall mean an

individual, corporation, partnership, limited liability company, joint venture,

trust, university, or unincorporated organization, or a government or any

agency or political subdivision thereof.

“Securities Act” shall

mean the Securities Act of 1933, as amended from time to time.

F.             Miscellaneous.

1.             No

Waiver; Cumulative Remedies.  No

failure or delay on the part of any party to this Agreement in exercising any

right, power or remedy hereunder shall operate as a waiver thereof; nor shall

any single or partial exercise of any such right, power or remedy preclude any

other or further exercise thereof or the exercise of any other right, power or

remedy hereunder.  The remedies herein

provided are cumulative and not exclusive of any remedies provided by law.

2.             Amendments,

Waivers and Consents.  Any provision

in this Agreement to the contrary notwithstanding, and except as hereinafter

provided, changes in, termination or amendments of or additions to this

Agreement may be made, and compliance with any covenant or provision set forth

herein may be omitted or waived, if the Company shall obtain consent thereto in

writing from the holder of the then outstanding Note and Warrant.  Any waiver or consent may be given subject

to satisfaction of conditions stated therein and any waiver or consent shall be

effective only in the specific instance and for the specific purpose for which

given.

3.             Addresses

for Notices.  Any notice, demand,

request, waiver or other communication under this Agreement shall be in writing

and shall be deemed to have been duly given on the date of service if

personally served, the date sent if sent by facsimile, or the date on the third

day after mailing via international courier if mailed to the party to whom

notice is to be given:

	

  To the Company:

  	

   

  	

  AXCESS Inc.

  
	

   

  	

   

  	

  3208 Commander Drive

  
	

   

  	

   

  	

  Carrollton, TX 75006

  
	

   

  	

   

  	

  Attn:  Allan

  Frank

  
	

   

  	

   

  	

  Facsimile No. 972 407 9085

  
	

   

  	

   

  	

   

  
	

  To the Investor:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  With a copy to:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  

 

5

 

4.             Binding

Effect; Assignment.  This Agreement

shall be binding upon and insure to the benefit of each of the Company and the

Investor and their respective heirs, successors and assigns, except that the

Company shall not have the right to delegate its obligations hereunder or to

assign its rights hereunder or any interest herein without the prior written

consent of the Investor.

5.             Governing

Law.  THIS AGREEMENT SHALL BE

GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE

OF DELAWARE, AND WITHOUT GIVING EFFECT TO CHOICE OF LAW PROVISIONS.

6.             Headings.  Article, section and subsection headings in

this Agreement are included herein for convenience of reference only and shall

not constitute a part of this Agreement for any other purpose.

7.             Counterparts.  This Agreement may be executed in any number

of counterparts, all of which taken together shall constitute one and the same

instrument, and any of the parties hereto may execute this Agreement by signing

any such counterpart.

8.             Waiver.  Any agreement on the part of a party hereto

to any such extension or waiver shall be valid only if set forth in an

instrument in writing signed by the party granting such waiver but such waiver

or failure to insist upon strict compliance with such obligation, covenant,

agreement or condition shall not operate as a waiver of, or estoppel with

respect to, any subsequent or future failure.

9.             Specific

Enforcement.  The Investor and the

Company acknowledge and agree that irreparable damage would occur in the event

that any of the provisions of this Agreement were not performed in accordance

with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to an

injunction or injunctions to prevent breaches of the provisions of this

Agreement and to enforce specifically the terms and provisions hereof in any

court of the United States or any state thereof having jurisdiction, this being

in addition to any other remedy to which they may be entitled at law or equity.

 

[Signature Page

Follows]

 

6

 

IN WITNESS WHEREOF, the parties hereto have caused

this Bridge Financing Agreement to be duly executed as of the date and year

first above written.

 

	

   

  	

   

  	

  AXCESS INC.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  [INVESTOR]

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Title:

  	

   

  

 

7

 

EXHIBIT A

FORM OF CONVERTIBLE

PROMISSORY NOTE

THIS SECURITY AND THE SECURITIES RECEIVABLE UPON THE

CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS

AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER

JURISDICTION.  THE OFFERING OF THIS

SECURITY AND THE SECURITIES RECEIVABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN

REVIEWED OR APPROVED BY ANY STATE’S SECURITIES ADMINISTRATOR.  THIS SECURITY AND THE SECURITIES RECEIVABLE

UPON THE CONVERSION HEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED

UNLESS REGISTERED OR QUALIFIED UNDER THE ACT AND APPLICABLE STATE SECURITIES

LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO COUNSEL

FOR THE COMPANY STATING THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS

ARE NOT REQUIRED UNDER ANY SUCH LAWS.

THIS SECURITY AND THE SECURITIES RECEIVABLE UPON THE

CONVERSION HEREOF ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN

SECTIONS 8 AND 9 HEREOF.

AXCESS INC.

CONVERTIBLE PROMISSORY NOTE

	

  $

  	

   

  	

   

  	

  July

          , 2002

  

 

AXCESS

Inc., a Delaware

corporation  (the “Company”), for value received, hereby promises to pay

on July        , 2005 (the “Maturity Date”)

to the order of

                              

(hereinafter referred to as “Payee”), the aggregate principal amount of

$                                ,  (or such lesser amount if any of the

principal amount has been converted by Payee or prepaid by the Company pursuant

to the terms of this Note) together with interest on the unpaid principal

balance hereof at an annual interest rate equal to seven percent (7%)

compounded annually. This Convertible Promissory Note (the “Note”) is issued by

the Company pursuant to the Bridge Financing Agreement dated as of July

     , 2002, by and between the Company and the Payee

(the “Bridge Financing Agreement”).  All

capitalized terms not otherwise defined herein have the meaning ascribed

thereto in the Purchase Agreement.

1.             Definitions.

“Affiliate” shall mean,

with respect to any party, any Person directly or indirectly controlling,

controlled by, or under common control with such party, and any officer,

director or executive employee of such party.

“Conversion Price” shall

initially be sixty-five percent (65%) of the average closing price of a share

of the Company’s common stock for the twenty (20) trading days preceding the

given

 

 

anniversary date,

provided that the maximum conversion price shall be $4.00 per share and the

minimum conversion price shall be $1.00 per share, and the Conversion Price

shall be subject to adjustment from time to time to reflect any reorganization,

recapitalization, reclassification, stock dividend, stock split, reverse stock

split or other similar change in the Company’s shares of common stock.

“Conversion Shares” is as

defined in Section 3.

“Note” shall mean this

Convertible Promissory Note or any note or notes issued in renewal,

restatement, extension, modification or replacement hereof including, without

limitation, any note issued pursuant to Section 6.

“Person” means any

individual, corporation, partnership, limited liability company, joint venture,

trust, university, or unincorporated organization, or a government or any

agency or political subdivision thereof.

“Securities Act” shall

mean the Securities Act of 1933, as amended, or any replacement thereof.

2.             Optional Conversion of the Note.   At each of July

     , 2003; July      ,

2004; and July      , 2005 (each a “Conversion Date”),

Payee may elect to convert one-third of the principal amount of the Note (plus

accrued interest thereon) into shares of the Company’s common stock at the

Conversion Price; provided that the Company has not, on or prior to each such

Conversion Date retired one-third of the principal amount of the Note.

3.             Conversion

Mechanics.  If Payee elects to

convert one-third of the principal amount of the Note pursuant to Section 2 (a

“Conversion Event”), then Payee shall provide written notice, and surrender the

Note to the Company at the office of the Company.  Upon such Conversion Event, the Company shall, as soon as

practicable thereafter, deliver to Payee or to the nominee for Payee at its

address provided by the Payee a certificate or certificates representing the

shares of common stock of the Company into which the Note is convertible (the

“Conversion Shares”) in the amount described herein and shall issue to Investor

an amended version of this Note in which the principal amount of the Note shall

be reduced to reflect the amount converted by the Investor.  Such conversion will be deemed effected as

of the effective time of the applicable Conversion Event, and Payee will be

deemed to be the holder of the Conversion Shares as of such effective

time.  In connection with the conversion

of part of this Note, the Payee will execute such documents as are reasonably

requested by the Company, including such documents as may restrict the holder’s

voting rights and/or the holder’s rights to transfer the Conversion Shares.

4.             Payments.  Payments of principal on this Note shall be

made by check, or, if instructed by Payee in writing, directly by wire transfer

to a bank designated by Payee without any presentment or notation of

payment.  If any payment on this Note

shall become due on a Saturday, Sunday or a bank or legal holiday under the

laws of the State of New York, such payment shall be made on the next succeeding

business day.

5.             Prepayment.  Subject to the Payee’s prior right to

exchange this Note in accordance with the terms of this Note, this Note may be

prepaid, in whole or in part, by the

 

2

 

Company, without premium or penalty, at any time.  Notice of any prepayment (a “Prepayment

Notice”) must be delivered to the Payee at least twenty (20) days before the

prepayment date.  If this Note is

prepaid, any such prepayment amount shall be applied first to all accrued and

unpaid interest and the remainder to the outstanding principal amount of this

Note.  If the Company prepays less than

all the amounts outstanding under this Note, the Company shall deliver to the

Payee a replacement note of like tenor representing the remaining unpaid

principal amount of this Note.  From and

after the date of any prepayment, interest shall cease to accrue on the portion

of the principal amount of this Note so prepaid.

6.             Replacement

of Note.  Upon receipt of evidence

satisfactory to the Company of the loss, theft, destruction or mutilation of

this Note and, if requested in the case of any such loss, theft or destruction,

upon delivery of an indemnity bond or other agreement or security satisfactory

to the Company or, in the case of any such mutilation, upon surrender and

cancellation of this Note, the Company will issue a new Note of like tenor and

amount, in replacement of such lost, stolen, destroyed or mutilated Note.

7.             Governing

Law.  This Note will be governed by

and construed in accordance with the domestic laws of the State of Delaware

without giving effect to any choice of law or conflict of law principles.  The Company and Payee agree that if a

controversy or claim between them arises out of or in relation to this Note and

results in litigation, the courts of United States of America located in the

State of Delaware shall have jurisdiction to hear and decide such matter, and

the Company and Payee hereby submit to the jurisdiction of such courts.

8.             Restrictions

on Transferability of Securities on Compliance with the Act.  In addition to the restrictions on

transferability set forth in Section 9, this Note cannot be publicly resold by

the holder hereof without registration under the Securities Act and compliance

with the prospectus delivery requirements thereof, or the availability of an

exemption therefrom.  This Note shall be

stamped or otherwise imprinted with the legend set forth on the first page of

this Note (in addition to any legend required under applicable state securities

laws).

9.             Assignment.  In addition to the transfer restrictions set

forth in Section 8, this Note may not be assigned by Payee without the prior

written consent of the Company.

10.           Entire

Agreement.  This Note, the Bridge

Financing Agreement and the other writings referred to herein and therein

contain the entire agreement among the Company and Payee with respect to the

transactions contemplated hereby and supersede all prior agreements or

understandings, written or oral, between the Company and Payee.

 

3

 

11.           Note

in Registered Form.  This Note is

issued in registered form as to both principal and interest pursuant to

§5f.103-1 of Title 26 of the Code of Federal Regulations (the “Regulations”)

and shall be initially registered on the books of the Company in the name of

Payee.  All interest and principal

payable hereunder shall be paid only to persons or entities in whose name this

Note is registered at the time of payment. 

Transfers of this Note and rights to payment of principal and interest

will be effected only upon surrender of the Note to the Company and either the

re-issuance by the Company of this Note to such new holder or the issuance by

the Company of a new note to such new holder having the same terms and

conditions as this Note.  In order for

any transfers of the Note to be effective, the change of registered ownership

must be properly recorded on the Company’s books and records.  The Payee shall not have the right to

convert this Note to bearer form.

	

   

  	

  AXCESS

  INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  

 

4EXHIBIT

10.5

 

NEITHER THIS WARRANT NOR ANY SHARES ACQUIRED UPON

EXERCISE 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 SHARES

MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN

EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND STATE SECURITIES LAWS OR THE

AVAILABILITY 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 the

basis for this Warrant:

 

A.                                                   This Warrant is issued to JP

Morgan Investment Corporation, a Delaware corporation, or its successors in

interest, assigns or transferees (collectively, the “Warrant Holder”), in

consideration for extending the term of indebtedness owed to the Warrant Holder

by AXCESS Inc., a Delaware corporation (the “Company”) pursuant to the

terms of that certain Senior Promissory Note, of even date herewith, executed

by the Company payable to the Warrant Holder in the stated principal amount of

up to $400,000 (the “Note”);

 

B.                                                     The total number of shares of

the Company’s Voting Common Stock (as defined in Section 9(a) hereof) (the “Warrant

Shares”) to be issued to the Warrant Holder is 10,000 shares

(subject to the antidilution provisions of this Warrant); and

 

C.                                                     This Warrant shall be

exercisable at any time and from time to time on or prior to the December 31,

2003.

 

                THIS CERTIFIES

THAT, for value received, the Warrant Holder is entitled to purchase from the

Company, 10,000 Warrant Shares at the exercise price of Three Dollars and No

Cents ($3.00) per share (the “Exercise Price”).  The number of Warrant Shares and the

Exercise Price shall be adjusted and readjusted or changed from time to time in

accordance with Section 4 hereof.

 

 

                Section

1.     Exercise of Warrant.

 

                The rights

represented by this Warrant may be exercised by the Warrant Holder, in whole or

in part, by (a) delivering to the Company a duly executed notice of exercise in

the 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 Company

in an amount equal to the product of (x) the Exercise Price times (y) the number

of Warrant Shares as to which this Warrant is being exercised (such product,

the “Total

Exercise Price”) or (ii) delivering to the Company a letter (the “Conversion

Letter”) requesting conversion or exchange of a portion of any

indebtedness owed by the Company to the Warrant Holder in an amount equal to

the Total Exercise Price or (iii) surrendering to the Company a portion of this

Warrant 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) the

amount by which the average closing price per share of the Company’s Common

Stock over the ten trading days preceding the date of exercise, as reported in The

Wall Street Journal, exceeds the Exercise Price and (II) the number of

Warrant Shares as to which this Warrant is surrendered for the purpose of

effecting payment for Warrant Shares. 

This Warrant shall be deemed to have been exercised immediately prior to

the close of business on the date of delivery of a duly executed notice of

exercise together with the amount (in cash or by delivering the Conversion

Letter or by surrender of a portion of this Warrant) payable upon exercise of

this Warrant and, as of such moment, (i) the rights of the Warrant Holder, as

such, with respect to the number of Warrant Shares as to which this Warrant is

being exercised (and, if applicable, surrendered as payment of the Total

Exercise Price) shall cease, and (ii) such Warrant Holder shall be deemed to be

the record holder of the shares of Voting Common Stock issuable upon such

exercise. As soon as practicable after the exercise, in whole or in part, of

this Warrant, and in any event within 5 business days thereafter, the Company

at its expense (including the payment by it of any applicable issuance or stamp

taxes) will cause to be issued in the name of and delivered to the Warrant

Holder, or as the Warrant Holder (upon payment by the Warrant Holder of any

applicable transfer taxes) may direct, a certificate or certificates for the

number of fully paid and nonassessable shares of Voting Common Stock to which

the Warrant Holder shall be entitled upon such exercise. In the event of

partial exercise of this Warrant and, if applicable, partial surrender of this

Warrant pursuant to clause (b)(iii) of this Section, the Warrant need not be

delivered to the Company; provided that the Warrant Holder agrees to make a

notation of such partial exercise and, if applicable, surrender on the Warrant.

If this Warrant is delivered to the Company, the Company shall issue and

deliver to the Warrant Holder a new Warrant evidencing the rights to purchase

the remaining Warrant Shares, which new Warrant shall in all other respects be

identical to this Warrant.

 

                Notwithstanding

the foregoing or any other term or provision of this Warrant, the Warrant

Holder shall not be permitted, without the prior written consent of the

Company, to exercise its rights to acquire Warrant Shares hereunder until such

time as the Company shall have received the authorization of its stockholders

to issue Warrant Shares to the Warrant Holder upon the exercise of all or any

portion of this Warrant by the Warrant 

 

 

2

 

Holder.  The Company hereby

agrees to submit such a proposal to its stockholders for approval at the

Company’s 2002 annual meeting of stockholders and to use its best efforts to

obtain such approval.

 

                Section 2.              Investment Representation.

 

                By accepting this

Warrant, the Warrant Holder represents that the Warrant Holder is acquiring

this Warrant for investment purposes and will not sell or otherwise dispose of

this Warrant or the underlying Warrant Shares in violation of applicable

securities laws. The Warrant Holder acknowledges that the certificates

representing any Warrant Shares will bear a legend indicating that they have

not been registered under the Act, and may not be sold by the Warrant Holder

except pursuant to an effective registration statement or pursuant to an

exemption from registration.

 

                Section 3.              Validity of Warrant and Issue

of Shares.

 

                The Company

represents and warrants that this Warrant has been duly authorized and validly

issued and covenants and agrees that all shares of Common Stock that may be

issued upon the exercise of the rights represented by this Warrant will, when

issued upon such exercise, be duly authorized, validly issued, fully paid and

nonassessable and free from all taxes, liens and charges with respect to the

issue thereof.  The Company further

covenants and agrees that during the period within which the rights represented

by this Warrant may be exercised, the Company will at all times have authorized

and reserved a sufficient number of shares of Common Stock to provide for the

exercise of the rights represented by this Warrant.

 

                Section 4.              Antidilution Provisions.

 

                The terms of this Warrant shall

be subject to adjustment as follows:

 

                (a)           If the Company shall (i) pay a stock

dividend or make a distribution to holders of Common Stock or common stock in

shares of its  Common Stock or common stock,

as the case may be, (ii) subdivide its outstanding shares of  Common Stock or common stock, (iii) combine

its outstanding shares of  Common Stock

or common stock into a smaller number of shares, or (iv) issue by

reclassification of its shares of  Common

Stock or common stock any shares of capital stock of the Company, (A) the

Exercise Price shall be increased or decreased as the case may be, to an amount

which shall bear the same relation to the Exercise Price in effect immediately

prior to such action as the total number of shares outstanding immediately

prior to such action shall bear to the total number of shares outstanding

immediately after such action and (B) this Warrant automatically shall be

adjusted so that it shall thereafter evidence the right to purchase the kind

and number of Warrant Shares or other securities which the Warrant Holder would

have owned and would have been entitled to receive after such action if this

Warrant had been exercised immediately prior to such action or any record date

with respect thereto. An adjustment made pursuant to this subsection shall

become effective retroactively immediately after the record date in the case of

a dividend or distribution of Common

 

 

3

 

Stock or common stock and shall become effective immediately after the

effective date in the case of a subdivision, combination or reclassification.

 

                (b)           If the Company shall fix a record

date for the making of a distribution to all holders of Common Stock or its

common stock (including any such distribution made in connection with a

consolidation or merger in which the Company is the continuing corporation) of

(i) assets (other than cash dividends or cash distributions payable out of

consolidated 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, or

of any corporation other than the Company (except for the Non-Voting Common

Stock or common stock of the Company) or (iii) subscription rights, options or

warrants to purchase any of the foregoing assets or securities, whether or not

such rights, options or warrants are immediately exercisable (hereinafter

collectively called “Distributions on Common Stock”), the

Company shall make provisions for the Warrant Holder to receive upon exercise

of this Warrant, a proportional amount (depending upon the extent to which this

Warrant is exercised) of such assets, evidences of indebtedness, securities or

such other rights, as if such Warrant Holder had exercised this Warrant on or

before such record date.

 

                (c)           In the case of any consolidation or

merger of the Company with or into another corporation or the sale of all or

substantially all the assets of the Company to another person or entity, this

Warrant thereafter shall be exercisable for the kind and amount of shares of

stock or other securities or property to which a holder of the number of shares

of Non-Voting Common Stock of the Company deliverable upon exercise of this

Warrant would have been entitled upon such consolidation, merger or sale; and,

in such case, appropriate adjustment shall be made in the application of the

provisions in this Section 4, to the end that the provisions set forth in this

Section 4 (including provisions with respect to changes in and adjustments of

the exercise price) shall thereafter be applicable, as nearly as reasonably may

be, in relation to any shares of stock or other securities or property

thereafter deliverable upon the exercise of this Warrant.

 

                (d)           Upon the occurrence of each

adjustment or readjustment of the exercise price or any change in the number of

Warrant Shares or in the shares of stock or other securities or property

deliverable upon exercise of this Warrant pursuant to this Section 4, the

Company at its expense shall promptly compute such adjustment or readjustment

and change in accordance with the terms hereof and furnish to each holder

hereof a certificate signed by the Chief Financial Officer of the Company,

setting forth such adjustment or readjustment and change and showing in detail

the facts upon which such adjustment or readjustment and change is based. The

Company shall, upon the written request at any time of the Warrant Holder,

furnish or cause to be furnished to such Holder, a similar certificate setting

forth (i) such adjustment or readjustment and change, (ii) the Exercise Price

then 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 be

received upon the exercise of the Warrant.

 

 

4

 

                (e)           The Company shall not be required

upon the exercise of this Warrant to issue any fraction of shares, but shall

make any adjustment therefor by rounding the number of shares obtainable upon

exercise to the next highest whole number of shares.

 

                Section 5.              Transfer of Rights.

 

                This Warrant is transferable in

whole or in part, at the option of the Warrant Holder, upon delivery of a duly

executed Warrant Assignment Form in the form annexed as Annex B hereto.  The Company shall execute and deliver a new

Warrant or Warrants in the form of this Warrant with appropriate changes to

reflect the issuance of subsequent Warrants in the name of the assignee or

assignees named in such instrument of assignment, and if the Warrant Holder’s

entire interest is not being transferred or assigned, in the name of the

Warrant Holder, and this Warrant shall promptly be canceled. Any transfer or

exchange of this Warrant shall be without charge to the Warrant Holder, and any

new Warrant or Warrants issued shall be dated the date hereof.  The term “Warrant” as used herein

includes any Warrants into which this Warrant may be divided or for which it

may be exchanged. The Warrant Holder (and not the Company) will be responsible

for any stamp, transfer or other taxes payable on any such transfer.

 

                Section 6.              Lost, Mutilated or Missing

Warrant.

 

                Upon receipt by

the Company of evidence satisfactory to it of the loss, theft, destruction or

mutilation of this Warrant, and upon surrender and cancellation of this

Warrant, if mutilated, the Company shall execute and deliver a new Warrant of

like denomination and date.

 

                Section 7.              Rights of Warrant Holder.

 

                The

Warrant Holder shall not, by virtue hereof, be entitled to any voting or other

rights of a shareholder of the Company, either at law or equity, and the rights

of the Warrant Holder are limited to those expressed in this Warrant.

 

                                                Section 8.              Successors.

 

                All the provisions of this

Warrant by or for the benefit of the Company or the Warrant Holder shall bind

and inure to the benefit of their respective successors and assigns.

 

                Section 9.              Miscellaneous.

 

                (a)           As used herein, the term “Non-Voting

Common Stock” shall mean and include the Company’s currently

authorized non-voting common stock, $.01 par value per share, and stock of any

other class or other consideration into which such currently authorized

Non-Voting Common Stock may hereafter have been changed.

 

 

5

 

                (b)           This Warrant shall be construed in

accordance with and governed by the laws of the State of Delaware.

 

                (c)           The caption headings used in this

Warrant are for convenience of reference only and shall not be construed in any

way to affect the interpretation of any provisions of this Warrant.

 

                Section 10.            Notices.

                Any notice

pursuant to this Warrant shall be effective if sent by first class mail,

postage prepaid, or delivered by facsimile transmission, addressed as follows:

 

                If

to the Company, then to it at:

 

                                AXCESS

Inc.

                                3208

Commander Drive

                                Dallas,

Texas 75006

                                Attention:

Chief Financial Officer

                                Facsimile

No.: (972) 407-9085

 

                (or to such other

address as the Company may have furnished in writing to the Warrant Holder for

this purpose); and

 

                If to the Warrant

Holder, then to it at such address as such Warrant Holder may have furnished in

writing to the Company for this purpose.

 

                IN WITNESS

WHEREOF, the Company, intending to be legally bound hereby, has caused this

Warrant to be signed by its President and Chief Executive Officer and attested

by its Secretary or Assistant Secretary as of the date set forth below.

 

	

   

  	

   

  	

  AXCESS

  INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/ Allan Griebenow

  
	

   

  	

   

  	

   

  	

  Allan Griebenow, Chief Executive Officer

  

 

 

Issuance

Date: July 5, 2002

 

6

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