Document:

Exhibit
10.2

 

December 16, 2002

 

	
  Samson
  Offshore Company

  	
   

  	
  Palace
  Exploration Company

  
	
  Attn:  Mr. Sonny Measley

  	
   

  	
  Attn:  Mr. Bob Zinke

  	
   

  	
   

  
	
  1301 Travis, Suite 1900

  	
   

  	
  1202 East 33rd St.

  	
   

  	
   

  
	
  Houston, TX  77002

  	
   

  	
  Tulsa, OK  74105-2048

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reef
  Global Energy I, L. P.

  	
   

  	
  Fidelity
  Exploration & Production Company

  
	
  Attn:  Mr. Walt Dunagin

  	
   

  	
  Attn:  Mr. George Soulis

  	
   

  	
   

  
	
  1901 N. Central
  Expressway, Ste. 300

  	
   

  	
  1700 Lincoln, Ste. 4600

  	
   

  	
   

  
	
  Richardson, TX  75080

  	
   

  	
  Denver, CO  80203

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bright
  & Company I, Ltd.

  	
   

  	
  Re:

  	
   

  	
  Participation
  Agreement and

  
	
  Attn:  Mr. Jack Carlile

  	
   

  	
   

  	
   

  	
  Operating
  Agreement

  
	
  4228 N. Central
  Expressway, Ste. 300

  	
   

  	
   

  	
   

  	
  Main Pass 57 Prospect

  
	
  Dallas, TX  75206-6345

  	
   

  	
   

  	
   

  	
  Offshore, Louisiana

  
							

 

Gentlemen:

 

This Participation
Agreement is made and entered into effective December 16, 2002, by and between
Samson Offshore Company (“Samson”), Challenger Minerals Inc. (“CMI”), Reef
Global Energy I, L. P. (“Reef”), Bright & Company I, Ltd. (“Bright”),
Palace Exploration Company (“Palace”) and Fidelity Exploration & Production
Co. (“Fidelity”), CMI, Reef, Bright, Palace and Fidelity are sometimes
collectively referred to as “Participants” and the Participants and Samson are
sometimes collectively referred to as the “Parties.”  This Participation Agreement sets forth below the terms and
conditions whereby Samson shall sell seventy-five percent (75%) interest in the
S/2 of Main Pass 57 Prospect (OCS-G 19851), as approximately shown on Exhibit
“A”, attached hereto and made a part hereof, to Participants.

 

1.             SUBJECT LEASE

 

Samson represents, but
does not warrant, that it is record title owner of 100.0% working interest in
and to that certain Oil and Gas Lease from the United States of America, as
Lessor, to Barrett Resources, as Lessee, effective as of July 1, 1988,
identified in the office of The Minerals Management Service, Gulf of Mexico OCS
Region, as Oil and Gas Lease of Submerged Lands under the Outer Continental
Shelf Lands Act OCS-G 19851, describing the south half of Block 57, Main Pass Area, as shown
on OCS official Leasing Map, Louisiana Map No. 10, being 2,497.275 acres, more
or less, hereafter called the “Subject Lease.”

 

2.             CONSIDERATION AND ASSIGNMENT

 

Subject to the other terms and conditions of
this Participation Agreement, Samson agrees to sell and assign to Participants,
an undivided seventy-five percent (75.0%) working interest in and to the
Subject Lease, which said working interest shall be assigned to the
Participants in the percentages opposite their names:

 

	
  Challenger
  Minerals Inc.

  	
   

  	
  9.375

  	
  %

  
	
  Reef
  Global Energy I, L.P.

  	
   

  	
  4.6875

  	
  %

  
	
  Bright
  & Company I, Ltd.

  	
   

  	
  4.6875

  	
  %

  
	
  Palace
  Exploration Company

  	
   

  	
  23.4375

  	
  %

  
	
  Fidelity
  Exploration & Production Co.

  	
   

  	
  32.8125

  	
  %

  

 

 

In consideration for the
rights and interest to be assigned hereunder, Participants agree to pay to
Samson their respective shares of $370,016.78 representing actual leasehold
bonus and rental costs, seismic/hazard survey, overhead, geological and
geophysical costs incurred in the prospect to date.  Participants share in such costs in the following proportions:  CMI - $37,001.68, Reef - $18,500.84, Bright -
$18,500.84, Palace - $92,504.20 and Fidelity - $129,505.87, and agree to pay
unto Samson within ten (10) days after spudding of the Test Well described
below.  Within five (5) business days
after receipt of the referenced payment, Samson shall deliver to Participants a
proper, recordable assignment of the undivided working interests set forth in
this Section 2, in the form attached hereto as Exhibit “B”, all rights, title
and interests in and to the Subject Lease, free from any additional royalty and
overriding royalty burdens, except the Lessor’s royalty and the overriding
royalty interest set forth in Section 3. 
Such assignment shall warrant title by, through and under Samson, but
not otherwise, and shall be subject to this Participation Agreement and the
applicable rules, regulations, or laws of the federal agency or body having
jurisdiction over the Subject Lease. 
The Parties hereto agree to execute such other instruments as may be
necessary or convenient to effectively convey the interest in the Subject
Lease, transfer rights and obligations as contemplated by this Participation
Agreement and/or otherwise effectuate the terms hereof.  In addition, the Parties shall reimburse
CMI, as Operator, for all costs incurred for regulatory approvals to drill the
Test Well, title opinions, or any other lease or legal costs necessary for the
drilling of the Test Well (“Other Costs”).

 

3.             LEASE
BURDENS

 

The Subject Lease shall
be delivered by Samson to Participants with total royalty, overriding royalty
and other burdens equal to 21.2734% of 8/8ths interest, being a 78.7266% of
8/8ths net revenue interest. 
Accordingly, the net revenue interest of each party hereto shall be
calculated as follows:  Samson – 25.0%
of 78.7266% of 8/8ths, CMI – 9.3750% of 78.7266% of 8/8ths, Reef – 4.6875% of
78.7266% of 8/8ths, Bright – 4.6875% of 78.7266% of 8/8ths, Palace – 23.4375%
of 78.7266% of 8/8ths and Fidelity 32.8125% of 78.7266% of 8/8ths.  The Parties hereby agree to bear their respective
proportionate shares of the aforementioned lease burdens, as herein provided,
and to execute applicable assignments necessary to effectuate same.

 

4.             3-D
SEISMIC REVIEW

 

To the extent permitted
in its licensing agreement, CMI shall allow the parties hereto the opportunity
to review its geological and 3-D seismic data covering the south-half (S 2) of
Main Pass 57.

 

5.             TEST
WELL

 

By executing this
Participation Agreement, the Parties shall agree to join in the drilling of a
well on the Subject Lease in accordance with both the terms of this
Participation Agreement and of the Operating Agreement provided for in Section
6 below.  The first well drilled on the
Subject Lease by the Parties shall be referred to herein as the “Test
Well.”  CMI shall commence, or cause to
be commenced, operations for drilling the Test Well, as Operator under said
Operating Agreement, on or before January 15, 2003.  The Test Well shall be drilled from and to
presently permitted surface and bottom hole locations on the Subject Lease to a
depth sufficient to test the stratigraphic equivalent of the 8,100’ Sand as
seen at a depth of 8,090’ MD in the electrical log from the Main Pass 57 Total
#1 Well (OCS-G 0702), or to a depth of 8,300’ TVD, whichever is the
lesser depth (“Objective Depth”). 
Samson shall bear 20.0% of 8/8ths of the costs to Casing Point and
Participants shall bear 80% of 8/8ths, in the proportions CMI  - 10% of 8/8ths, Reef – 5% of 8/8ths, Bright
– 5% of 8/8ths, Palace – 25% of 8/8ths and Fidelity – 35% of 8/8ths, of all
cost of drilling the initial Test Well to Casing Point (including shallow
hazard data costs incurred by Samson prior to the execution of this Agreement),
and of the cost of plugging and abandoning said Well if a completion attempt is
not made.  Casing Point is defined as
the point in which the Well, substitute well or any exploratory and/or
development well has been drilled to its proposed Objective Depth, or mutually
agreed to lesser depth, and all test included in the approved Authority of
Expenditure 

 

2

 

(“AFE”), have been performed unless waived by mutual agreement of the
Parties and a recommendation is made by Operator to:  (i) set casing and complete the well (ii) plug and
abandon the well or (iii) conduct other operations as provided for in the
Offshore Operating Agreement referred to in Article 6 below.  Upon reaching Casing Point, all operations
and elections pertaining to the Test Well shall be governed by the Operating
Agreement, with each Participant’s rights under the Operating Agreement being
based on its working interest in the Subject Leases, as set forth above in
Section 2, and Samson’s rights being based on a 25.0% working interest.

 

An Authority for
Expenditures (“AFE”) setting for the estimated costs of drilling the Test Well
to Casing Point under a turnkey drilling contract from Applied Drilling
Technology, Inc. (“ADTI”) (the “Drilling Contract”) is attached hereto as
Exhibit “C”.  Simultaneously with the
return of this Agreement, the Parties shall sign and return the AFE to CMI
along with each their respective share of their $1,803,000.00 dry hole cost set
forth in said AFE.  The sharing of such
costs shall be Challenger - $180,300.00; Reef - $90,150.00; Bright -
$90,150.00; Palace - $450,750.00; Fidelity - $631,050; and Samson -
$360,000.00.  Payment may be made by
check payable to Challenger Minerals Inc., P.O. Box 601077, Charlotte, NC  28260-1077 or by wire transfer to First
Union National Bank of North Carolina, Charlotte, NC, ABA #053000219, for
credit to:  Challenger Minerals Inc.,
Account # 2000000372011.

 

6.             OPERATING
AGREEMENT

 

The parties hereto shall
each execute and deliver to CMI the Memorandum of Operating Agreement,
Mortgage, Security Agreement, and Financing Statement as to their respective
interest, that is attached as Exhibit “D” hereto.  Contemporaneously with the execution of this Participation
Agreement, the Parties shall execute the Offshore Operating Agreement attached hereto
as Exhibit “E” naming CMI as Operator therein. 
In the event of a conflict between this Participation Agreement and the
Operating Agreement, this Participation Agreement shall control.  As none of the Parties desire to operate
the Subject Lease subsequent to drilling and completing the Test Well, the
Parties authorize Palace Operating Company and/or Merit Energy Company to
operate the Subject Lease and Test Well should production be established
thereon.

 

7.             PARTICIPANTS’
REPRESENTATIONS

 

Participants each
represent and warrant that:

 

(a)                                  They
are duly qualified or are in the process of qualifying to hold interest in oil
and gas leases covering interest in the Gulf of Mexico Outer Continental Self
where the Subject Lease lies.

 

(b)                                 They
have all requisite power and authority to carry on their business as presently
conducted, to enter into this Participation Agreement, to purchase the Subject
Lease on the terms described in this Participation Agreement and to perform
their obligations hereunder.

 

(c)                                  They
have complied with all bond coverage requirements of the federal government
necessary to hold the interest to be assigned to them hereunder and have
properly filed all instruments required by the federal government as a
prerequisite to holding an interest in an oil and gas lease covering rights in
the Gulf of Mexico Outer Continental Self.

 

(d)                                 They
meet the citizenship and other qualification criteria specified in Section
256.35 of 30 CFR Ch. II (7-1-99 Edition).

 

3

 

8.                                      MISCELLANEOUS
CONDITIONS

 

(a)                                  Participants
shall be solely responsible for all filings and recordings of documents and
other costs related to the Subject Leases and for all fees connected therewith,
and Participants shall advise Samson of the pertinent recording data.  Samson shall not be responsible for any loss
to Participants because of Participants’ failure to file or record documents
promptly.  Participants shall pay all
applicable federal, state and county sales or use taxes imposed on the transfer
of the subject properties and shall file all returns to the necessary
authorities.

 

(b)                                 This
Participation Agreement, and all instruments executed in accordance with it
shall be governed by and interpreted in accordance with the laws of the State
of Texas without regard to conflict of law rules that would direct application
of the laws of another jurisdiction.

 

(c)                                  The
Parties hereto, singularly and plural, warrant and agree that each shall use
its best efforts to take or cause to be taken all such actions, as may be
necessary to consummate and make effective the transaction contemplated by this
Participation Agreement, including but not limited to obtaining any required
governmental or other approvals or consents, and to assure that it will not be
under any material, corporate, legal or contractual restriction that would
prohibit or delay the timely consummation of such transaction.

 

(d)                                 All
of the terms, covenants, and conditions of this Participation Agreement shall
be binding upon and inure to the benefit of the parties hereto; their
respective parents, subsidiaries, affiliates, successors and assigns.  All notices, consents, requests,
instructions, approvals and other communications provided for herein shall be
deemed to be validly given, made or served, if in writing, and delivered
personally or sent by courier service, telex, facsimile or certified mail to
the address listed below:

 

	
  Samson Offshore Company

  Attn:  Mr. Sonny Measley

  1301 Travis, Suite 1900

  Houston, TX  77002

  Telephone:  (713) 577-2011

  Fax:  (713) 751-8864

  Email:  smeasley@samson.com

  	
   

  	
  Bright & Company I,
  Ltd.

  Attn:  Mr. Jack Carlile

  4228 N. Central Exprwy, Ste. 300

  Dallas, TX  75206-6345

  Telephone:  (214) 559-9200

  Fax:  (214) 559-0021

  Email:  jack.carlile@brightco.com

  
	
   

  	
   

  	
   

  
	
  Challenger Minerals
  Inc.

  Attn:  Mr. Reagan Newton

  15375 Memorial Dr., Suite G-200

  Houston, TX  77079

  Telephone:  (281) 925-7215

  Fax:  (281) 925-7281

  Email:  rhnewton@sbcglobal.net

  	
   

  	
  Palace Operating
  Company

  Attn:  Mr. Bob Zinke

  1202 East 33rd St.

  Tulsa, OK  74105-2048

  Telephone:  (972) 743-5096

  Fax:  (972) 743-5159

  Email:  bzinke@ztienergy.com

  

 

4

 

	
  Reef Global Energy I,
  L.P.

  Attn:  Mr. Walt Dunagin

  1901 N. Central Exprwy., Ste. 300

  Richardson, TX  75080

  Telephone:  (972) 437-6792

  Fax:  (972) 994-0369

  Email:  walt@reefexploration.com

  	
   

  	
  Fidelity Exploration
  & Production Company

  Attn:  Mr. George Soulis

  1700 Lincoln, Ste. 4600

  Denver, CO  80203

  Telephone:  (720) 931-6448

  Fax:(303) 893-1964

  Email:  george.soulis@fidelityepco.com

  
	
   

  	
   

  	
   

  
	
  For copy purposes only
  send information to:

  	
   

  	
  Samson Offshore Company

  Attn:  Mr. Jack Canon

  Two West Second Street

  Tulsa, OK  74103-3123

  Telephone:  (918) 583-1791

  Fax:  (918) 591-1718

  

 

(e)                                  This
Participation Agreement constitutes the entire agreement between the Parties
with respect to the transactions contemplated herein, and supersedes all prior
oral or written agreements, commitments, understanding, or information
otherwise furnished by Samson to Participants with respect to such
matters.  No amendment shall be binding
unless in writing and signed by representatives of each of the Parties.

 

(f)                                    In
the event any party hereto commences an action in a court of competent
jurisdiction to enforce a right under this Participation Agreement or commences
an action for breach of any term or provision of this Participation Agreement,
then the prevailing party shall be entitled to recover from the other party to
said action any damages it has incurred, together with any attorney’s fees and
costs incurred by it as a result of such action.

 

(g)                                 The
Parties each represent and warrant to the other that it has incurred no
liability, contingent or otherwise, for broker’s or finder’s fees in connection
with this Participation Agreement or the transactions contemplated by it for
which the other party will have any responsibility.

 

(h)                                 All
representations, promises, agreements, releases, and indemnities made in this
Participation Agreement shall survive the Closing.

 

9.                                      COUNTERPART
EXECUTIONS

 

This Participation
Agreement may be signed in counterparts and shall be binding upon the Parties
and upon their successors, representatives and assigns.  Each Party may sign a counterpart copy of
this Participation Agreement and extra signature pages.  The extra sets of signature pages may be
inserted into the other Parties’ counterpart copy so as to create a composite,
which will have the same effect as if all Parties signed the same Participation
Agreement.

 

This Participation
Agreement is executed by the Parties effective as of the date first above
written (“Effective Date”).

 

5

 

	
   

  	
  Sincerely,

  
	
   

  	
  CHALLENGER MINERALS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ T.J. Morrow

  	
   

  
	
   

  	
  By:

  	
  T. J. Morrow

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
  AGREED TO AND ACCEPTED
  THIS 31st day of December, 2002,

  	
   

  
	
  BRIGHT & COMPANY I,
  LTD. By H.G.G., Inc.,

  	
   

  
	
  General Partner

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Clark N. Bright

  	
   

  	
   

  
	
  By:

  	
  Clark N. Bright

  	
   

  	
   

  
	
  Title:

  	
  President

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED TO AND ACCEPTED
  THIS 30th day of December, 2002.

  	
   

  
	
  REEF
  GLOBAL ENERGY I, L.P.

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Michael J. Mauceli

  	
   

  	
   

  
	
  By:

  	
  Michael J. Mauceli

  	
   

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED TO AND ACCEPTED
  THIS 23rd day of December, 2002.

  	
   

  
	
  SAMSON
  OFFSHORE COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ J.A Canon

  	
   

  	
   

  
	
  By:

  	
  J.A. Canon

  	
   

  	
   

  
	
  Title:

  	
  Sr. Vice President

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED TO AND ACCEPTED
  THIS 23rd day of December, 2002.

  	
   

  
	
  FIDELITY
  EXPLORATION & PRODUCTION COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Darwin Subart

  	
   

  	
   

  
	
  By:

  	
  Darwin Subart

  	
   

  	
   

  
	
  Title:

  	
  President

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED TO AND ACCEPTED
  THIS 20th day of December, 2002.

  	
   

  
	
  PALACE
  EXPLORATION COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Robert M. Zinke

  	
   

  	
   

  
	
  By:

  	
  Robert M. Zinke

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  

 

6Exhibit 10.1

 

AXCESS INC.

3208 Commander Drive

Carrollton, Texas  75006

 

May 15, 2003

 

 

 

 

 

Re:          Stock
Purchase Agreement

 

Ladies and Gentlemen:

 

This Agreement
sets forth the terms and conditions on which AXCESS Inc., a Delaware
Corporation, of 3208 Commander Drive, Carrollton, Texas, 75006 (the “Company”)
will issue and sell to
                              ,
of
                                                    
(the “Purchaser”) shares of Series 2003 Preferred Stock of the Company, par
value $0.01 per share (the “Preferred”)
and Series 2003 Warrants (the “Warrants”)
which provide the right to purchase shares of the Company’s Common Stock.

 

1.             Type of Security and Purchase
Price.  The Purchaser hereby agrees
to subscribe for and purchase from the Company, and the Company hereby agrees
to issue and sell to the Purchaser,
             Units,
each Unit consisting of 100,000 Preferred and 100,000 Warrants.  The purchase price for each Unit shall be
$75,000, payable in cash.  Preferred shares shall bear dividends at 7%
annually paid in arrears, payable in cash or in kind at the option of the
company. The Warrants shall have an exercise life of two years and the exercise
price of the warrants is $1.00. The purchase and sale of each Unit
hereunder shall be effective as of the date the Company receives the purchase
price for each Unit from the Purchaser (the “Effective Date”).

 

2.             Purchase Dates and Delivery of
Shares.  The Company wishes to close
on the sale of up to $1 million of Units on April 18, 2003 and May 2, 2003.  For investors closing on or before the first closing of April 18, 2003,
15,000 additional restricted common shares will be awarded per $75,000
invested. Upon its receipt of the purchase price for each Unit, the
Company shall issue and sell to the Purchaser the number of Preferred and
Warrants based on paragraph 1 above. On and as of the Effective Date, the
Company shall execute and deliver to the Purchaser stock and warrant
certificates in proper form representing the Shares.

 

3.             Conversion and Lock-up of Series
2003 Preferred Stock to  Common Stock.
When the Company
achieves a full quarter of profitability (EBIDTA) or when the share price
surpasses $2.00 based on the average closing price for the 20 trading days
preceding, the preferred shares shall be converted on a one to one basis into
common stock, $0.01 par value per share.  Purchaser shall not to
sell more than 1/6 of the common shares issued to them in connection with this
offering in any calendar month.

 

4.             Securities Act
Legend; Registration Rights.

 

4.1         The Shares will not be
registered under the Securities Act of 1933, as amended (the “Securities
Act”).  The Company will use reasonable efforts to
register the common shares offered in this offering within 60 days of the close
of the offering or as soon as practicable thereafter. Prior to registration, certificates
representing the Shares shall bear a restrictive legend substantially to the
effect of the following:

 

THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
OR APPLICABLE STATE SECURITIES LAWS, OR THE SECURITIES LAWS OF ANY OTHER
JURISDICTION.  THEY MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THOSE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION THEREFROM.  ADDITIONAL RESTRICTIONS REGARDING THE TERMS
UNDER WHICH THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE CONVERTED INTO
NON-VOTING COMMON STOCK OF THE COMPANY ARE SET FORTH IN THE CERTIFICATE OF
DESIGNATIONS, PREFERENCES, POWERS AND RIGHTS OF THE SERIES 2003 PREFERRED
STOCK.

 

 

5.             Representations and Warranties
by the Company.  The Company hereby
represents and warrants to the Purchaser as follows:

 

5.1           The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the corporate power and authority to execute and deliver this
Agreement, to issue the Shares on the basis described herein and otherwise to
perform its obligations under this Agreement.

 

5.2           The execution and delivery by the
Company of this Agreement, the issuance of the Shares, and the performance by
the Company of its obligations hereunder, have been duly authorized by all
requisite corporate action on the part of the Company and will not (i) violate
any provision of law, statute, rule or regulation or any order of any court or
other agency of government, (ii) conflict with or violate the Certificate of
Incorporation (after amendment to authorize the additional shares of non-voting
common stock) or By-Laws of the Company, in each case as amended, or
(iii) violate, conflict with or constitute (with due notice or lapse of
time or both) a default under any indenture, mortgage, lease, license,
agreement or other contract or instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature upon the properties or assets
of the Company or any of its subsidiaries, in each case if such violation,
conflict, default, lien, charge or encumbrance would have a material adverse
effect on the Company.

 

5.3           This Agreement has been duly executed
and delivered by the Company and constitutes the valid and legally binding
obligation of the Company, enforceable in accordance with its terms, except to
the extent the enforceability hereof may be limited by applicable bankruptcy,
moratorium or similar laws affecting the rights of creditors generally.

 

5.4           Based in part upon the
representations and warranties of the Purchaser contained in this Agreement, no
registration or filing with, or consent or approval of, or other action by, any
federal, state or other governmental department, commission, board, bureau,
agency or instrumentality or any third party is or will be necessary for the
execution and delivery of this Agreement by the Company and the issuance of the
Shares hereunder, other than the filing of a notice of sale on Form D with the
Securities and Exchange Commission and any other required jurisdictions in
accordance with the rules and regulations thereof under the Securities Act and
applicable state law.

 

5.5           The Preferred Shares are duly
authorized, validly issued, fully paid and non-assessable shares of Series 2003
Preferred Stock, and are not subject to any preemptive rights.

 

5.6           Attached hereto as Exhibit A
is a true copy of the Certificate of Designations, Preferences, Powers and
Rights of Series 2003 Preferred Stock, to be filed with the Secretary of State
of the State of Delaware (the “Series 2003 Certificate of Designations”).  The Board of Directors of the Company has
approved and adopted resolutions creating the Preferred Shares, Common Shares,
and Warrants and directing the proper officers of the Company to file the same
with the office of the Secretary of State of the State of Delaware, in
accordance with the applicable provisions of the Delaware General Corporation
Law.

 

6.                                       Representations
and Warranties of the Purchaser. 
The Purchaser hereby represents and warrants to the Company as follows:

 

6.1           The Purchaser is acquiring the Shares
for its own account, for investment and not with a view to the distribution
thereof within the meaning of the Securities Act.

 

6.2           The Purchaser understands that the
Shares have not been registered under the Securities Act, by reason of their
issuance by the Company in transactions exempt from the registration requirements
of the Securities Act, and that the Common shares must be held by the Purchaser
until registered under the Securities Act.

 

6.3           The Purchaser further understands
that the exemption from registration afforded by Rule 144 (the provisions of
which are known to it) promulgated under the Securities Act depends on the
satisfaction of various conditions, and that, if applicable, Rule 144 may
afford the basis for sales only in limited amounts, after compliance with the
holding periods and other provisions thereof.

 

6.4           The Purchaser understands that its
investment hereunder involves substantial risks and represents and warrants
that it has made such independent examinations and investigations of the
Company as it has deemed necessary in making its investment decision, and the
Purchaser further represents and warrants that it has had sufficient access to
the officers, directors, books and records of the Company as it has deemed
necessary to conduct such examination and investigation and make such
investment decision.  Purchaser agrees
to keep confidential the confidential information provided for the purpose of
evaluating the purchase herein.

 

2

 

6.5           The Purchaser is a qualified investor
able to bear the economic risk of the investment contemplated by this Agreement
and has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of the investment contemplated by
this Agreement.

 

7.             Reaffirmation of Representations
and Warranties.  The date Units are
purchased shall constitute a reaffirmation of each and every one of the
representations and warranties of the Company set forth in Section 5 of this
Agreement and those of the Purchaser set forth in Section 6 of this Agreement
as if made as of each Effective Date, unless otherwise restated or corrected by
either the Purchaser or the Company, as the case may be.

 

8.             Miscellaneous.

 

8.1           This Agreement constitutes our entire
agreement with respect to the subject matter hereof.   This Agreement may not be modified or amended or any provision
hereof waived except by an instrument in writing signed by the Company and the
Purchaser.

 

8.2           This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.  The rights of
the Purchaser hereunder shall be assignable to any holder of the Shares.  Except as provided in the immediately
preceding sentence, this Agreement and the rights of the Purchaser hereunder
shall not be assignable, and any purported assignment hereof or thereof shall
be void.

 

8.3           This Agreement may be executed in any
number of counterparts and on separate counterparts, each of which shall be an
original instrument, but all of which together shall constitute a single
agreement.  One or more signature pages
from any counterpart of this Agreement may be attached to any other counterpart
of this Agreement without in any way changing the effect thereof.  This Agreement shall be effective when executed
and delivered by the Company and the Purchaser.

 

8.4           All notices, requests, demands,
consents, waivers, or other communications made hereunder to any party or
holder of Shares shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by nationally-recognized overnight
courier, facsimile or by first class registered or certified mail, return
receipt requested, postage prepaid, addressed to such party at the address set
forth below:

 

if to the
Company, to:

 

AXCESS Inc.

3208 Commander Drive

Carrollton, TX  75006

Attention: Chief Financial Officer

 

with a copy to:

 

Haynes and Boone, LLP

901 Main Street, Suite 3100

Dallas, TX 
75202-3789

Attention: William Kleinman.; and

 

if to the
Purchaser, to the Purchaser at its address first set forth above,or to such
other address as the party to whom such communication is to be given may have
furnished to the other party in writing in accordance herewith.  All such notices, requests, demands,
consents, waivers or other communications shall be deemed to have been
delivered (i) in the case of personal delivery, on the date of delivery,
(ii) if sent by facsimile, on the date sender receives a confirmation
confirming receipt, (iii) if sent by overnight courier, on the next business day
following the date sent and (iv) in the case of mailing, on the third business
day following such mailing.

 

8.5                                 All
representations, warranties and agreements contained herein shall survive the
execution and delivery of this Agreement and the sale of the Shares hereunder.

 

3

 

8.6           This Agreement, and all rights,
obligations and liabilities hereunder, shall be construed according to the laws
of the State of Texas applicable to contracts made and to be performed wholly
therein.  Any judicial proceeding
brought against the Company to enforce, or otherwise in connection with, this
Agreement may be brought in any court of competent jurisdiction in the City of
New York, and, by execution and delivery of this Agreement, the Company (i)
accepts, generally and unconditionally, the nonexclusive jurisdiction of such
courts and any related appellate court and irrevocably agrees to be bound by
any final judgment rendered thereby in connection with this Agreement and (ii)
irrevocably waives any objection it may now or hereafter have as to the venue
of any such proceeding brought in such a court or that such a court is an
inconvenient forum.

 

*Intentionally Left Blank*

 

4

 

If the
foregoing correctly sets forth your understanding of our agreement, please so
indicate by signing and returning to the Company the enclosed counterpart of
this Agreement.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  AXCESS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   Allan Frank, Chief Financial Officer and Secretary

  
	
   

  	
   

  
	
  The
  undersigned agrees with and

  accepts the foregoing terms and provisions

  as of the date first above written.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  ,

  	
   

  
						

 

5

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