**EXHIBIT10.38**

 

[Jackson Hole Letterhead]

 

December 18, 2003

 

AXCESS Inc.

3208 Commander Drive

Dallas, Texas 75006

 

Re:                                     SeriesC Preferred Stock

 

Ladies and Gentlemen:

 

Jackson Hole, hereby notifies and directs AxcessInternational Inc. (the “*Company*”) to convert Series C PreferredStock held by Jackson Hole at December 15, 2003 into Voting Common Shares ofthe Company.

 

1.                                       Issuanceof Common Shares.  Jackson Holedirects the Company to issue 173,858 shares of Common Stock in exchange for allshares of Series C Preferred Stock and all accrued dividends held by JacksonHole at December 15, 2003.

 

2.                                       SecuritiesAct Legend; Registration Rights.

 

2.1                                 TheShares will not be registered under the Securities Act of 1933, as amended (the“*SecuritiesAct*”).  Certificatesrepresenting the Shares shall bear a restrictive legend substantially to theeffect of the following:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933, OR APPLICABLE STATE SECURITIESLAWS, OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION.  THEY MAY NOT BE SOLD OR TRANSFERRED IN THEABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THOSE SECURITIES LAWS ORPURSUANT TO AN EXEMPTION THEREFROM.

 

3.                                       Representationsand Warranties of Jackson Hole. Jackson Hole hereby represents and warrants to the Company as follows:

 

3.1                                 JacksonHole is acquiring the Shares for its own account, for investment and not with aview to the distribution thereof within the meaning of the Securities Act.

 

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3.2                                 JacksonHole understands that the Shares have not been registered under the SecuritiesAct, by reason of their issuance by the Company in transactions exempt from theregistration requirements of the Securities Act, and that Jackson Hole musthold the Shares indefinitely unless a subsequent disposition thereof isregistered under the Securities Act or is exempt from such registration.

 

3.3                                 JacksonHole further understands that the exemption from registration afforded by Rule144 (the provisions of which are known to it) promulgated under the SecuritiesAct depends on the satisfaction of various conditions, and that, if applicable,Rule 144 may afford the basis for sales only in limited amounts, aftercompliance with the holding periods and other provisions thereof.

 

3.4                                 JacksonHole understands that its investment hereunder involves substantial risks andrepresents and warrants that it has made such independent examinations andinvestigations of the Company as it has deemed necessary in making itsinvestment decision, and Jackson Hole further represents and warrants that ithas had sufficient access to the officers, directors, books and records of theCompany as it has deemed necessary to conduct such examination andinvestigation and make such investment decision.

 

3.5                                 JacksonHole is able to bear the economic risk of the investment contemplated by thisagreement and has such knowledge and experience in financial and businessmatters that it is capable of evaluating the merits and risks of the investmentcontemplated by this agreement.

 
|   | Very truly yours, |
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|   |              |
|   | JACKSON HOLE      |
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|   | By:               |   |   |
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|   | Title:            |   |   |
|        |                   |  |  |  |  |

 

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