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                                                                   EXHIBIT 10.31
                                                                   -------------

                    [Jackson Hole Management Co Letterhead]



AXCESS Inc.                                                    December 29, 2000
3208 Commander Drive
Dallas, Texas 75006

                    Re:  Series C Preferred Stock Dividends
                    ---------------------------------------

Ladies and Gentlemen:

         Jackson Hole Management Co., ("JHMC"), hereby notifies and directs
AXCESS Inc. (the "Company") to pay all accrued, but unpaid dividends which are
outstanding as of December 31, 2000 (approximately $23,506) on the shares of
Series C Convertible Preferred Stock of the Company held by JHMC as of December
31, 2000 (collectively the "Accrued Dividends") in kind by issuing to JHMC
additional shares of Series C Preferred Stock, respectively, of the Company.

         1. Payment of Accrued Dividends; Issuance of Shares. JHMC hereby
            ------------------------------------------------
directs the Company to issue 778 shares of Series C Convertible Preferred Stock
in exchange as payment in full for the Accrued Dividends (the "Shares"). On and
as of the date of this letter, the Accrued Dividends shall automatically be
converted and discharged in full and JHMC shall be the due and valid holder of
record of the Shares.

         2. Securities Act Legend; Registration Rights.
            ------------------------------------------

            2.1 The Shares will not be registered under the Securities Act of
1933, as amended (the "Securities Act"). 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 VOTING OR NON-VOTING COMMON
         STOCK OF THE COMPANY, AS THE CASE MAY BE, ARE SET FORTH IN THAT CERTAIN
         NOTE PAYABLE CONVERSION AGREEMENT EFFECTIVE AS OF DECEMBER 31, 1998.
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AXCESS Inc.
December 29, 2000
Page 2

         3.   Representations and Warranties by the Company. The Company
              ----------------------------------------------
   hereby represents and warrants to JHMC as follows:

              3.1   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.

              3.2   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 (a) violate any provision of
   law, statute, rule or regulation or any order of any court or other agency of
   government, (b) conflict with or violate the Certificate of Incorporation or
   By-Laws of the Company, in each case as amended, or (c) 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.

              3.3   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.

              3.4   Based in part upon the representations and warranties of
   JHMC 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 in accordance with the rules and regulations thereof under the
   Securities Act.

              3.5   The Shares are duly authorized, validly issued, fully paid
   and non-assessable shares of Series C Convertible Preferred Stock and are not
   subject to any preemptive rights.
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AXCESS Inc.
December 29, 2000
Page 3

              3.6   The Company shall cause to be delivered to JHMC a true copy
   of the Series C Convertible Preferred Certificate of Designation, which was
   approved and adopted by the Board of Directors of the Company.

         4.   Representations and Warranties of JHMC. JHMC hereby represents
              ---------------------------------------
   and warrants to the Company as follows:

              4.1   JHMC 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.

              4.2   JHMC 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 Shares must be held by JHMC indefinitely unless a subsequent
   disposition thereof is registered under the Securities Act or is exempt from
   such registration.

              4.3   JHMC 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.

              4.4   JHMC 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 JHMC 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.

              4.5   JHMC is 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.

        5.    Miscellaneous.
              -------------

        5.1   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 JHMC.

        5.2   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 JHMC
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AXCESS Inc.
December 29, 2000
Page 4

hereunder shall be assignable to any holder of the Shares. Except as provided in
the immediately preceding sentence, this agreement and the rights of JHMC
hereunder shall not be assignable, and any purported assignment hereof or
thereof shall be void.

        5.3   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
JHMC.

        5.4   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 the Company at its address
        first set forth above,:

        with a copy to:

        Haynes and Boone, LLP
        901 Main Street, Suite 3100
        Dallas, TX  75202-3789
        Attention: William Kleinman.; and

        if to JHMC, to JHMC 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 (a) in the case of personal delivery, on the
date of delivery, (b) if sent by facsimile, on the date sender receives a
confirmation confirming receipt, (c) 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.

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

        5.6   This agreement, and all rights, obligations and
liabilities hereunder, shall be construed according to the laws of the State of
New York 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
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AXCESS Inc.
December 29, 2000
Page 5

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.

         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,

                                          Jackson Hole Management Co




                                          By: /s/ Larry Scheinfeld
                                              ----------------------------------
                                              Larry Scheinfeld

The undersigned agrees with and
accepts the foregoing terms and provisions
as of the date first above written

AXCESS INC.


By: /s/  James R. Craig
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    James R. Craig, Chief Financial Officer and Secretary