**EXHIBIT10.35**

 

AGREEMENT TO CONVERT

 

This Agreement to Convert certain Demand Notes intoCommon Stock  is made as of December       , 2003, by and between AXCESSInternational, Inc., a Delaware corporation (the “***AXCESS***”), and VennWorks LLC, a Delawarelimited liability corporation, formerly incuVest LLC (“***VennWorks***”).

 

RECITALS

 

A.                                   AXCESS issued to incuVest a Demand note onSeptember 14, 2000 and as of November 30, 2003 has an outstanding principalbalance of $91,106.00 and unpaid interest of $68,052.27.

 

B.                                     AXCESS also issued to incuVest a Demand Noteon January 12, 2001 and as of November 30, 2003 has an outstanding principalbalance of $712,148.61 and unpaid interest of $64,260.12.

 

C.                                     AXCESS also issued to VennWorks a Demand Noteon February 14, 2002 and as of November 30, 2003 has an outstanding principalbalance of $326,978.15 and unpaid interest of $38,927.60.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing and the mutualcovenants contained herein, the parties hereto agree as follows:

 

1.                                       Conversion.  AXCESS and VennWorks agree to convert$1,301,472.75 owed to VennWorks by AXCESS for the above demand notes and unpaidinterest will be converted into Common Stock and Warrants as follows:

 

i.      AXCESS upon the execution ofthis Agreement shall issue and deliver to VennWorks 1,831,332 shares of theCommon Stock, and

 

ii.   As further consideration forentering into this Agreement upon the execution of this Agreement AXCESS shallissue and deliver to VennWorks a warrant to purchase up to 1,831,332 shares ofthe Common Stock of AXCESS.  Theexercise price of the warrants will be $2.75 and they will expire on November30, 2005.

 

2.                                       SecuritiesAct Legend; Registration Rights. The Securities issued in connection with this agreement  (hereinafter collectively, the “Shares”)will not be registered under the Securities Act of 1933, as amended (the“Securities Act”).  Certificatesrepresenting the Shares shall bear a restrictive legend substantially to theeffect of the following:

 

THE SECURITIES REPRESENTEDHEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR

 

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APPLICABLE STATESECURITIES LAWS, OR THE SECURITIES LAWS OF ANY OTHER JUSRISDICTION.  THEY MAY NOT BE SOLD OR TRANSFERRED IN THEABSENSE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THOSE SECURITIES LAWS ORPURSUANT TO AN EXEMPTION THEREFROM. ADDITIONAL RESTRICTIONS REGARDING THE TERMS UNDER WHICH THE SHARESREPRESENTED BY THIS CERTIFICATE MAY BE CONVERTED INTO VOTING OR NON-VOTINGCOMMON STOCK OF THE COMPANY, AS THE CASE MAY BE, ARE SET FORTH IN THERESPECTIVE CERTIFICATES OF DESIGNATIONS, PREFERENCES, POWERS AND RIGHTS FOR THESHARES.

 

3.                                       Representationsand Warranties by AXCESS.  AXCESShereby represents and warrants to VennWorks as follows:

 

a.               AXCESSis a corporation duly organized, validly existing and in good standing underthe laws of the state of Delaware, and has the corporate power and authority toexecute and deliver this agreement, to issue the Shares on the basis describedherein and otherwise to perform its obligations under this agreement.

 

b.              Theexecution and delivery by the AXCESS of this letter agreement, the issuance ofthe Shares, and the performance by AXCESS of its obligations hereunder, havebeen duly authorized by all requisite corporation action on the part of AXCESSand will not (a) violate any provision of law, statute, rule or regulation orany order of any court or other agency of government, (b) conflict with orviolate the Certificate of Incorporation or By-Laws of AXCESS, in each case asamended, or (c) violate, conflict with or constitute (with due notice or lapseof time or both) a default under any indenture, mortgage, lease, license,agreement or other contract or instrument or result in the creation orimposition of any lien, charge or encumbrance of any nature upon the propertiesor assets of AXCESS or any of its subsidiaries, in each case if such violation,conflict, default, lien, charge or encumbrance would have a material adverseeffect on AXCESS.

 

c.               Thisletter has been duly executed and delivered by AXCESS and constitutes the validand legally binding obligation of AXCESS, enforceable in accordance with itsterms, except to the extent the enforceability hereof may be limited byapplicable bankruptcy, moratorium or similar laws affecting the rights ofcreditors generally.

 

d.              Basedin part upon the representations and warranties of VennWorks by, any federal,state or other governmental department, commission, board, bureau, agency, orinstrumentality or any third party is or will be necessary for the

 

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execution and delivery ofthis agreement by AXCESS and the issuance of the Shares hereunder, other thatthe filing of a notice of sale on Form D with the Securities and ExchangeCommission in accordance with the rules and regulations thereof under theSecurities Act

 

e.               TheShares are duly authorized, validly issued, fully paid and non-assessableshares of Common Stock and are not subject to any preemptive rights.

 

4.                                       Representationsand Warranties by VennWorks. VennWorks hereby represents and warrants to AXCESS as follows:

 

a.               VennWorksis acquiring the Shares for its own account, for investment and not with a viewto the distribution thereof within the meaning of the Securities Act.

 

b.              VennWorksunderstands that the Shares have not been registered under the Securities Act,by reason of their issuance by AXCESS in transactions exempt from theregistration requirements of the Securities Act, and that the Shares must beheld by VennWorks indefinitely unless a subsequent disposition thereof isregistered under the Securities Act or is exempt from such registration

 

c.               VennWorksfurther understands that the exemption from registration afforded by Rule 144(the provisions of which are known to it) promulgated under the Securities Actdepends 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.

 

d.              VennWorksunderstands that its investment hereunder involves substantial risks andrepresents and warrants that it has made such independent examinations andinvestigations of AXCESS as it has deemed necessary in making its investmentdecision, and VennWorks further represents and warrants that it has hadsufficient access to the officers, directors, books and records of AXCESS as ithas deemed necessary to conduct such examination and investigation and makesuch investment decision

e.               VennWorksis 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

 

5.                                       Miscellaneous.

 

a.               Thisletter agreement constitutes our entire agreement with respect to the subjectmatter hereof.  This letter agreementmay not be modified or amended

 

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of any provision hereofwaived except by an instrument in writing signed by AXCESS and VennWorks.

 

b.              Thisletter agreement shall be binding upon and inure to the benefit of the partieshereto and their respective successors and permitted assigns.  The rights of Amhion hereunder shall beassignable to any other holder of the Shares. Except as provided in the immediately preceding sentence, this agreementand the rights of Amhion hereunder shall not be assignable, and any purportedassignment hereof or thereof shall be void

 

c.               Thisletter agreement may be executed in any number of counterparts and on separatecounterparts, each of which shall be an original instrument, but all of whichtogether shall constitute a single agreement. One or more signature pages from any counterpart of this letter agreementmay be attached to any other counterpart of this letter agreement without inany way changing the effect thereof. This letter agreement shall be effective when executed and delivered byAXCESS and Amhion.

 

d.              Allnotices, requests, demands, consents, waivers, or other communications madehereunder to any party or holder of Shares shall be in writing and shall bedeemed to have been duly given if delivered personally or sent bynationally-recognized overnight courier, facsimile or by first class registeredor certified mail, return receipt requested, postage prepaid, addressed to suchparty at the address set forth below:

 
| AXCESS:         | 3208 Commander Drive                      |
|-----------------|-------------------------------------------|
|            | Carrollton, Texas 75093                   |
|            | Attention:   Chief Financial Officer |
|            | Facsimile No.:   972-407-9085        |
|            |                                      |
| With a Copy to: | Craig G. Ongley                           |
|            | Vial, Hamilton, Koch & Knox, LLP      |
|            | 1700 Pacific Avenue, Suite 2800           |
|            | Dallas, Texas 75201                       |

 

or to such other address as the party to whom suchcommunication is to be given may have furnished to the other party in writingin accordance herewith.  All suchnotices, requests, demands, consents, waivers or other communications shall bedeemed to have been delivered (a) in the case of personal delivery, on the dateof delivery, (b) if sent by facsimile, on the date sender receives aconfirmation receipt, (c) if sent by overnight courier, on the next businessday following the date sent and (d) in the case of mailing, on the thirdbusiness day following such mailing

 

e.               EntireAgreement.  This Agreement setsforth the entire agreement of the parties hereto with respect to the subjectmatter hereof.

 

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f.                 GoverningLaw.  This Agreement shall begoverned by, and construed and enforced in accordance with, the laws of theState of Delaware.

 

 

*[THEREMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]*

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as ofthe date first written above.

 
|   | **AXCESS  INTERNATIONAL, INC.,**a Delaware corporation     |
|--------|------------------------------------------------------------|
|   |                                                       |
|   |                                                       |
|   | By:                                                        | /s/ Allan Frank |   |
|   |                                                       |   |
|   | Name:                                                      | Allan Frank |   |
|   |                                                       |   |   |
|   | Title:                                                     |   | VP & CFO |   |
|   |                                                       |   |
|   |                                                       |
|   | **VENNWORKS  LLC**a Delaware limited liability corporation |
|   |                                                       |
|   |                                                       |
|   | By:                                                        | /s/ Robert J. Bertoldi |   |
|   |                                                       |   |
|   | Name:                                                      | Robert J. Bertoldi |   |
|   |                                                       |   |   |
|   | Title:                                                     |   | President |   |

 

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