<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 11)*
AXCESS INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
054546 10 6
-------------------------------
(CUSIP NUMBER)
Richard C. E. Morgan
Amphion Capital Management L.L.C.
590 Madison Avenue
New York, NY 10022
(212) 849-8120
-------------------------------
(Name, Address and Telephone of Person Authorized to
Receive Notices and Communications)
December 31, 1999
-----------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
Note: Schedules of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
SCHEDULE 13D
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Cusip No. 054546 10 6 Page 2 of 14 Pages
- --------------------------------------------------------------------------------
1. Name of Reporting Person
SS or I.R.S. Identification No. of Above Person:
Amphion Ventures L.P.
13-3962697
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2. Check the appropriate box if a member of a group (a)[ ]
(b)[ ]
- --------------------------------------------------------------------------------
3. SEC Use Only.
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4. Source of Funds BK, AF, OO
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5. Check box if disclosure of legal proceedings is required pursuant to [ ]
Items 2(d) or 2(e)
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6. Citizenship or Place of Organization Delaware
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Number of 7. Sole Voting Power N/A
Shares ------------------------------------------------------------
Beneficially 8. Shared Voting Power 2,446,486(See Item 5)
Owned by ------------------------------------------------------------
Each 9. Sole Dispositive Power N/A
Reporting -------------------------------------------------------------
Person 10. Shared Dispositive Power 2,446,486(See Item 5)
With
- --------------------------------------------------------------------------------
11. Aggregate amount beneficially owned by
each reporting person 2,446,486(See Item 5)
- --------------------------------------------------------------------------------
12. Check box if the aggregate amount in row (11) excludes [ ]
certain shares
- --------------------------------------------------------------------------------
13. Percent of class represented by amount in row (11) 45.4% (See Item 5)
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14. Type of Reporting Person PN
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<PAGE> 3
SCHEDULE 13D
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Cusip No. 054546 10 6 Page 3 of 14 Pages
- --------------------------------------------------------------------------------
1. Name of Reporting Person
SS or I.R.S. Identification No. of Above Person:
Amphion Partners L.L.C.
13-3962696
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2. Check the appropriate box if a member of a group (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC Use Only.
- --------------------------------------------------------------------------------
4. Source of Funds AF
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5. Check box if disclosure of legal proceedings
is required pursuant to Items 2(d) or 2(e) [ ]
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6. Citizenship or Place of Organization Delaware
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Number of 7. Sole Voting Power 28,125(See Item 5)
Shares -----------------------------------------------------------
Beneficially 8. Shared Voting Power 2,446,486(See Item 5)
Owned by -------------------------------------------------------------
Each 9. Sole Dispositive Power 28,125(See Item 5)
Reporting -------------------------------------------------------------
Person 10. Shared Dispositive Power 2,446,486(See Item 5)
With
- -------------------------------------------------------------------------------
11. Aggregate amount beneficially owned 2,474,611(See Item 5)
by each reporting person
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12. Check box if the aggregate amount in row
(11) excludes certain shares [ ]
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13. Percent of class represented by amount in row (11) 46.0% (See Item 5)
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14. Type of Reporting Person OO
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<PAGE> 4
SCHEDULE 13D
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Cusip No. 054546 10 6 Page 4 of 14 Pages
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1. Name of Reporting Person
SS or I.R.S. Identification No. of Above Person:
Antiope Partners L.L.C.
13-3260056
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2. Check the appropriate box if a member of a group (a) [ ]
(b) [ ]
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3. SEC Use Only.
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4. Source of Funds OO
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5. Check box if disclosure of legal proceedings [ ]
is required pursuant to Items 2(d) or 2(e)
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6. Citizenship or Place of Organization Delaware
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Number of 7. Sole Voting Power 318,034 (See Item 5)
Shares -------------------------------------------------------------
Beneficially 8. Shared Voting Power N/A
Owned by -------------------------------------------------------------
Each 9. Sole Dispositive Power 318,034 (See Item 5)
Reporting -------------------------------------------------------------
Person 10. Shared Dispositive Power N/A
With
- -------------------------------------------------------------------------------
11. Aggregate amount beneficially owned 318,034(See Item 5)
by each reporting person
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12. Check box if the aggregate amount in row (11) [ ]
excludes certain shares
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13. Percent of class represented 9.0% (See Item 5)
by amount in row (11)
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14. Type of Reporting Person OO
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<PAGE> 5
SCHEDULE 13D
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Cusip No. 054546 10 6 Page 5 of 14 Pages
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1. Name of Reporting Person
SS or I.R.S. Identification No. of Above Person:
Amphion Investments L.L.C.
13-4030159
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2. Check the appropriate box if a member of a group (a) [ ]
(b) [ ]
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3. SEC Use Only.
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4. Source of Funds OO
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5. Check box if disclosure of legal proceedings is [ ]
required pursuant to Items 2(d) or 2(e)
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6. Citizenship or Place of Organization Delaware
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Number of 7. Sole Voting Power 28,000 (See Item 5)
Shares -------------------------------------------------------------
Beneficially 8. Shared Voting Power N/A
Owned by -------------------------------------------------------------
Each 9. Sole Dispositive Power 28,000 (See Item 5)
Reporting -------------------------------------------------------------
Person 10. Shared Dispositive Power N/A
With
- -------------------------------------------------------------------------------
11. Aggregate amount beneficially owned by 28,000(See Item 5)
each reporting person
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12. Check box if the aggregate amount in row [ ]
(11) excludes certain shares
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13. Percent of class represented by amount in row (11) 0.8% (See Item 5)
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14. Type of Reporting Person OO
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<PAGE> 6
SCHEDULE 13D
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Cusip No. 054546 10 6 Page 6 of 14 Pages
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1. Name of Reporting Person
SS or I.R.S. Identification No. of Above Person:
Richard C.E. Morgan
- -------------------------------------------------------------------------------
2. Check the appropriate box if a member of a group (a) [ ]
(b) [ ]
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3. SEC Use Only.
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4. Source of Funds PF
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5. Check box if disclosure of legal proceedings [ ]
is required pursuant to Items 2(d) or 2(e)
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6. Citizenship or Place of Organization United States
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Number of 7. Sole Voting Power 182,463 (See Item 5)
Shares -------------------------------------------------------------
Beneficially 8. Shared Voting Power 2,820,645
Owned by -------------------------------------------------------------
Each 9. Sole Dispositive Power 182,463 (See Item 5)
Reporting -------------------------------------------------------------
Person 10. Shared Dispositive Power 2,820,645
With
- -------------------------------------------------------------------------------
11. Aggregate amount beneficially owned 3,003,108 (See Item 5)
by each reporting person
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12. Check box if the aggregate amount in row [ ]
(11) excludes certain shares
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13. Percent of class represented by amount in row (11) 55.7% (See Item 5)
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14. Type of Reporting Person IN
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<PAGE> 7
Page 7 of 14 Pages
This Amendment No. 11 to the Statement on Schedule 13D dated October 4, 1985
(the "Schedule 13D") previously filed by Antiope Ventures L.P. f/k/a Wolfensohn
Associates L.P. and Antiope Partners L.L.C. f/k/a Wolfensohn Partners L.P.
("Antiope Partners"), is filed by Richard C.E. Morgan, Antiope Partners, Amphion
Ventures L.P. ("Amphion Ventures"), Amphion Partners L.L.C. ("Amphion Partners")
and Amphion Investments L.L.C. ("Amphion Investments"), and concerns the common
stock, $0.01 par value per share (the "Voting Common Stock"), of AXCESS Inc., a
Delaware corporation, which has its principal executive offices at 3208
Commander Drive, Dallas, Texas 75006 (the "Company"). This Amendment No. 11
amends Items 2, 3, 4, 5, 6 and 7 of the Schedule 13D.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) The person filing this report is Mr. Richard C.E. Morgan. His
principal occupation is a private investor. Mr. Morgan's business
address is c/o Amphion Capital Management L.L.C., 590 Madison Avenue,
New York, NY 10022.
(d)-(f) Mr. Morgan has not been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such individual was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws, in each case during the last five years. Mr. Morgan
is a United States citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS AND OTHER CONSIDERATION
Conversion of Note Convertible Payable by Stockholder
Under the terms of a Convertible Note dated September 30, 1999 (the "Convertible
Note"), the Company borrowed a total of up to $6,000,000 from Amphion Ventures.
In December 1999, Amphion Ventures elected to convert $3,323,423 of the
outstanding indebtedness of the Company to it under the Convertible Note into
shares of Series 2000 Non-Voting Preferred Stock.
In January 2000, Amphion Ventures elected to convert an additional $150,000 of
the outstanding indebtedness of the Company to it under the Convertible Note
into shares of Series 2000 Non-Voting Preferred Stock.
As a result of the debt conversions described above, the Company issued 347
shares of Series 2000 Non-Voting Preferred Stock to Amphion Ventures for its
partial conversion of the indebtedness described above.
Each share of Series 2000 Non-Voting Preferred Stock has a liquidation
preference over all Common Stock of the Company equal to the stated value of all
such shares of preferred stock outstanding at the time plus all accrued
dividends. Shares of Series 2000 Non-Voting Preferred Stock are convertible, in
whole or in part, at any time at the option of the holder into shares of
Non-Voting Common Stock equal to the quotient of (a) the aggregate original
Series 2000 Preferred Stock issue price of $10,000 per share (the "Original
Series 2000
<PAGE> 8
Page 8 of 14 Pages
Issue Price") divided by (b) the conversion price of $3.50 per share, which is
subject to being adjusted from time to time based on the occurrence of certain
events described in the Series 2000 Certificates of Designations attached to
this Schedule 13D as Exhibit 99.31.
The Series 2000 Preferred Stock is subject to the optional redemption at any
time by the Company, in whole or in part, at a redemption price per share equal
to the Original Series 2000 Issue Price, plus any accrued, but unpaid dividends
thereon. The Company's optional right of redemption is subject to each Series
2000 Preferred Stock holder's right to convert such Series 2000 Preferred Stock
into Non-Voting Common Stock within ten (10) business days after the Company's
notice of redemption.
The Series 2000 Preferred Stock is also subject to the mandatory conversion by
the Company into shares of Non- Voting Common Stock, if the closing bid price of
the Company's Voting Common Stock on the Nasdaq SmallCap market is at least
$10.00 per share for a period of at least ninety (90) consecutive trading days.
Although the Non-Voting Common Stock may be converted to Voting Common Stock at
any time by a holder thereof, Amphion Ventures has agreed not to convert any
shares of Non-Voting Common Stock to Voting Common Stock without the prior
consent of the Company.
Funds used by Amphion Ventures for the transactions described herein were
obtained from a bank loan and capital contributions from limited partners. Funds
used by Amphion Partners for the transaction described herein were obtained from
current income.
Payment of Dividends on Preferred Stock
The holders of Series A, B and C Preferred Stock are entitled to receive
dividends on each such share held by a holder at the annual rate of 10% of the
original issue price of each such share payable quarterly in arrears, when, and
as if declared by the Company's Board of Directors, in cash or additional shares
of preferred stock. On September 30, 1999, the Company issued 19 shares of its
Series J Preferred Stock to Amphion Ventures as payment in full for the $190,000
of accrued, but unpaid dividends on the Series A, B and C Preferred Stock held
by Amphion Ventures.
The holders of Series I and J Preferred Stock are entitled to receive dividends
on each such share held by a holder at the annual rate of 8% of the original
issue price of each such share payable semi-annually in arrears, when, as and if
declared by the Company's Board of Directors, in cash or by the issuance of
additional shares of preferred stock.
On June 30, 1999, the Company issued 8 shares of Series I Preferred Stock and 36
shares of Series J Preferred Stock to Amphion Ventures as payment in full for
the $440,000 of accrued, but unpaid dividends on the Series I and J Preferred
Stock.
On December 31, 1999, the Company issued 96 shares of Series J Preferred Stock
to Amphion Ventures as payment in full of the $960,000 of accrued, but unpaid
dividends on the Series A, B, C, I and J Preferred Stock held by Amphion
Ventures as of such date. Further, the Company also issued 8 shares of Series J
<PAGE> 9
Page 9 of 14 Pages
Preferred Stock to Antiope Partners as payment in full of the $80,000 of
accrued, but unpaid dividends on the Series I and J Preferred Stock held by
Antiope Partners.
ITEM 4. PURPOSE OF TRANSACTIONS.
The purchases made by Richard C.E. Morgan, Amphion Partners, Amphion Ventures
and Amphion Investments reported in this Amendment No. 11 were all in connection
with their respective general investment activities.
In addition to the acquisitions described in this Schedule 13D, Amphion Partners
and Amphion Ventures each has the right to acquire additional shares of Voting
Common Stock (or other capital stock of the Company), and to dispose of some or
all of their respective current holdings of Voting Common Stock or other capital
stock of the Company or to exercise any warrants or other rights either of them
may in the future have in respect thereof, in one or more open-market or
privately negotiated transactions or otherwise, on such terms and at such times
as each considers desirable.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of February 1, 2000, Amphion Ventures owned the following
interests in the Company:
<TABLE>
<CAPTION>
Common Stock
Type of Security Number of Shares Equivalent if Converted
------------------ ---------------- -----------------------
<S> <C> <C>
Common Stock 361,409 N/A
Series A Convertible Preferred
Stock 57,692 57,692
Series B Convertible Preferred
Stock 52,816 52,816
Series C Convertible Preferred
Stock 25,492 25,492
Series I Convertible Preferred Stock 484 1,613,333(1)
Series J Convertible Preferred Stock 1,706 5,686,667(2)
Series 2000 Convertible Preferred
Stock 347 991,429(3)
10% Convertible Note due 2002 $2,526,577 721,879(3)(4)
Warrants 512,263 512,263(5)
Options 3,843 3,843
</TABLE>
<PAGE> 10
Page 10 of 14 Pages
(1) Assumes a per share price of $10,000 divided by a conversion price of
$3.00, which is subject to being adjusted upon the occurrence of certain
events.
(2) Assumes a per share price of $10,000 divided by a conversion price of
$3.00, which is subject to being adjusted upon the occurrence of certain
events. The Series J Preferred Stock is convertible into Non-Voting Common
Stock at the option of the holder. Holders of Non-Voting Common Stock may
convert their shares 1-for-1 to Voting Common Stock at any time. Amphion
Ventures, however, has agreed with the Company not to convert its
Non-Voting Common Stock to Common Stock without the Company's prior written
consent.
(3) Assumes a per share price of $10,000 divided by a conversion price of
$3.50, which is subject to being adjusted upon the occurrence of certain
events. The Series 2000 Preferred Stock is convertible into Non-Voting
Common Stock at the option of the holder. Holders of Non-Voting Common
Stock may convert their shares 1-for-1 to Voting Common Stock at any time.
Amphion Ventures, however, has agreed with the Company not to convert its
Non-Voting Common Stock to Common Stock without the Company's prior written
consent.
(4) This note is convertible into shares of the Company's Series 2000
Convertible Preferred Stock at the option of the holder.
(5) Of the 512,263 warrants, 180,362 of these warrant shares represent warrants
to acquire the Company's Non-Voting Common Stock. See Note 3 above.
As of February 1, 2000, Amphion Ventures owned 361,409 shares of Voting Common
Stock, which Amphion Ventures estimates is approximately 11.0% of the total
issued and outstanding shares of the Voting Common Stock. Assuming the exercise
by Amphion Ventures of all of its rights to convert all of the Series A, Series
B, Series C and Series I Preferred Stock, as well as the warrants and the
options held by it into Voting Common Stock, Amphion Ventures would be deemed
the beneficial holder of 2,446,486 shares of Voting Common Stock, which Amphion
Ventures estimates would constitute approximately 45.4% of the issued and
outstanding Voting Common Stock (assuming all outstanding options and warrants
held by it had been exercised, except for warrants exercisable for Non-Voting
Common Stock, and all outstanding convertible securities held by it had been
converted into Common Stock, except for the Series J Preferred Stock and the
Series 2000 Preferred Stock, both of which are convertible into Non-Voting
Common Stock) as of February 1, 2000.
As of February 1, 2000, Amphion Partners owned 28,125 shares of Voting Common
Stock, which Amphion Partners estimates is approximately 0.9% of the total
issued and outstanding shares of the Voting Common Stock. Amphion Partners is
the general partner of Amphion Ventures and holds 0.2% of the total partnership
interests. See the holdings of Amphion Ventures above.
As of February 1, 2000, Antiope Partners owned the following interests in the
Company:
<TABLE>
<CAPTION>
Common Stock
Type of Security Number of Shares Equivalent if Converted
---------------- ---------------- ----------------------
<S> <C> <C>
Common Stock 97,534 N/A
Series I Convertible Preferred Stock 54 180,000(1)
Series J Convertible Preferred Stock 134 446,667(2)
Warrants 40,500 40,500
</TABLE>
<PAGE> 11
11 of 14 Pages
(1) Assumes a per share price of $10,000 divided by a conversion price of $3.00
per share which is subject to being adjusted, upon the occurrence of
certain events.
(2) Assumes a per share price of $10,000 divided by a conversion price of
$3.00, which is subject to being adjusted upon the occurrence of certain
events. The Series J Preferred Stock is convertible into the Company's
Non-Voting Common Stock at the option of the holder. Holders of Non-Voting
Common Stock may convert their shares 1-for-1 to Voting Common Stock at any
time.
As of February 1, 2000, Antiope Partners owned 97,534 shares of Voting Common
Stock, which Antiope Partners estimates is approximately 3.0% of the total
issued and outstanding shares of Voting Common Stock of the Company.
Assuming the exercise by Antiope Partners of all of its rights to convert all of
the Series I Preferred Stock and the warrants held by it into Voting Common
Stock, Antiope Partners would be deemed the beneficial holder of 318,034 shares
of Common Stock, which Antiope Partners estimates would constitute approximately
9.0% of the issued and outstanding Voting Common Stock (assuming all outstanding
warrants held by it had been exercised, and all outstanding convertible
securities held by it had been converted into Voting Common Stock) as of
February 1, 2000.
As of February 1, 2000, Amphion Investments owned 28,000 shares of Voting Common
Stock, which represents less than one percent of the issued and outstanding
shares of Voting Common Stock.
Items 7-11 and 13 of the cover page of this Schedule which relate to the
beneficial ownership of shares of Common Stock by Richard C.E. Morgan are
incorporated by reference in response to this item.
As of December 31, 1999, Mr. Morgan may be deemed to beneficially own, within
the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934,
3,003,108 shares of Voting Common Stock of the Company, representing 55.7% of
the Company's Voting Common Stock. Such percentage was determined based upon the
number of shares of Voting Common Stock outstanding as reported on the Company's
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1999.
Mr. Morgan has sole power to vote 179,463 shares of Voting Common Stock and
options to purchase 3,000 additional shares, all of which are currently vested.
Mr. Morgan has acquired the Voting Common Stock for investment purposes. Subject
to availability at prices deemed favorable, Mr. Morgan, for investment purposes,
may purchase additional shares of Voting Common Stock from time to time in the
open market, in privately negotiated transactions or otherwise. Mr. Morgan may
dispose of the shares of Voting Common Stock held by him, directly or
indirectly, in the open market, in privately negotiated transactions or
otherwise.
Mr. Morgan has shared power to vote (or to direct the vote of) and to dispose of
(or direct the disposition of) an aggregate of 2,820,645 shares of Voting Common
Stock, all of which are owned by various entities through which Mr. Morgan
indirectly possesses the power to vote or dispose of such shares of Common
Stock. In accordance with Rule 13d-3, Mr. Morgan may be deemed to be the
beneficial owner of the 2,820,645 shares of Voting Common Stock owned by such
entities. Pursuant to Rule 13d-4, Mr. Morgan expressly disclaims that he is the
beneficial owner of certain of such shares.
<PAGE> 12
Page 12 of 14 Pages
(b) Reference is made to Rows (7) through (11) and (13) of each
Reporting person's cover page.
(c) This amendment and filing reports the following events:
Except as reported herein, neither Amphion Ventures, Amphion Partners, Antiope
Partners, Amphion Investments nor, to the best knowledge of each of these or any
of the managing members of Antiope Partners, Amphion Partners or Amphion
Investments or any of their controlling persons has effected any transactions in
the Common Stock (or securities convertible into Common Stock) during the last
sixty days.
The following sets forth certain information concerning transactions in the
Voting Common Stock by Mr. Morgan during the sixty (60) days prior to the date
of this statement. Each transaction is a purchase in the open market:
<TABLE>
<CAPTION>
Date
of No. of Price Per
Transaction Shares Share
----------- ------ ---------
<S> <C> <C> <C>
11/01/99 7,000 $4.24
11/09/99 10,000 4.39
11/18/99 10,000 5.30
12/09/99 5,000 5.00
12/10/99 8,000 5.26
12/13/99 5,000 5.53
12/15/99 5,000 5.79
12/17/99 5,000 5.93
12/30/99 10,000 5.05
12/31/99 7,000 5.62
</TABLE>
(d) No amendment.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
In connection with the Company's acquisition of substantially all of the assets
of Prism Video, Inc. ("Prism") in July 1999, the Company, as partial
consideration for the acquisition, issued shares of its Series 1999 Convertible
Preferred Stock and a warrant to acquire shares of the Company's Common Stock to
Prism. Amphion Ventures agreed to vote its shares of Common Stock in favor of a
proposal to be submitted to the Company's stockholders at its 2000 annual
meeting which would permit the Company to issue shares of its Common Stock to
Prism upon either the conversion of Prism's Series 1999 Preferred Stock or the
exercise of Prism's Warrant.
<PAGE> 13
Page 13 of 14 Pages
Except as reported herein and in previous reports, none of Amphion Ventures,
Antiope Partners, Amphion Partners or Amphion Investments or, to the best
knowledge of each of them or any of the managing members of Antiope Partners,
Amphion Partners or Amphion Investments or any of their controlling persons has
entered into any contracts, arrangements, understandings or relationships (legal
or otherwise) with any person with respect to any securities of the Company,
which are in effect as of the date of this Amendment No. 11.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following Exhibits are filed herewith as exhibits to this Schedule 13D:
99.30 Joint Filing Agreement.
99.31 Certificate of Designation of Series 2000 Non-Voting Convertible
Preferred Stock.
99.32 Convertible Note.
The following are incorporated herein by reference to other filings:
The Series A, B and C Designations of Preferred Stock which are attached to
Amendment No. 7 as Exhibits 17, 18 and 19, respectively, and the Series I
and J Designations of Preferred Stock which are attached to Amendment No.
10 as Exhibits 99.31 and 99.32, respectively.
<PAGE> 14
Page 14 of 14 Pages
SIGNATURES
After reasonable inquiry and to the best of its knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 10, 2000
AMPHION VENTURES L.P.
By: Amphion Partners L.L.C., General Partner
By:/s/ Richard C.E. Morgan
-----------------------
Richard C.E. Morgan, a Managing Member
AMPHION PARTNERS L.L.C.
By:/s/ Richard C.E. Morgan
-----------------------
Richard C.E. Morgan, a Managing Member
ANTIOPE PARTNERS L.L.C.
By:/s/ Richard C.E. Morgan
-----------------------
Richard C.E. Morgan, a Managing Member
AMPHION INVESTMENTS L.L.C.
By:/s/ Richard C.E. Morgan
-----------------------
Richard C.E. Morgan, a Managing Member
/s/ Richard C.E. Morgan
-----------------------
Richard C.E. Morgan
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
99.30 Joint Filing Agreement.
99.31 Certificate of Designation of Series 2000 Non-Voting Convertible
Preferred Stock.
99.32 Convertible Note.
</TABLE>
<PAGE> 1
JOINT FILING AGREEMENT
The undersigned hereby agree to the joint filing of the Schedule 13D to
which this Agreement is attached.
Dated: February 10, 2000
AMPHION VENTURES L.P.
By: Amphion Partners L.L.C., General Partner
By:/s/ Richard C.E. Morgan
-----------------------
Richard C.E. Morgan, a Managing Member
AMPHION PARTNERS L.L.C.
By:/s/ Richard C.E. Morgan
-----------------------
Richard C.E. Morgan, a Managing Member
ANTIOPE PARTNERS L.L.C.
By:/s/ Richard C.E. Morgan
-----------------------
Richard C.E. Morgan, a Managing Member
AMPHION INVESTMENTS L.L.C.
By:/s/ Richard C.E. Morgan
-----------------------
Richard C.E. Morgan, a Managing Member
/s/ Richard C.E. Morgan
-----------------------
Richard C.E. Morgan
<PAGE> 1
EXHIBIT 99.31
CERTIFICATES OF DESIGNATIONS,
PREFERENCES, POWERS AND RIGHTS
OF
SERIES 2000 NON-VOTING PREFERRED STOCK
OF
AXCESS INC.
Pursuant to Section 151 of the
General Corporation Law
of the State of Delaware
AXCESS INC., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Company"), hereby certifies that,
pursuant to the authority contained in Article Fourth of its Certificate of
Incorporation, as amended, and in accordance with the provisions of Sections 103
and 151 of the General Corporation Law of the State of Delaware, its Board of
Directors has adopted the following resolution providing for the issuance of the
Series 2000 Non-Voting Preferred Stock:
RESOLVED, that a series of the class of authorized preferred stock of the
Company is hereby created and the Board of Directors hereby fixes the
designation and amount thereof, and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof as follows:
SECTION 1. DESIGNATION AND AMOUNT. The shares of such series shall have a
par value of $0.01 per share and shall be designated as Series 2000 Non-Voting
Preferred Stock and the number of shares constituting the Series 2000 Non-Voting
Preferred Stock shall be TWO THOUSAND FIVE HUNDRED (2,500). The Series 2000
Non-Voting Preferred Stock shall have a stated value of Ten Thousand Dollars
($10,000) per share (the "Original Issue Price").
SECTION 2. RANK. The Series 2000 Non-Voting Preferred Stock shall rank: (a)
junior to any other class or series of capital stock of the Company hereafter
created specifically ranking by its terms senior to the Series 2000 Non-Voting
Preferred Stock (collectively, the "Senior Securities"); (b) prior to all of the
Company's Common Stock and Non-Voting Common Stock, each $0.01 par value per
share (the "Common Stock"); (c) prior to any class or series of capital stock of
the Company hereafter created not specifically ranking by its terms senior to or
on parity with the Series 2000 Non-Voting Preferred Stock (collectively, with
the Common Stock, the "Junior Securities"); and (d) on a parity with the Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series I
Preferred Stock, Series J Preferred Stock, Series 1999 Voting Preferred Stock,
Series 1999 Non-Voting Preferred Stock of the Company, and any class or series
of capital stock of the Company hereafter created specifically ranking by its
terms on a parity with the Series 2000 Non-Voting Preferred Stock (the "Parity
Securities"), in each case as to distributions of assets upon liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary (all
such distributions being referred to collectively as "Distributions").
<PAGE> 2
SECTION 3. DIVIDENDS AND DISTRIBUTIONS.
(a) Subject to Section 3(d), the holders of record of shares of
Series 2000 Non-Voting Preferred Stock (the "Holders"), in preference to the
holders of shares of capital stock ranking junior to the Series 2000 Non-Voting
Preferred Stock as to dividends, shall be entitled to receive dividends on each
share of Series 2000 Non-Voting Preferred Stock held of record at the annual
rate of 8% of the Original Issue Price, payable semi-annually, to the extent of
funds legally available therefor. Such dividends shall be cumulative, shall
accrue on each share on a daily basis (calculated on the basis of a 360-day
year, whether or not earned or declared, from the date of original issue of such
shares) and shall be payable in arrears, when, as and if declared by the Board
of Directors, on the last day of June and December in each year (each such date,
a "Dividend Payment Date"). Each such dividend will be paid to the Holders as
they appear on the stock register of the Company on the record date therefor as
shall be fixed by the Board of Directors, which record date shall not be more
than 25 days or less than 10 days preceding the payment date thereof.
(b) The Company may, at its option, make any dividend payment to
Holders of Series 2000 Non-Voting Preferred Stock in cash or in additional
shares (including fractional shares) of Series 2000 Non-Voting Preferred Stock
or in any combination of cash and such shares. Each such dividend payment (or
portion thereof) to be paid in shares of Series 2000 Non-Voting Preferred Stock
shall be paid by the issuance and delivery to such Holders of that number of
additional shares (including any fractional shares, if applicable) of Series
2000 Non-Voting Preferred Stock as shall be equal to the quotient obtained by
dividing the aggregate dollar amount of such dividend payment (or portion
thereof) by the Original Issue Price per share. Dividends to be paid in
additional shares of Series 2000 Non-Voting Preferred Stock shall be deemed to
have been made when certificates representing such additional shares of Series
2000 Non-Voting Preferred Stock have been delivered to the record holders of
the Series 2000 Non-Voting Preferred Stock entitled to receive the same, in
accordance with the instructions of such holders designated in writing to the
Company at least two business days prior to any Dividend Payment Date. All
shares of Series 2000 Non-Voting Preferred Stock paid as such dividends (the
"Dividend Shares") shall be validly issued, fully paid and non-assessable, shall
be free and clear of preemptive rights and liens, claims and encumbrances of any
kind. Subject to the other provisions of this Certificate of Designation,
holders of shares of Series 2000 Non-Voting Preferred Stock shall not be
entitled to any dividend, whether payable in cash, additional shares of Series
2000 Non-Voting Preferred Stock, or other property, in excess of full cumulative
dividends as herein provided. No interest, or sum of money in lieu of interest,
shall be payable under this Certificate of Designation in respect of any
dividend payment or payments on the Series 2000 Non-Voting Preferred Stock which
may be in arrears.
(c) So long as any Series 2000 Non-Voting Preferred Stock remains
outstanding, the Company will not redeem, purchase or otherwise acquire any
Junior Securities; nor will the Company declare or pay any dividend or make any
distribution (in each case, whether in cash or securities or assets in kind)
upon any Junior Securities (other than stock dividends on Junior Securities,
payable in shares of, options, warrants or similar rights to acquire shares of,
the same class (and series, if applicable) of Junior Securities), or make any
sinking fund or other payment in respect of any of the foregoing if the Company
shall not have paid in full all accrued dividends on the Series 2000 Non-Voting
Preferred Stock in accordance with Section 3(a) hereof.
(d) Anything contained herein to the contrary notwithstanding, if at
any time that any shares of Series 2000 Non-Voting Preferred Stock are
outstanding, the closing bid price per share of the Common Stock on the Nasdaq
Stock Market (or, if the Common Stock is not then included in Nasdaq, but
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<PAGE> 3
is listed on any national securities exchange, on the principal national
securities exchange on which the Common Stock is then listed) remains above
$20.00 per share (as adjusted for any stock splits, reverse stock splits, stock
dividends or similar events after the date of this Certificate of Designation)
for twenty (20) consecutive trading days, then, commencing on such 20th trading
day, the cumulative dividend will not be payable; provided, however, that if the
closing bid price per share of the Common Stock remains thereafter below $20.00
for twenty (20) consecutive trading days (as so adjusted), then the dividend
will resume as of such 20th day.
SECTION 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of
the Company (each a "Liquidation Event"), either voluntary or involuntary, the
Holders of shares of Series 2000 Non-Voting Preferred Stock shall be entitled to
receive, immediately after any distributions to Senior Securities required by
the Company's Certificate of Incorporation or any certificate of designation,
and prior in preference to any distribution to Junior Securities, and in parity
with any distribution to Parity Securities, an amount for each share of Series
2000 Non-Voting Preferred Stock then outstanding equal to the Original Issue
Price, plus any and all accrued unpaid dividends. If upon the occurrence of such
event, and after payment in full of the preferential amounts with respect to the
Senior Securities, the assets and funds available to be distributed among the
Holders of the Series 2000 Non-Voting Preferred Stock and Parity Securities
shall be insufficient to permit the payment to such Holders of the full
preferential amounts due to the Holders of the Series 2000 Non-Voting Preferred
Stock and the Parity Securities, respectively, then the entire assets and funds
of the Company legally available for distribution shall be distributed among the
Holders of the Series 2000 Non-Voting Preferred Stock and the Parity
Securities, pro rata, based on the respective liquidation amounts to which each
such series of stock is entitled by the Company's Certificate of Incorporation
and any certificate(s) of designation relating thereto.
(b) Upon the completion of the distribution required by Section
4(a), if assets remain in the Company, they shall be distributed to holders of
Junior Securities in accordance with the Company's Certificate of Incorporation
including any duly adopted certificate(s) of designation relating thereto.
(c) At each Holder's option, a sale, conveyance or disposition of
all or substantially all of the assets of the Company or the effectuation by the
Company of a transaction or series of related transactions in which any person
or entity acquires more than fifty percent (50%) of the voting power of the
Company (a "Change of Control") shall be deemed to be a Liquidation Event as
defined in Section 4(a); provided further that (i) a consolidation, merger,
acquisition, or other business combination of the Company with or into any other
publicly traded company or companies shall not be treated as a Liquidation Event
as defined in Section 4(a), but instead shall be treated pursuant to Section
5(d)(ii) hereof, (ii) the acquisition by Amphion Ventures L.P., by itself or
along with one or more of its affiliates, of more than fifty percent (50%) of
the voting power of the Company shall not be deemed to be a Change of Control
and, accordingly, will not be treated as a Liquidation Event as defined in
Section 4(a) and (iii) a consolidation, merger, acquisition, or other business
combination of the Company with or into any other non-publicly traded company or
companies shall be treated as a Liquidation Event as defined in Section 4(a).
The Company shall not effect any transaction described in Section 4(c)(ii)
unless it first gives thirty (30) business days' prior notice of such
transaction (during which time the Holder shall be entitled to convert its
shares of Series 2000 Non-Voting Preferred Stock into non-voting Common Stock).
For purposes of this Section 4(c), the public offering, sale or distribution of
shares of stock (or assets) of the Company's Sandia Imaging Systems Corporation
subsidiary shall not be deemed to be a Liquidation Event.
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<PAGE> 4
(d) In the event that, immediately prior to the closing of a
transaction described in Section 4(c) which would constitute a Liquidation
Event, the cash distributions required by Section 4(a) have not been made, the
Company shall either: (i) cause such closing to be postponed until such cash
distributions have been made, or (ii) cancel such transaction, in which event
the rights of the Holders of Series 2000 Non-Voting Preferred Stock shall be
the same as existing immediately prior to such proposed transaction.
SECTION 5. CONVERSION. The record Holders of this Series 2000 Non-Voting
Preferred Stock shall have conversion rights as follows (the "Conversion
Rights"):
(a) Right to Convert. On the terms and subject to the conditions set
forth in this Certificate of Designation, each record Holder of Series 2000
Non-Voting Preferred Stock shall be entitled to convert the shares of Series
2000 Non-Voting Preferred Stock held by such Holder, in whole at any time and in
part from time to time, into a number of fully-paid and non-assessable shares of
non-voting Common Stock of the Company equal to the quotient of (i) the
aggregate Original Issue Price of the shares of Series 2000 Non-Voting Preferred
Stock being converted divided by (ii) the Conversion Price as determined
pursuant to this Section 5 (the "Conversion Price"). The Conversion Price shall
initially be THREE DOLLARS AND FIFTY CENTS ($3.50) per share of Series 2000
Non-Voting Preferred Stock. The Conversion Price shall be subject to adjustment
from time to time as provided in Section 5(d). Notwithstanding the foregoing or
any other term or provision of this Certificate of Designation, the Holder shall
not be permitted, without the prior written consent of the Company, to convert
any shares of Series 2000 Non-Voting Preferred Stock to shares of non-voting
Common Stock until such time as the Company shall have received the
authorization of its stockholders to issue shares of the Company's non-voting
Common Stock to the Holder upon the conversion by the Holder of any share of
Series 2000 Non-Voting Preferred Stock. The Company hereby agrees to submit such
a proposal to its stockholders for approval at the Company's 2000 annual meeting
of stockholders and to use its best efforts to obtain such approval.
(b) Mechanics of Conversion. Subject to the terms of Section 5(a)
above, the conversion of shares of Series 2000 Non-Voting Preferred Stock may be
effected by written notice to the Company, and shall be effective upon receipt
of such notice by the Company, or as otherwise provided in such notice, and
delivery to the Company of (i) one or more certificates representing the shares
of Series 2000 Non-Voting Preferred Stock being converted, (ii) a certificate of
guaranteed delivery of such certificates reasonably satisfactory to the Company,
or (iii) evidence of the loss, theft or destruction of such certificates
pursuant to Section 11 of this Certificate of Designation, together with any
indemnity or security reasonably requested by the Company pursuant to such
Section 11. Upon any conversion of shares of Series 2000 Non-Voting Preferred
Stock pursuant to this Section 5, the Holder shall be deemed to be the record
holder of the shares of non-voting Common Stock into which shares of Series 2000
Non-Voting Preferred Stock have been converted and shall be entitled to receive
duly executed certificates, in proper form, representing such shares of
non-voting Common Stock as soon as practicable thereafter. Anything contained
herein to the contrary notwithstanding, if any conversion of shares of Series
2000 Non-Voting Preferred Stock would create a fractional share of non-voting
Common Stock or a right to acquire a fractional share of non-voting Common
Stock, such fractional share shall be disregarded and the number of shares of
non-voting Common Stock issuable upon such conversion, in the aggregate, shall
be rounded up to the nearest whole number of shares.
(c) Reservation of Stock Issuable Upon Conversion. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of non-voting Common Stock, solely for the purpose of effecting the
conversion of the Series 2000 Non-Voting Preferred Stock, such number of its
shares of non-voting Common Stock as shall from time to time be sufficient to
effect the conversion of all
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<PAGE> 5
then outstanding Series 2000 Non-Voting Preferred Stock. If at any time the
number of authorized but unissued shares of non-voting Common Stock (excluding
for this purpose any authorized but unissued shares of non-voting Common Stock
that are properly reserved for some other purpose) shall be insufficient to
cause the conversion into non-voting Common Stock of all shares of Series 2000
Non-Voting Preferred Stock then outstanding, the Company will take such
corporate action as may be reasonably necessary to increase its authorized but
unissued shares of non-voting Common Stock to such number of shares as shall be
sufficient for such purpose.
(d) Adjustment to Conversion Price.
(i) Adjustment to Conversion Price Due to Stock Split, Stock
ADividend, Etc. If, at any time that any shares of Series 2000 Non-Voting
Preferred Stock remain outstanding, the number of outstanding shares of
non-voting Common Stock is increased by a stock split, stock dividend, or other
similar event, the Conversion Price shall be proportionately reduced, or if the
number of outstanding shares of non-voting Common Stock is decreased by a
reverse stock split, combination or reclassification of shares, or other similar
event, the Conversion Price shall be proportionately increased.
(ii) Adjustment Due to Merger, Consolidation, Etc. If, at any
time that any shares of Series 2000 Non-Voting Preferred Stock remain
outstanding, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which
shares of non-voting Common Stock of the Company shall be changed into the same
or a different number of shares of the same or another class or classes of stock
or securities of the Company or another entity, or there is a sale of all or
substantially all the Company's assets or there is a Change of Control not
deemed to be a Liquidation Event pursuant to Section 4(c), then the Holders
shall thereafter have the right to receive upon conversion of shares of Series
2000 Non-Voting Preferred Stock, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of non-voting Common Stock
immediately theretofore issuable upon conversion, such stock, securities and/or
other assets which the Holder would have been entitled to receive in such
transaction had such shares of Series 2000 Non-Voting Preferred Stock been
converted immediately prior to such transaction, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
the Holders of the Series 2000 Non-Voting Preferred Stock to the end that the
provisions hereof (including, without limitation, provisions for the adjustment
of the Conversion Price and of the number of shares issuable upon conversion of
the Series 2000 Non-Voting Preferred Stock) shall thereafter be applicable, as
nearly as may be practicable in relation to any securities thereafter
deliverable upon the exercise hereof. The Company shall not effect any
transaction described in this Section 5(d)(ii) unless (A) it first gives thirty
(30) business days' prior notice to Holders of such merger, consolidation,
exchange of shares, recapitalization, reorganization, or other similar event
(during which time the Holders shall be entitled to convert their shares of
Series 2000 Non-Voting Preferred Stock into non-voting Common Stock) and (B)
the resulting successor or acquiring entity (if not the Company) assumes by
written instrument the obligations of the Company under this Certificate of
Designation including this Section 5(d)(ii).
SECTION 6. VOTING. The Holders shall not be entitled to vote on any matter
submitted to a vote of the stockholders of the Company, or as to which the
holders of the voting Common Stock shall otherwise be entitled to vote. As used
in this Section 6, all references to votes and voting shall refer as well to
action and actions by written consent.
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<PAGE> 6
SECTION 7. OPTIONAL REDEMPTION BY COMPANY. The Series 2000 Non-Voting
Preferred Stock shall be subject to the optional redemption by the Company, in
whole at any time or in part from time to time, at a redemption price per share
equal to the Original Issue Price, plus any and all accrued unpaid dividends
thereon. The Company shall give at least ten (10) days' prior written notice of
any redemption pursuant to this Section 7 to each Holder of shares of Series
2000 Non-Voting Preferred Stock to be redeemed. The Company's optional right of
redemption is subject to each Holder's right to convert all or any part of the
shares to be redeemed into non-voting Common Stock pursuant to Section 5,
provided that the Holder gives written notice of such conversion to the Company
in accordance with Section 5 within ten (10) business days after the Company's
notice of redemption. The Holders of Series 2000 Non-Voting Preferred Stock
shall not be entitled to any mandatory redemption of their Series 2000
Non-Voting Preferred Stock without the consent of the Company.
SECTION 8. MANDATORY CONVERSION BY COMPANY. Each share of Series 2000
Non-Voting Preferred Stock shall automatically convert into that number of
fully-paid and non-assessable shares of non-voting Common Stock of the Company
equal to the Original Issue Price plus all accrued, but unpaid dividends
thereon, divided by the Conversion Price (subject to adjustment from time to
time as provided in Section 5(d)), upon (a) the closing bid price per share of
the Common Stock on the Nasdaq SmallCap Market (or, if the Common Stock is not
then included in Nasdaq, but is listed on any national securities exchange, on
the principal national securities exchange on which the Common Stock is then
listed) having reached and remained above $7.50 per share for a period of twenty
(20) consecutive trading days and (b) the trading volume of the Common Stock on
Nasdaq or other securities exchange was at least 50,000 shares per day as
measured by Nasdaq or other securities exchange during each of such twenty (20)
consecutive trading days.
SECTION 9. STATUS OF CONVERTED OR REDEEMED STOCK. In the event any shares
of Series 2000 Non-Voting Preferred Stock shall be converted pursuant to either
Section 5 or 8 hereof or redeemed pursuant to Section 7 hereof, the shares so
converted or redeemed shall be canceled, shall return to the status of
authorized but unissued Preferred Stock of no designated series, and shall not
thereafter be issuable by the Company as Series 2000 Non-Voting Preferred Stock.
SECTION 10. OTHER PREFERRED STOCK. Nothing contained herein shall be
construed to prevent the Board of Directors from authorizing the creation of, or
to prevent the Company from issuing shares of, one or more series of Preferred
Stock junior to or on parity with the Series 2000 Non-Voting Preferred Stock as
to dividend, liquidation rights or otherwise.
SECTION 11. LOST OR STOLEN CERTIFICATES. Upon receipt by the Company of
evidence of the loss, theft, destruction or mutilation of any certificates
representing shares of Series 2000 Non-Voting Preferred Stock, and (in the case
of loss, theft or destruction) of indemnity or security reasonably satisfactory
to the Company, and upon surrender and cancellation of the certificate(s), if
mutilated, the Company shall execute and deliver to the record Holder thereof
new certificate(s) of like tenor and date. However, the Company shall not be
obligated to re-issue such lost or stolen certificates if the Holder
contemporaneously requests the Company to convert such shares of Series 2000
Non-Voting Preferred Stock into shares of non-voting Common Stock.
SECTION 12. FRACTIONAL SHARES. In the event a Holder of Series 2000
Non-Voting Preferred Stock shall be entitled to receive a fractional interest in
a share of Series 2000 Non-Voting Preferred Stock of less than one one-hundredth
of one share, except as otherwise provided herein, the Company shall either, in
the sole discretion of the Board of Directors, (a) round such fractional
interest up to the next one-hundredth
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<PAGE> 7
of one whole share of Series 2000 Non-Voting Preferred Stock or (b) deliver cash
in the amount of the fair market value (as determined by the Board of Directors
or in any manner prescribed by the Board of Directors) of such fractional
interest.
SECTION 13. PREEMPTIVE RIGHTS. The Holders of Series 2000 Non-Voting
Preferred Stock are not entitled to any preemptive or subscription rights in
respect of any securities of the Company.
IN WITNESS WHEREOF, AXCESS Inc. has caused this certificate to be signed by
its Chief Financial Officer and attested by its Assistant Secretary, as of the
29th day of December, 1999.
AXCESS INC.
By: /s/ James R. Craig
---------------------------------------
James R. Craig, Chief Financial Officer
Attest:
/s/ Michael R. Dorey
- -------------------------------------
Michael R. Dorey, Assistant Secretary
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<PAGE> 1
EXHIBIT 99.32
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS
AND, ACCORDINGLY, MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT OR LAWS OR PURSUANT TO AN EXEMPTION
THEREFROM.
AXCESS INC.
10% Convertible Note due
September 30, 2002
$6,000,000.00 September 30,1999
FOR VALUE RECEIVED, the undersigned, AXCESS Inc., a Delaware corporation
("Maker"), hereby promises to pay to the order of Amphion Ventures, L.P., a
Delaware limited partnership ("Holder"), on September 30, 2002 (the "Maturity
Date"), the principal sum of up to SIX MILLION UNITED STATES DOLLARS (U.S.
$6,000,000.00), together with interest on the outstanding principal balance
hereunder from time to time, at the rate of ten percent (10.00%) per annum (the
"Interest Rate"), calculated on the basis of the number of days elapsed over a
360-day year of twelve 30-day months.
Interest shall be payable semiannually in cash on April 1 and October 1 of
each year until the Maturity Date, or if any such day is not a Business Day (as
defined below) on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on this Note will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from the date of
original issuance; provided, however, that the first Interest Payment Date shall
not occur until April 1, 2000. Following an Event of Default (as defined below),
Maker shall, to the extent lawful, pay interest on any overdue payment of
principal and interest, if any, from time to time on demand and at the rate of
two percent (2%) per annum in excess of the Interest Rate (without regard to any
applicable grace periods). As used herein, "Business Day" means any day other
than a Saturday, a Sunday or a day on which banking institutions in the City of
New York, or in the city in which the principal office of Maker's bank, are not
required to open.
Payments of principal and interest hereunder shall be made in lawful money
of the United States of America by check mailed to the registered address or by
wire transfer, in either case as designated by Holder for such purpose.
This Note shall represent and evidence the indebtedness of Maker to Holder
for advances made by Holder to Maker from time to time hereunder (the
"Advances"), including without limitation, the unpaid principal amount of, and
accrued but unpaid interest on, all Advances, as well as any additional amounts
that may be owed by Maker to Holder hereunder. Advances shall be made from time
to time in cash as Maker shall request up to and not to exceed $6,000,000.00.
Concurrently with the execution and delivery of this Note, Maker and Holder have
agreed to convert certain prior advances by Holder to Maker, including all
accrued, but unpaid interest thereon, in the
<PAGE> 2
aggregate principal amount of $3,787,608.37 (the "Prior Advances") into
Advances under this Note. Accordingly, effective as of the date hereof, (a) all
promissory notes representing the Prior Advances shall be canceled and
surrendered by Holder to Maker and (b) the indebtedness of Maker to Holder
represented by the Prior Advances shall, for all purposes hereof, constitute an
Advance by Holder to Maker under this Note in the aggregate principal amount of
the Prior Advances.
In consideration for Holder making the Advances hereunder, Maker shall
issue to Holder a Warrant representing the right to purchase up to an aggregate
of 857,143 shares of the non-voting common stock, par value $0.01 per share, of
Maker (the "Non-Voting Common Stock") at an exercise price of $2.10 per share on
the terms set forth in that certain Warrant Agreement of even date herewith
issued by Maker to Holder (the "Warrant").
This Note is also subject to the following terms and provisions:
ARTICLE I. DEFAULTS
Each of the following events shall constitute an event of default hereunder
(each an "Event of Default"):
1.1 if Maker fails to pay any amount of principal or interest when due, and
such due but unpaid amount remains unpaid for three (3) Business Days after
Holder makes written demand therefor; or
1.2 if Maker fails to pay any amount of interest when due under the terms
of this Note when the same shall become demand payable and such due but unpaid
amount remains unpaid for one hundred eighty (180) days; or
1.3 if an event of default, as defined in any indenture or other instrument
evidencing or under which there is at any time outstanding any indebtedness of
Maker on the same terms or senior to the obligations of Maker to Holder
hereunder, and the effect of such an event of default is to cause, or to permit,
with the giving of notice or the lapse of time, or both, holder or holders
thereof to cause such indebtedness to become due prior to its stated maturity;
or
1.4 Maker shall: (a) be adjudicated insolvent or bankrupt, or cease, be
unable, or admit in writing its inability, to pay its debts as they mature, or
make a general assignment for the benefit of, or enter into any composition or
arrangement with, creditors; (b) apply for, or consent (by admission of material
allegation of a petition or otherwise) to the appointment of, a receiver,
trustee, or liquidator of Maker or of a substantial part of its assets, or
authorize such application or consent, or proceedings seeking such appointment
shall be commenced without such authorization, consent, or application against
it and continue undismissed for a period of sixty (60) days; (c) authorize or
file a voluntary petition in bankruptcy or apply for or consent (by admission of
material allegations of a petition or otherwise) to the application of any
bankruptcy, reorganization, readjustment of debt, insolvency, dissolution,
liquidation, or other similar law of any jurisdiction, or authorize such
application or consent, or proceedings to such end shall be instituted against
Maker without such authorization, application, or consent and be approved as
properly instituted, remain undismissed for sixty (60) days, or result in
adjudication of bankruptcy or insolvency; (d) permit or suffer all or any
substantial part of its property to be sequestered or attached by court order
and such order remains
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<PAGE> 3
undismissed for sixty (60) days; or (e) take corporate action looking toward any
of the actions in (a) through (d) above.
ARTICLE II. REMEDIES ON DEFAULT
Upon the occurrence of an Event of Default, Holder may at any time (unless
all Events of Default shall theretofore have been remedied) at its option, by
written notice to Maker, declare this Note to be due and payable, whereupon the
same shall forthwith mature and become due and payable, together with interest
accrued thereon, without presentment, demand, protest, or notice, all of which
are hereby waived by Maker. If an Event of Default occurs with respect to
Maker's prompt payment of this Note when due or declared due, or in the
performance of any term, covenant, or condition of any term of this Note, and
this Note is placed in the hands of an attorney for collection or enforcement,
or suit is brought on same, or the same is collected or enforced through any
judicial proceeding whatsoever, including an action in bankruptcy, or if any
action of foreclosure be had thereon, then Maker agrees and promises to pay the
reasonable attorney's fees and costs incurred by Holder in collection or
enforcement.
ARTICLE III. CONVERSION
Prior to the time that all principal of and interest and premium, if any,
on this Note have been paid in full, Holder shall have the right at any time to
convert this Note into shares of Maker's Series 1999 Non-Voting Preferred Stock,
par value $0.01 per share (the "Non-Voting Preferred Stock") on the following
terms and conditions:
3.1 Conversion of Note. This Note shall be convertible at the office of
Maker or at the office of the transfer agent, if any, for the Non-Voting
Preferred Stock into fully paid and non-assessable shares of Non-Voting
Preferred Stock at the original issue price of $10,000 per share (the
"Conversion Price"). The number of shares of Non-Voting Preferred Stock to be
delivered upon conversion of this Note shall be determined by dividing the
unpaid principal balance hereof and the accrued interest hereon by the
Conversion Price. Notwithstanding the foregoing or any other term or provision
of this Note, Holder shall not be permitted, without the prior written consent
of Maker, to exercise its rights to convert all or a portion of this Note and
acquire shares of Non-Voting Preferred Stock hereunder until such time as Maker
shall have received the authorization of its stockholders to issue Non-Voting
Preferred Stock to Holder upon the conversion of all or any portion of this Note
by Holder. Maker hereby agrees to submit such a proposal to its stockholders for
approval at Maker's 2000 annual meeting of stockholders and to use its best
efforts to obtain such approval.
3.2 Mechanics of Conversion. Before Holder of this Note shall be entitled
to convert the same into shares of Non-Voting Preferred Stock, Holder shall
surrender this Note, duly endorsed, at the office of Maker or the transfer agent
for the Non-Voting Preferred Stock, if any, and shall give written notice to
Maker that it elects to convert all or part of this Note and shall state in
writing therein the name or names in which it wishes the certificate or
certificates for Non-Voting Preferred Stock to be issued. Maker will, as soon as
practicable thereafter, issue and deliver to Holder certifi cates for the number
of full shares of Non-Voting Preferred Stock to which it shall be entitled as
aforesaid, together with cash in lieu of any fraction of a share as hereinafter
provided. If this Note is converted only in part, Maker will issue and deliver
to Holder a new certificate or certificates
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representing the unconverted portion of this Note. This Note shall be deemed to
have been converted as of the date of the surrender of this Note for conversion
as provided above, and the person or persons entitled to receive the Non-Voting
Preferred Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such Non-Voting Preferred Stock on such date.
3.3 No Fractional Shares. No fractional share of the Non-Voting Preferred
Stock shall be issued upon any conversion but, in lieu thereof, there shall be
paid to Holder when this Note is surrendered for conversion, who but for the
provisions of this Section 3.3 would be entitled to receive a fraction of a
share on such conversion, an amount in cash equal to the amount of the remaining
unpaid principal balance hereof and the accrued interest hereon which cannot be
so converted as a result of the provisions of this Section 3.3.
3.4 Reservation of Shares. Maker will reserve and keep available a
sufficient number of shares of (a) Non-Voting Preferred Stock to satisfy the
requirements of this Note and (b) Non-Voting Common Stock to satisfy the
conversion requirements of the Non-Voting Preferred Stock. Maker will take all
such action as may be necessary to insure that all shares of Non-Voting
Preferred Stock issuable upon conversion hereof and all shares of Non-Voting
Common Stock issuable upon conversion of such shares of Non-Voting Preferred
Stock will be duly and validly authorized and issued and fully paid and
nonassessable.
3.5 No Charge for Conversion. The issuance of certificates for shares of
Non-Voting Preferred Stock upon the conversion hereof shall be made without
charge to Holder converting this Note for any issue or stamp tax in respect of
the issuance of such certificates, and such certificates shall be issued in the
name of, or in such names as may be directed by, Holder; provided, however, that
Maker shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate in a
name other than that of Holder, and Maker shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to Maker the amount of such tax or shall have
established to the satisfaction of Maker that such tax has been paid.
3.6 Notice of Certain Corporate Actions. In case at any time
(A) Maker shall take any action which would require an adjustment to the
Conversion Price;
(B) Maker shall authorize the granting to the holders of any class of
its common stock of any dividends or distributions payable in cash, stock or
other property;
(C) there shall be any capital reorganization or reclassification of any
of the capital stock of Maker, or any consolidation or merger to which Maker is
a party and for which approval of any stockholders of Maker is required, or any
sale or transfer of all or substantially all of the assets of Maker; or
(D) there shall be a voluntary or involuntary dissolution, liquidation,
or winding up of Maker;
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then, in any one or more of such cases, Maker shall give written notice to
Holder, not less than twenty (20) days before any record date or other date set
for definitive action, of the date on which such reorganization,
reclassification, sale, consolidation, merger, dissolution, liquidation, or
winding-up shall take place, as the case may be. Such notice shall also set
forth such facts as shall indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the conversion price or the
kind and amount of the shares of Non-Voting Preferred Stock and other securities
and property deliverable upon conversion of this Note or upon conversion of the
Non-Voting Preferred Stock. Such notice shall also specify the date as of which
the holders of the Non-Voting Preferred Stock or other capital stock of record
shall be entitled to exchange their securities for securities or other property
deliverable upon such reorganization, reclassification, sale, consolidation,
merger, dissolution, liquidation, or winding up, as the case may be (or which
date, in the event of voluntary or involuntary dissolution, liquidation, or
winding up of Maker, the right to convert this Note shall terminate).
Without limiting the obligation of Maker to provide notice to Holder of
corporate actions hereunder, it is agreed that failure of Maker to give such
notice shall not invalidate such corporate action of Maker.
ARTICLE IV. PREPAYMENT
4.1 Right to Prepay. Subject to the terms of this Article IV, this Note may
be prepaid, at any time at the option of Maker, by the payment to Holder of the
unpaid principal balance hereof, together with (a) interest on the unpaid
principal balance hereof and (b) an amount equal to ten percent (10%) of the
unpaid principal balance hereof accrued to the date fixed for prepayment;
provided, however, that the 10% prepayment penalty may, at the option of Maker,
be paid to Holder in cash or by the issuance of additional shares of Maker's
Non-Voting Preferred Stock. The number of shares of Non-Voting Preferred Stock
to be delivered shall be determined by dividing the amount of the prepayment
penalty by the then applicable Conversion Price.
4.2 Notice of Prepayment. In case Maker shall exercise its right to prepay
this Note, it shall give notice thereof to Holder, not later than the twentieth
(20th) day before the date fixed for prepayment. The notice of prepayment shall
specify the date fixed for prepayment, the place where this Note shall be
delivered and the prepayment amount shall be paid, and the amount to be paid.
4.3 Cessation of Rights of Note Holder. After 5:00 P.M., New York City
time, on the date fixed for prepayment, all rights with respect to this Note,
including, without limitation, the conversion rights contained herein, shall
forthwith terminate, except only the right of Holder to receive the amounts set
forth in Section 4.1.
ARTICLE V. OTHER PROVISIONS RELATING TO RIGHTS
OF HOLDER OF THIS NOTE
5.1 Rights of Holder of Note; Registration Rights. Until the date of
conversion, this Note shall not entitle Holder to any of the rights of a
stockholder of Maker, including, without limitation, the right to vote, to
receive dividends and other distributions, or to receive any notice of, or to
attend, meetings of stockholders or any other proceedings of Maker.
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5.2 Lost, Stolen, Mutilated or Destroyed Note. If this Note shall be
mutilated, lost, stolen, or destroyed, Maker shall execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated Note, or in
lieu of or in substitution for a lost, stolen, or destroyed Note, a new Note for
the principal amount of this Note so mutilated, lost, stolen, or destroyed but
only upon receipt of evidence of such loss, theft, or destruction of such Note,
and of the ownership thereof, and indemnity, if requested, all reasonably
satisfactory to Maker.
5.3 Consent of Holder Required for Certain Matters. The consent of Holder
will be required for any amendment, alteration, or repeal, whether by merger or
consolidation or otherwise, of Maker's Certificate of Incorporation if the
amendment, alteration, or repeal materially and adversely affects the powers,
preferences, or special rights of the Non-Voting Preferred Stock; provided,
however, that any increase in the authorized preferred stock of Maker or the
creation and issuance of any other capital stock of Maker ranking on the same
terms or junior to the Non-Voting Preferred Stock shall not be deemed to affect
materially and adversely such powers, preferences or special rights.
ARTICLE VI. REPRESENTATIONS OF HOLDER
6.1 Investment Representations. By accepting this Note, Holder represents
the following to Maker:
(A) Maker has delivered to Holder a true and complete copy of (i)
Maker's Annual Report on Form 10-KSB for the year ended December 31, 1998, (ii)
Maker's definitive proxy statement relating to its 1999 annual stockholders
meeting and (iii) all other filings (other than preliminary registration and
proxy statements) made by Maker with the Securities and Exchange Commission
between December 31, 1998 and the date hereof (collectively, the "SEC
Documents"). Holder is familiar with the SEC Documents, the business, financial
condition, management, prospects and operations of Maker. During the course of
the negotiation of this Note, Holder has reviewed all information provided to it
by Maker and has had the opportunity to ask questions of and receive answers
from representatives of Maker concerning Maker, the securities offered and sold
hereby, and to obtain certain additional information requested by Holder;
(B) Holder understands that the offer and sale of this Note, the
Warrant, the Non-Voting Preferred Stock issuable upon the conversion hereof or
exercise of the Warrant are not being registered under the Securities Act of
1933 (the "1933 Act"), or under any applicable state securities law and that
this Note, the Warrant, the Non-Voting Preferred Stock issuable upon the
conversion hereof and the exercise of the Warrant are being offered and sold in
reliance on the so-called "private offering" exemption provided by Section 4(2)
of the 1933 Act and/or Regulation D promulgated pursuant to the 1933 Act, and
similar exemptions under applicable state securities laws, and that Maker is
basing its reliance on that exemption in part on the representations,
warranties, statements and agreements contained herein;
(C) Holder understands that this Note, the Warrant, the Non-Voting
Preferred Stock issuable upon the conversion hereof or the exercise of the
Warrant cannot be resold, transferred or assigned unless (i) subsequently
registered under the 1933 Act and applicable state securities laws or (ii)
exemptions from such registrations are available. Holder is aware of the
provisions of Rule
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144 promulgated under the 1933 Act which permit limited resale of shares
purchased in a private transaction subject to the satisfaction of certain
conditions;
(D) Holder understands that no public market now exists for the Note,
the Non- Voting Preferred Stock or the Warrant and that it is uncertain that a
public market will ever exist for this Note, the Non-Voting Preferred Stock or
the Warrant; and
(E) Holder understands that the certificates for the Non-Voting
Preferred Stock issuable upon the conversion hereof and the Warrant will bear
the following legend:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THE CORPORATION WILL NOT TRANSFER THIS
CERTIFICATE UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION
COVERING THE SHARES REPRESENTED BY THIS CERTIFICATE UNDER THE
SECURITIES ACT OF 1933 AND ALL APPLICABLE STATE SECURITIES
LAWS, (ii) IT FIRST RECEIVES A LETTER FROM AN ATTORNEY,
ACCEPTABLE TO THE BOARD OF DIRECTORS OR ITS AGENTS, STATING
THAT IN THE OPINION OF THE ATTORNEY THE PROPOSED TRANSFER IS
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND
UNDER ALL APPLICABLE STATE SECURITIES LAWS, OR (iii) THE
TRANSFER IS MADE PURSUANT TO RULE 144 UNDER THE SECURITIES ACT
OF 1933.
ARTICLE VII OTHER MATTERS
7.1 Successor to Maker. The provisions of this Note shall be binding upon
and inure to the benefit of Maker and Holder and their respective permitted
successors and assigns. Maker may not assign or otherwise transfer this Note or
delegate its duties hereunder without having received the prior written consent
of Holder.
7.2 Modification. This Note sets forth the entire understanding of Maker
and Holder with respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, and may be modified only
by a written instrument duly executed by Maker and Holder.
7.3 Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be effective if sent by first
class mail, postage prepaid, or certified mail, return receipt requested, or
delivered by telecopy, overnight courier or hand delivery, against receipt, to
the following addresses:
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If to Maker, then to it at:
AXCESS Inc.
3208 Commander Drive
Dallas, Texas 75006
Attention: Chief Financial Officer
Facsimile No.: (972) 407-6080
(or to such other address as Maker may have furnished in writing to Holder
for this purpose); and
If to Holder, then to it at such address as Holder may have furnished
in writing to Maker for this purpose.
7.4 Waiver. Any waiver by or Holder of a breach of any provision of
this Note shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this Note.
The failure of Holder to insist upon strict adherence to any term of this Note
on one or more occasions shall not be considered a waiver or deprive Holder of
the right thereafter to insist upon strict adherence to that term or any other
term of this Note. Any waiver must be in writing.
7.5 Separability. If any provision of this Note is invalid, illegal,
or unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
7.6 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
rules governing the conflict of laws.
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IN WITNESS WHEREOF, Maker has caused this Note to be executed on its behalf
by its officer thereunto duly authorized as of the date set forth above.
AXCESS INC.
By: /s/ James R. Craig
-----------------------------------
James R. Craig, Chief Financial Officer and Secretary
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