Exhibit 10.5
THIS SECURITY AGREEMENT AMENDMENT AND THE RIGHTS PROVIDED HEREIN ARE SUBJECT IN
ALL RESPECTS TO THE TERMS OF AN AMENDED AND RESTATED SUBORDINATION AGREEMENT OF
EVEN DATE HEREWITH BETWEEN THE AGENT OF THE SECURED PARTIES AND SAND HILL
FINANCE, LLC.
SECOND SECURITY AGREEMENT AMENDMENT
     This SECOND SECURITY AGREEMENT AMENDMENT (the “Amendment”) is made as of
July 24, 2008 between BlueLine Capital Partners, LP, a Delaware limited
partnership with an office located at 4115 Blackhawk Plaza Circle, Suite 100,
Danville, CA 94596, as agent (hereinafter, in such capacity, the “Agent”) for
itself and the other lenders listed on the signature pages hereto (hereinafter,
collectively, the “Secured Parties”), the Secured Parties and AXS-One Inc., a
Delaware corporation with its principal executive offices located at 301 Route
17 North, Rutherford, NJ 07070, Attention: President (the “Debtor”).
     WHEREAS, on May 29, 2007, the Debtor issued in favor of certain of the
Secured Parties (the “May Secured Parties”), promissory notes (collectively the
“May 2007 Notes”), in the aggregate principal amount of Five Million Dollars
($5,000,000) and such May 2007 Notes were issued pursuant to the terms of a
Convertible Note and Warrant Purchase Agreement dated as of May 29, 2007 between
the Debtor and the May Secured Parties;
     WHEREAS, on November 16, 2007, the Debtor issued in favor of certain of the
Secured Parties (the “November Secured Parties”), promissory notes
(collectively, the “November 2007 Notes”), in the aggregate principal amount of
Three Million Seven Hundred and Fifty Thousand Dollars ($3,750,000) and such
November Notes were issued pursuant to the terms of a Convertible Note and
Warrant Purchase Agreement (the “November Purchase Agreement”) dated as of
November 13, 2007, between the Debtor and the November Secured Parties (such
transaction, the “November Financing”);
     WHEREAS, in connection with the issuance of the May 2007 Notes, the Debtor
entered into that certain Security Agreement dated as of May 29, 2007, between
the Debtor, the Agent and the Secured Parties described therein, which agreement
was amended in connection with the issuance of the November 2007 Notes pursuant
to a Security Agreement Amendment dated November 16, 2007 between the Company,
the Agent and certain of the Secured Parties (such amendment, the “First
Amendment” and such security agreement as amended pursuant to the First
Amendment, the “Security Agreement”);
     WHEREAS, on the date hereof, the Debtor has issued in favor of certain of
the Secured Parties (the “July Secured Parties”), promissory notes
(collectively, the “July 2008 Notes”), in the aggregate principal amount of Two
Million One Hundred Thousand Dollars ($2,100,000) and the July 2008 Notes have
been issued pursuant to the terms of a Convertible Note and Warrant Purchase
Agreement (the “July Purchase Agreement”) as of July 24, 2008, between the
Debtor and the July Secured Parties (such transaction, the “July 2008
Financing”);

 

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     WHEREAS, it is a condition precedent to the July Secured Parties’ making
any loans under the July Purchase Agreement and the July 2008 Notes or otherwise
extending credit to the Debtor that the Debtor execute and deliver this
Amendment; and
     WHEREAS, the Debtor, the Agent and each of the Secured Parties desires to
amend the Security Agreement in order to secure the Debtor’s obligations
pursuant to the July 2008 Notes;
     NOW, THEREFORE, in consideration of the premises and to induce the July
Secured Parties to extend the loans to the Debtor pursuant to the July 2008
Notes, the Debtor and the Secured Parties hereby agree as follows:
1. Capitalized Terms. Capitalized terms used and not defined herein shall have
the respective meanings ascribed to such terms in the Security Agreement.
2. Amendment to the Security Agreement.
     (a) Section 1(c) of the Security Agreement is hereby amended by amending
clause (viii) of the defined term “Permitted Encumbrances” as follows: “(viii)
the security interests of Sand Hill Finance, LLC as set forth in the Amended and
Restated Subordination Agreement of even date herewith between Sand Hill
Finance, LLC and the Agent for the Secured Parties.”
     (b) Section 1(c) of the Security Agreement is hereby amended by deleting
the following defined terms and replacing them with amended definitions set
forth below:
     “Note” and “Notes” means the May 2007 Notes, the November 2007 Notes and/or
the July 2008 Notes. This definition shall supersede the definition of such
terms set forth in the recitals to this Agreement.
     “Purchase Agreement” means the May Purchase Agreement, the November
Purchase Agreement, and/or the July Purchase Agreement as applicable. This
definition shall supersede the definition of such term in the recitals to this
Agreement.
     “Secured Parties” shall mean the holders of the May 2007 Notes that
executed this Agreement, the holders of the November 2007 Notes that are made
party to this Agreement pursuant to the Security Agreement Amendment dated as of
November 16, 2007 between the Company, the Agent and certain of the Secured
Parties and the holders of the July 2008 Notes that are made party to the
Security Agreement pursuant to the Second Security Agreement Amendment dated as
of July 24, 2008, between the Debtor, the Agent and the other parties set forth
therein.
     “Warrants” shall mean the warrants to purchase Common Stock of the debtor
issued pursuant to the May Purchase Agreement, the November Purchase Agreement,
or the July Purchase Agreement as applicable.
     (c) Section 1(c) of the Security Agreement is hereby amended by inserting
the following defined terms in appropriate alphabetical order therein:

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     “July 2008 Notes” means the Series D 6% Secured Convertible Promissory
Notes of the Debtor in the aggregate principal amount of Two Million One Hundred
Thousand Dollars ($2,100,000) issued pursuant to the July Purchase Agreement.
     “July Purchase Agreement” means the Convertible Note and Warrant Purchase
Agreement dated as of July 24, 2008 among the Debtor and certain of the Secured
Parties.
     (d) The Security Agreement is hereby amended by inserting the following
Section 20:
“20. Amendment. The provisions of this Agreement may be amended in whole or in
part, modified or supplemented, and waivers or consents to departures from the
provisions hereof may be given, by a written instrument executed by the Agent,
the Required Secured Parties and Debtor.”
3. Joinder. The July Secured Parties executing this Amendment are hereby joined
to and made party to the Security Agreement as amended pursuant to the First
Amendment and hereby as “Secured Parties” thereunder and agree to be bound by
all of the terms thereof. The Debtor, the Agent, the May Secured Parties and the
November Secured Parties hereby consent to such joinder.
4. Consent to July Financing. The Secured Parties hereby consent to the
July 2008 Financing and, in connection therewith, the Debtor’s execution,
delivery and performance of the July Purchase Agreement, the sale of the
July 2008 Notes and the consummation of the other transactions and execution and
performance of the other agreements and documents contemplated by the July
Purchase Agreement.
5. Consent to pari passu Rank. The Secured Parties hereby acknowledge and agree
that the security interests granted in connection with the July 2008 Notes will
rank pari passu in priority of payment and in all other respects with the
security interests granted in connection with the May 2007 Notes and
November 2007 Notes, and the Secured Parties hereby consent to such pari passu
ranking for all purposes under the Security Agreement, the May 2007 Notes, the
November 2007 Notes and the related transaction documents.
6. Full Force and Effect of the Security Agreement. Except as specifically
amended pursuant to the First Amendment and hereby, the Security Agreement shall
remain of full force and effect and is hereby ratified and affirmed in all
respects.
7. Governing Law, etc. This Amendment shall be deemed to be a contract made
under the laws of the State of New York and shall be construed in accordance
with such laws without reference to conflict of laws.
8. Counterparts; Facsimile Execution. This Amendment may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute

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one and the same instrument. Executed signature pages delivered by facsimile or
other means of electronic image transmission shall have the same force and
effect as an original thereof.
[Signature pages follow.]

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IN WITNESS WHEREOF, the parties hereto have caused this Second Security
Agreement Amendment to be duly executed and delivered as of the date first above
written.

            AXS-ONE INC.
      By:   /s/ Joseph P. Dwyer         Name:   Joseph P. Dwyer        Title:  
CFO        BLUELINE CAPITAL PARTNERS, LP, as Agent
      By:   /s/ Timothy P. Bacci         Name:   Timothy P. Bacci       
Title:   Managing Partner   

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OMNIBUS SIGNATURE PAGE TO
AXS-ONE, INC.
SECOND SECURITY AGREEMENT AMENDMENT
The undersigned, as a Secured Party, hereby executes and delivers the Second
Security Agreement Amendment to which this signature page is attached, which,
together with all counterparts of the Second Security Agreement Amendment and
signature pages of the other parties named in said Second Security Agreement
Amendment, shall constitute one and the same document in accordance with the
terms of the Second Security Agreement Amendment.

         
 
     Print Name:   Robert J. Migliorino

         
 
  By:   /s/ Robert J. Migliorino
 
       
 
  Name:    
 
       
 
  Title:    
 
       

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OMNIBUS SIGNATURE PAGE TO
AXS-ONE, INC.
SECOND SECURITY AGREEMENT AMENDMENT
The undersigned, as a Secured Party, hereby executes and delivers the Second
Security Agreement Amendment to which this signature page is attached, which,
together with all counterparts of the Second Security Agreement Amendment and
signature pages of the other parties named in said Second Security Agreement
Amendment, shall constitute one and the same document in accordance with the
terms of the Second Security Agreement Amendment.

         
 
  Print Name:   BlueLine Capital Partners III, LP
 
       
 
  By:   /s/ Timothy P. Bacci
 
       
 
  Name:   Timothy P. Bacci
 
       
 
  Title:   Managing Partner
 
       

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OMNIBUS SIGNATURE PAGE TO
AXS-ONE, INC.
SECOND SECURITY AGREEMENT AMENDMENT
The undersigned, as a Secured Party, hereby executes and delivers the Second
Security Agreement Amendment to which this signature page is attached, which,
together with all counterparts of the Second Security Agreement Amendment and
signature pages of the other parties named in said Second Security Agreement
Amendment, shall constitute one and the same document in accordance with the
terms of the Second Security Agreement Amendment.

         
 
     Print Name:   BlueLine Capital Partners II, LP

         
 
  By:   /s/ Timothy P. Bacci
 
       
 
  Name:   Timothy P. Bacci
 
       
 
  Title:   Managing Partner
 
       

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OMNIBUS SIGNATURE PAGE TO
AXS-ONE, INC.
SECOND SECURITY AGREEMENT AMENDMENT
The undersigned, as a Secured Party, hereby executes and delivers the Second
Security Agreement Amendment to which this signature page is attached, which,
together with all counterparts of the Second Security Agreement Amendment and
signature pages of the other parties named in said Second Security Agreement
Amendment, shall constitute one and the same document in accordance with the
terms of the Second Security Agreement Amendment.

         
 
     Print Name:   Philip L. Rugani
 
       

         
 
  By:   /s/ Philip L. Rugani
 
       
 
  Name:   Philip L. Rugani
 
       
 
  Title:   EVP Field Operations
 
       

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OMNIBUS SIGNATURE PAGE TO
AXS-ONE, INC.
SECOND SECURITY AGREEMENT AMENDMENT
The undersigned, as a Secured Party, hereby executes and delivers the Second
Security Agreement Amendment to which this signature page is attached, which,
together with all counterparts of the Second Security Agreement Amendment and
signature pages of the other parties named in said Second Security Agreement
Amendment, shall constitute one and the same document in accordance with the
terms of the Second Security Agreement Amendment.

         
 
     Print Name:   William P. Lyons
 
       

         
 
  By:   /s/ William P. Lyons
 
       
 
  Name:   William P. Lyons
 
       
 
  Title:   CEO
 
       

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OMNIBUS SIGNATURE PAGE TO
AXS-ONE, INC.
SECOND SECURITY AGREEMENT AMENDMENT
The undersigned, as a Secured Party, hereby executes and delivers the Second
Security Agreement Amendment to which this signature page is attached, which,
together with all counterparts of the Second Security Agreement Amendment and
signature pages of the other parties named in said Second Security Agreement
Amendment, shall constitute one and the same document in accordance with the
terms of the Second Security Agreement Amendment.

         
 
     Print Name:   Aston Assets, S.A.
 
       

         
 
  By:   /s/ Alejandro Gonzalez
 
       
 
  Name:   Alejandro Gonzalez
 
       
 
  Title:   Legal Representative (Power of Attorney)
 
       

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OMNIBUS SIGNATURE PAGE TO
AXS-ONE, INC.
SECOND SECURITY AGREEMENT AMENDMENT
The undersigned, as a Secured Party, hereby executes and delivers the Second
Security Agreement Amendment to which this signature page is attached, which,
together with all counterparts of the Second Security Agreement Amendment and
signature pages of the other parties named in said Second Security Agreement
Amendment, shall constitute one and the same document in accordance with the
terms of the Second Security Agreement Amendment.

         
 
     Print Name:   Daniel Burch
 
       

         
 
  By:   /s/ Daniel Burch
 
       
 
  Name:   Daniel Burch
 
       
 
  Title:   Director
 
       

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OMNIBUS SIGNATURE PAGE TO
AXS-ONE, INC.
SECOND SECURITY AGREEMENT AMENDMENT
The undersigned, as a Secured Party, hereby executes and delivers the Second
Security Agreement Amendment to which this signature page is attached, which,
together with all counterparts of the Second Security Agreement Amendment and
signature pages of the other parties named in said Second Security Agreement
Amendment, shall constitute one and the same document in accordance with the
terms of the Second Security Agreement Amendment.

         
 
     Print Name:   Harold D. Copperman
 
       

         
 
  By:   /s/ Harold D. Copperman
 
       
 
  Name:    
 
       
 
  Title:    
 
       

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OMNIBUS SIGNATURE PAGE TO
AXS-ONE, INC.
SECOND SECURITY AGREEMENT AMENDMENT
The undersigned, as a Secured Party, hereby executes and delivers the Second
Security Agreement Amendment to which this signature page is attached, which,
together with all counterparts of the Second Security Agreement Amendment and
signature pages of the other parties named in said Second Security Agreement
Amendment, shall constitute one and the same document in accordance with the
terms of the Second Security Agreement Amendment.

         
 
     Print Name:   Jurika Family Trust U/A 1989
 
       

         
 
  By:   /s/ William K. Jurika
 
       
 
  Name:   William K. Jurika
 
       
 
  Title:   Trustee
 
       

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OMNIBUS SIGNATURE PAGE TO
AXS-ONE, INC.
SECOND SECURITY AGREEMENT AMENDMENT
The undersigned, as a Secured Party, hereby executes and delivers the Second
Security Agreement Amendment to which this signature page is attached, which,
together with all counterparts of the Second Security Agreement Amendment and
signature pages of the other parties named in said Second Security Agreement
Amendment, shall constitute one and the same document in accordance with the
terms of the Second Security Agreement Amendment.

         
 
  Print Name:   Primafides (Suisse) S.A. as Trustees of Sirius Trust
 
       

         
 
  By:   /s/ P.DeSalis      /s/ D. Moran
 
       
 
  Name:   Primafides (Suisse) S.A. as Trustees of Sirius Trust
 
       
 
  Title:   Directors
 
       

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