Exhibit 10.6
AMENDED AND RESTATED SUBORDINATION AGREEMENT
     This Amended and Restated Subordination Agreement is made as of July 24,
2008 by and between BlueLine Capital Partners, LP, a Delaware limited
partnership, as agent (“Agent”) for the secured parties under the Security
Agreement (as defined below), and Sand Hill Finance, LLC (“SHF”).
Recitals
     Pursuant to a Security Agreement dated as of May 29, 2007, as amended on
November 16, 2007 and July 24, 2008 (“Security Agreement”), between AXS-One Inc.
(“Borrower”), Agent and the other secured parties set forth therein (Agent and
such other secured parties together, the “Creditors”), Borrower granted a
security interest in certain of its assets to Agent for the benefit of the
Secured Parties. To induce SHF to purchase accounts and extend credit to
Borrower, from time to time, or to grant such renewals or extension of any such
credit or purchase, Agent, on behalf of the Creditors, is willing to
subordinate: (i) all of Borrower’s indebtedness and obligations to the
Creditors, whether presently existing or arising in the future (the
“Subordinated Debt”) to all of Borrower’s indebtedness and obligations to SHF;
and (ii) all of Creditor’s security interests, if any, in the Borrower’s
property, to all of SHF’s security interests in the Borrower’s property.
     NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
     1. Creditors subordinate any security interest or lien that the Creditors
may have in any property of Borrower. Notwithstanding the respective dates of
attachment or perfection of the security interest of the Creditors and the
security interest of SHF, the security interest of SHF in the Collateral, as
defined in the Financing Agreement between Borrower and SHF, dated as of May 22,
2008, as amended from time to time (the “Financing Agreement”), shall at all
times be prior to the security interest of the Creditors. Capitalized terms not
otherwise defined herein shall have the same meaning as in the Financing
Agreement.
     2. All Subordinated Debt is subordinated in right of payment to all
obligations of Borrower to SHF now existing or hereafter arising, together with
all costs of collecting such obligations (including attorneys’ fees), including,
without limitation, all interest accruing after the commencement by or against
Borrower of any Bankruptcy, reorganization or similar proceeding, and all
obligations under the Financing Agreement (the “Senior Debt”).
     3. Creditors will not demand or receive from Borrower (and Borrower will
not pay to the Creditors) all or any part of the Subordinated Debt, by way of
payment, prepayment, setoff, lawsuit or otherwise, nor will the Creditors
exercise any remedy with respect to the Collateral, nor will the Creditors
commence, or cause to commence, prosecute or participate in any administrative,
legal or equitable action against Borrower, for so long as any portion of the
Senior Debt remains outstanding. Notwithstanding the foregoing, the Creditors
shall be entitled to receive each regularly scheduled payment of interest under
any promissory note issued by Borrower to Creditor evidencing the Subordinated
Debt, provided that no Event of Default (as defined in the Financing Agreement)
has occurred under the Financing Agreement that is continuing or would exist
immediately after giving effect to such payment. Creditors shall promptly
deliver to SHF in the form received (except for endorsement or assignment by the
Creditors where required by SHF) for application to the Senior Debt any payment,
distribution, security or proceeds received by the Creditors with respect to the
Subordinated Debt other than in accordance with this Agreement.
     4. This Agreement shall remain effective for so long as SHF has any
obligation to make credit extensions to Borrower or Borrower owes any amounts to
SHF under the Financing Agreement or otherwise. If, at any time after payment in
full of the Senior Debt any payments of the Senior Debt must be disgorged by SHF
for any reason (including, without limitation, the Bankruptcy of Borrower), this

 

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Agreement and the relative rights and priorities set forth herein shall be
reinstated as to all such disgorged payments as though such payments had not
been made and the Creditors shall immediately pay over to SHF all payments
received with respect to the Subordinated Debt to the extent that such payments
would have been prohibited hereunder. At any time and from time to time, without
notice to the Creditors, SHF may take such actions with respect to the Senior
Debt as SHF, in its sole discretion, may deem appropriate, including, without
limitation, terminating advances to Borrower, increasing the principal amount,
extending the time of payment, increasing applicable interest rates, renewing,
compromising or otherwise amending the terms of any documents affecting the
Senior Debt and any collateral securing the Senior Debt, and enforcing or
failing to enforce any rights against Borrower or any other person. No such
action or inaction shall impair or otherwise affect SHF’s rights hereunder.
     5. Notwithstanding any provision herein to the contrary, nothing contained
in this Agreement shall apply to or restrict any portion of the Subordinated
Debt from being converted into Borrower’s equity securities in accordance with
its existing terms.
     6. This Agreement shall bind any successors or assignees of the Creditors
and shall benefit any successors or assigns of SHF. This Agreement is solely for
the benefit of the Creditors and SHF and not for the benefit of Borrower or any
other party. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
instrument. This Agreement represents the entire agreement with respect to the
subject matter hereof, and supersedes all prior negotiations, agreements and
commitments. The Creditors are not relying on any representations by SHF or
Borrower in entering into this Agreement, and the Creditors have kept and will
continue to keep fully apprised of the financial and other condition of
Borrower. This Agreement may be amended only by written instrument signed by the
Agent and SHF.
     7. This Agreement shall be governed by and construed in accordance with the
laws of the State of California, without giving effect to conflicts of laws
principles. The Creditors and SHF submit to the jurisdiction of the state and
federal courts located in Santa Clara County, California. THE CREDITORS AND SHF
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN. If the jury waiver set forth in this Section is not
enforceable, then any dispute, controversy or claim arising out of or relating
to this Agreement or any of the transactions contemplated herein shall be
settled by final and binding arbitration held in San Jose, California in
accordance with the then applicable Commercial Arbitration Rules of the American
Arbitration Association. Judgment upon any award resulting from arbitration may
be entered into and enforced by any state of federal court having jurisdiction
thereof. In the event of any legal action to enforce the rights of a party under
this Agreement, the party prevailing in such action shall be entitled, in
addition to such other relief as may be granted, all reasonable costs and
expenses, including reasonable attorneys’ fees, incurred in such action.
[Signature page follows.]

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

              “Agent on behalf of Creditors”
 
            BLUELINE CAPITAL PARTNERS, LP, as Agent
 
       
 
  By:   /s/ Timothy P. Bacci
 
       
 
  Title:   Managing Partner
 
       
 
            “SHF”
 
            SAND HILL FINANCE, LLC
 
       
 
  By:   /s/ Mark Cameron
 
       
 
  Title:   Partner
 
       

     The undersigned approves of the terms of this Agreement.

              “Borrower”
 
            AXS-ONE INC.
 
       
 
  By:   /s/ Joe Dwyer
 
       
 
  Title:   CFO
 
       

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