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Exhibit 10.56

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AXS-One Inc.
301 Route 17 North
Rutherford, New Jersey 07070
 
 
Telephone:
 
201-935-3400
 
      Facsimile:   201-935-2742    
 
 
October 21, 2002

 
 

Mr. Matthew Hayden
President
Hayden Communications, Inc.
1401 Havens Drive, Suite 100
North Myrtle Beach, SC 29582

Dear Mr. Hayden:

        This letter will serve as an agreement between AXS-One Inc. ("AXS-One"),
and Hayden Communications, Inc. ("Consultant") regarding AXS-One's retention of
Consultant to provide investor relations services to AXS-One ("Services").

          1.    (a)    Consultant will provide, in a timely and professional
manner, the Services to AXS-One as are described in Exhibit A attached hereto
and made a part hereof. In the event of a conflict between the terms of this
Agreement and the terms of Exhibit A, this Agreement shall govern.

                (b)    The content and format of all communications between
Consultant and third parties relating to AXS-One must be approved in advance by
the CEO of AXS-One or such AXS-One representatives as shall be designated by
such CEO from time to time during the term hereof. Consultant will ensure that
all of its employees contacting third parties relating to AXS-One will conduct
themselves at all times during such contacts in a manner that will reflect
favorably on AXS-One and its products and services.

          2.    (a)    As full and complete compensation and consideration for
Consultant's Services hereunder, including, except as otherwise expressly set
forth in Paragraph 2(d) below, as full reimbursement for Consultant's expenses
incurred in performing the Services, AXS-One shall (i) pay to Consultant a
monthly service fee ("Fee") of $5,000 for each whole month during the actual
term of this Agreement (Fees for partial months during the term shall be
pro-rated), and (ii) issue to Consultant the warrants to purchase AXS-One common
stock as provided for in Paragraph 2(b) below. Each Fee shall be invoiced by
Consultant to AXS-One on the first business day of the month for which such Fee
is payable, and Fees and permitted expenses shall be paid net 45 days following
the date of AXS-One's receipt of a proper written invoice from Consultant.

                (b)    In addition to the Fees provided for in Paragraph 2(a)
above, AXS-One shall, upon the expiration or termination of the term of this
Agreement, issue to Consultant warrant(s), substantially in the form of
Exhibit B attached hereto and made a part hereof (collectively, the "Warrant"),
to purchase the number of shares of common stock of AXS-One which is equal to
the product of 10,000 shares multiplied by the number of whole months during the
actual term of this Agreement (shares for partial months during the term shall
be pro-rated); but in no event shall the Warrant permit Consultant to purchase
more than a total of 120,000 shares of AXS-One common stock. The Warrant shall
be 100% vested on the date of its issuance by AXS-One, as aforesaid, and shall
(subject to the conditions set forth in the Warrant) be exercisable at any time,
and from time to time, during a period of three (3) years following the date of
such issuance. The exercise price for the Warrant shall be (i) for the initial
up to 60,000 shares covered by the Warrant, $0.41 per share, which represents
the closing price for one share of AXS-One common stock on

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the American Stock Exchange on October 1, 2002 (the commencement date of the
term of this Agreement), and (ii) for the remaining shares covered by the
Warrant, if any, the closing price for one share of AXS-One common stock on the
American Stock Exchange (or, if on such date, AXS-One's common stock is not
traded on the American Stock Exchange, the closing price on the principal
national stock exchange, or, if there is none, over-the-counter market or "pink
sheets", upon which such common stock is then traded) on April 1, 2003.

                (c)    Notwithstanding any other provision of this Agreement to
the contrary, in the event that during the term of this Agreement, all, or
substantially all, of the business, assets or common stock of AXS-One is
acquired by a person or entity owning less than five percent (5%) of AXS-One's
common stock as of October 1, 2002, then, promptly following the later of the
date that (i) AXS-One signs a definitive agreement related to such acquisition,
or (ii) AXS-One's Board of Directors approves such acquisition, AXS-One shall,
in replacement of and substitution for its obligations under Paragraph 2(b)
above, issue to Consultant the Warrant described in Paragraph 2(b) above for
120,000 shares of common stock, which Warrant shall be 100% vested on the date
of such issuance; it being the intent of the parties that Consultant shall have
the opportunity to exercise such Warrant and exchange the resulting shares of
common stock for the consideration provided for in the acquisition. If the
Warrant is issued under this Paragraph 2(c) on or prior to April 1, 2003, then
the exercise price for all of the shares covered by the Warrant shall be $0.41
per share; otherwise the exercise price rules of Paragraph 2(b) above shall
apply.

                (d)    AXS-One shall reimburse Consultant for any reasonable and
necessary (i) out-of-town travel (transportation, lodging and meal) expenses
incurred by Consultant's employees, at the express request of AXS-One, during
the performance of the Services, in accordance with the terms and conditions of
AXS-One's policies therefor (including documentation requirements) for AXS-One's
own employees, and (ii) documented fees paid by Consultant to third parties
(e.g., postage for investor packages or research reports, news wire service
fees, fax-broadcasting news release fees, photocopying/printing fees) in
connection with the Services, at Consultant's actual costs therefor; provided,
however, that such third party fees must be approved by AXS-One in writing in
advance of being incurred if such fees will exceed $500 in any single instance.
AXS-One may pre-approve in writing reimbursement of reasonable and necessary
expenses for other extraordinary items such as broker lunch presentations or
media campaigns.

          3.    (a)    The term of this Agreement shall commence on October 1,
2002 and expire as of September 30, 2003, unless earlier terminated by either
party, solely as a result of a material breach of this Agreement by the other
party, which breach remains uncured for a period of thirty (30) days following
the breaching party's receipt of a written notice from the other party setting
forth such breach and demanding its cure. Any such termination by AXS-One as a
result of an uncured material breach by Consultant prior to expiration shall
immediately relieve AXS-One of any further obligation to pay any then unpaid
Fees or issue warrants to purchase unearned shares pursuant to Paragraph 2
above. Any such termination by Consultant as a result of an uncured material
breach by AXS-One prior to expiration shall not relieve AXS-One of the
obligation to pay any Fees, or issue warrants to purchase shares pursuant to
Paragraph 2 above for the entire term of the Agreement.

                (b)    Upon the expiration or any earlier termination of this
Agreement, Consultant shall immediately turn over to AXS-One all materials
belonging to AXS-One, including, without limitation, any and all materials
created for AXS-One under this Agreement. Consultant shall not retain any copies
of the foregoing materials.

          4.    It is understood and agreed that Consultant is, and shall
remain, an independent contractor. Consultant acknowledges and agrees that it
shall be solely Consultant's obligation to report to taxation and similar
authorities all compensation received by Consultant pursuant to this Agreement
and to pay all taxes or impositions thereon, and Consultant agrees to indemnify
AXS-One and to hold it harmless to the extent of any obligation imposed against
AXS-One to pay any withholding taxes, social security, unemployment or
disability insurance, or similar items in connection with any payments made to

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Consultant by AXS-One pursuant to this Agreement. Consultant's obligations under
this paragraph shall survive indefinitely the termination of this Agreement.

          5.    It is understood and agreed that Consultant shall have no
authority whatsoever to bind AXS-One to any contract or otherwise, or to use
AXS-One's name for any purpose not expressly required as part of the Services;
provided, however, that Consultant may include AXS-One's name in its published
list of clients.

          6.    Consultant acknowledges that it may acquire knowledge and
information about AXS-One, including, without limitation, various trade secrets,
confidential terminology, proprietary information, business plans, customer
names, programs, compilations of information, records, specifications, etc., and
that all such knowledge and information acquired or developed hereunder are, and
shall be and remain, the confidential and proprietary information of AXS-One
("Confidential Information"). Consultant agrees to hold, and to cause its
employees to hold, such Confidential Information in strict confidence and agrees
not to disclose the same to others or use the same in any way, commercially or
otherwise, either before or after the expiration or termination of this
Agreement, without the prior written consent of the AXS-One's CEO or CFO.
Consultant further agrees to take all action necessary to protect the
confidentiality of the Confidential Information, and to prevent the unauthorized
use or copying of the Confidential Information, which comes into Consultant's
possession. Upon AXS-One's request or the expiration or termination of this
Agreement, Consultant shall return all written, recorded or machine readable
Confidential Information to AXS-One. Consultant's obligations under this
paragraph shall survive indefinitely the expiration or termination of this
Agreement.

          7.    (a)    AXS-One and Consultant agree that any and all work
product arising from Consultant's performance of the Services (collectively, the
"Work"), shall belong exclusively to AXS-One, whether or not AXS-One uses such
material, and Consultant hereby irrevocably assigns, and shall cause its
employees to irrevocably assign, all rights of every kind, including, without
limitation, copyright rights, in the Work to AXS-One. AXS-One shall have the
right to hereafter use all of the Work, any part or parts thereof, or none of
the Work, as AXS-One sees fit, without the payment of any compensation to
Consultant, other than the compensation expressly provided for in Paragraph 2
above. No rights to or in the Work are reserved to Consultant or to Consultant's
employees, and Consultant shall not use any of the Work for any of its other
clients.

                (b)    Notwithstanding Paragraph 7(a) above, nothing in this
Agreement shall be construed as prohibiting Consultant from utilizing any of its
generalized expertise, methodologies, or increase in residual knowledge
resulting from the Services, in any other project.

          8.    The rights and obligations of a party hereunder shall not be
assigned or transferred by operation of law or otherwise; provided, however,
that AXS-One may, upon written notice to Consultant, assign this Agreement to
the successor of its business and/or assets.

          9.    Consultant represents and warrants that it is not under any
pre-existing obligation inconsistent with the provisions of this Agreement or
Consultant's performance of the Services to the best of its abilities, and
Consultant agrees not to hereafter during the term of this Agreement assume any
obligation inconsistent with the provisions of this Agreement or Consultant's
performance of the Services to the best of its abilities. Without limiting the
generality of the foregoing, Consultant agrees not to perform any investor
relations services for any competitor of AXS-One during the term of this
Agreement and for a period of six (6) months following the expiration or
termination of this Agreement.

        10.    In the performance of the Services, Consultant shall comply with
any and all applicable Federal, state or local statutes and laws, and all
ordinances, rules and regulations promulgated thereunder.

        11.    This Agreement sets forth the entire understanding, and hereby
supersedes any and all prior agreements, oral or written, heretofore made,
between the parties with respect to the subject matter of this Agreement, and
there are no representations, warranties, covenants, agreements or
understandings, oral

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or otherwise, express or implied, affecting this Agreement not expressly set
forth herein. No delay on the part of a party in exercising any of its
respective rights hereunder or the failure to exercise the same, nor the
acquiescence in or waiver of a breach of any term, provision or condition of
this Agreement shall be deemed or construed to operate as a waiver of such
rights or acquiescence thereto, except in the specific instance for which given.
None of the terms, conditions or provisions of this Agreement shall have been
held to have been changed, varied, waived, modified or altered, except by a
statement in writing signed by duly authorized representatives of both of the
parties hereto.

        12.    In the event that any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

        13.    This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York without regard to its conflict-of-laws
rules.

        Please indicate your acceptance of the terms and conditions of this
Agreement by signing the enclosed copy of this letter at the space indicated
below and returning it to me at your earliest convenience.

 
 
Very truly yours,
 
 
AXS-ONE INC.
 
 
By:
/s/  JOHN RADE      

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John Rade
President, CFO

The foregoing is accepted and agreed to as of the date written above.

HAYDEN COMMUNICATIONS, INC.
 
 
By:
 
/s/  MATTHEW HAYDEN      

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Matthew Hayden
President
 
 

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EXHIBIT A

SCOPE OF SERVICES/PROGRAMS/ACTIVITIES

Hayden Communications, Inc. (HC) will develop, implement, and maintain an
ongoing stock market support system for AXS-One Inc. (AXO) with the general
objective of expanding awareness in AXO among stockbrokers, analysts, micro-cap
portfolio/fund managers, market makers, and the appropriate financial & trade
publications. HC agrees that it will reasonably be available during regular
business hours to advise, counsel and inform designated officers and employees
of AXO about the software industry, business, financial marketplace,
competitors, business acquisitions and other aspects of or concerning AXO's
business about which HC has knowledge or expertise. In addition, HC will perform
the following:

1. PROFESSIONAL INVESTMENT COMMUNITY AWARENESS to build a core of informed
stockbrokers, market makers, security analysts and portfolio/fund managers who
are interested in understanding and becoming involved in AXO. The system will be
established through the following methods (the appropriate audience will be a
subset of HC's entire database):

A.Introductions to professionals at select firms, with a focus on members of the
Financial Community in various geographic regions: the United States, Canada and
Europe. The targeted group of professionals, which has been drawn from HC's
proprietary database of contacts, would include:

1.Over 25,000 Equity Brokers

2.Over 1,500 Analysts (Buy and Sell Side—both generalists and industry
specialists)

3.Over 4,500 Micro-Cap Portfolio/ Fund Managers

4.Over 120 Market Makers (both retail and wholesale)

5.Financial, Trade and Industry Publications

B.Introductions to High Net-Worth accredited investors who build positions in
companies similar to AXO and are familiar with other quality companies, which HC
currently and previously represented.

C.Broker conference calls/presentations arranged by HC in select cities (and at
compatible times) with top management at AXO. Cities we would schedule meetings
include New York, Philadelphia, Baltimore, Boston, Dallas, Denver, Ft.
Lauderdale, Houston, Atlanta, Chicago, LA, Minneapolis, Miami, Orange County,
CA, Raleigh, San Diego, San Francisco, St. Louis, D.C. and other select cities.

D.All interested parties will be continually updated of Client's progress via
phone conversations and through our fax/e-mail list for news releases.

2. SHAREHOLDER COMMUNICATIONS focuses on maintaining shareholder awareness of
AXO activities and fostering a sense of loyalty in the ownership of the stock.
Current shareholders represent the "Supply Side" and with proper communication
to that audience, the dynamics of supply and demand are likely to work in AXO's
favor.

A.Handle investor requests for timely information via the telephone and e-mail.
HC will have a knowledgeable associate available during market hours to field
and respond to all investor inquiries in a timely manner. A majority of these
calls will be generated from HC Clients who take a position or have an interest
in AXO.

B.HC will provide the names and addresses of those requesting due diligence
packages to the appropriate contact at AXO within 2 business hours after
receiving the request.

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C."CEO letter" to the shareholders updating AXO achievements and properly
positioning the company's strategic growth opportunities. This letter can be
placed on the corporate Web site, where it can easily be updated at appropriate
times. Due to Regulation FD, all correspondence must be forwarded to the wire
prior to web posting. This letter can be combined with the following:

D.Quarterly Interim-Reports to the shareholders, which provide a complete update
on AXO's performance, financial position and material developments. HC will
assist in the creation, design, printing and mailing of a 3-fold brochure that
is attractive and informative, yet simple. In order to be conscious of corporate
costs, these quarterly interim reports may be posted on the corporate web site.

3. MEDIA RELATIONS is utilized to provide information on AXO to both industry
and financial professionals who follow the software services industry. A
positive article from a national publication can provide substantial credibility
among investors, shareholders and current or prospective customers.

A.HC's Media Department will develop a focus list of industry, trade and
financial publications and contact appropriate editors, make introductions and
review and manage editorial calendars for relevant upcoming articles. Interested
parties will be updated on material news releases and corporate developments.
Examples of these publications are: Smart Money, Fortune, Kiplinger's, Business
Week, Forbes ASAP, Business 2.0, Investors Business Daily, The Wall Street
Journal, Bloomberg and Worth. Other Software and Technology Publications
include: Smart Business, Fast Company, CIO, New Jersey Online, Business &
Technology, Commerce & Industry, Computer Technology News, Computer Technology
Review, E-Business World, Electronic Servicing & Technology, eWeek Magazine,
Fortune Small Business Magazine, Inc., Industrial Process Products & Technology,
New Technology Week, Small Cap Center, Smart Business, Technology at Work,
Technology Review & Today, Techscan: The Managers Guide to Technology, Trade &
Commerce. ZDNet Magazine, 123 Jump, and Micro-Cap News Network.

B.Financial Newsletter campaign. We will work with our many financial newsletter
editors and publishers for a "Buy Recommendation" for AXO. The newsletters we
contact have a paid subscription base of investors who focus solely on micro cap
stocks. A "Buy Recommendation" from one of these letters can produce a great
deal of new investor interest. A recommendation of this type gives third party
support and opinion. HC has been able to achieve "Buy Recommendations" for
former and current clients in: The Kon-Lin letter, The Conservative Speculator,
Dick Davis Digest, George Southerland's Special Investment Situations, The
Patient Inve$tor, and Equities Special Situations. Other publications we have
worked with and will introduce AXO to include: The Red Chip Review, Investor's
Digest, The Quiet Investor, Acker Letter, High-Growth Newsletter, Bullish
Investor, Low-Priced Stocks, Micro-Stock Digest and The Napeaugue Letter.

4. THE FINANCIAL PRESS is utilized to disseminate newsworthy events quickly and
efficiently through the newswire services (Dow Jones, Reuters, The Wall Street
Journal, New York Times, The Associated Press, Moody's, Standard & Poors, Fitch
Financial, Knight-Ridder, Bloomberg, and Investor's Business Daily).

A.HC will assist AXO to draft and complete press releases on all material events
as deemed by the Company. AXO management and corporate counsel will approve all
releases before they are sent to the wire.

B.HC will disseminate news releases through a Broadcast Fax and/or electronic
mail (e-mail) to our established database of financial professionals including:
special situation analysts, brokers, fund managers, individual investors, money
managers, and current or prospective individual shareholders who are already
invested or have expressed an interest in AXO.

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C.HC will work with national and regional circuits to put AXO news releases and
story in front of newspapers, television, radio stations and the relevant
technology trade publications.

5. STRATEGIC OPPORTUNITIES are utilized to introduce management to new
companies, which could become key strategic partners, customers or acquisition
candidates. HC will also manage a schedule of industry and financial trade shows
and conferences where applicable.

A.HC will continually evaluate strategic M&A and partnership opportunities for
AXO, which are consistent with management's focus and could include
introductions to investment banking entities and/or acquisition candidates.

B.HC will screen all investment firms for upcoming financial conferences, which
would be appropriate for AXO. HC will work through the proper channels with the
goal of receiving invitations for management to present at relevant conferences.

AGENDA (Initial 180 days)

A.Establish a time line of expected corporate events. Streamline the
presentation to articulate AXO's story in a clear and concise format, focusing
on Corporate Image, AXO's competitive position and key growth strategies.

B.Generate a two and four-page Corporate Profile, which clearly articulates
AXO's current business and financial position, as well as its strategy for
future growth.

C.Assist AXO in updating its investor package and investor information via the
company's corporate Web site. Assist with Shareholders' letter and quarterly
update.

D.Assist AXO management in developing and/or updating its Power Point
presentation to utilize during corporate presentations. Key points of this
presentation include: Financial and market overview, information on key
management and core business strengths, AXO's strategic growth plans, customer
list, and the competitive landscape.

E.Target select brokers and micro-cap fund managers, which follow companies that
have a similar profile to AXO, and/or are focused on value situations.

F.Expand the number of market makers, which utilize retail support.

G.Plan in house broker meetings/conference calls in select cities. Assist
management with presentations to the Stock Broker's society. Follow up with
phone calls to create "action" and to gauge management's effectiveness in
articulating the story.

H.Target newsletter editors and publishers for a "Buy Recommendation". Focus on
Trade, Financial and Industry Publications for appropriate stories on AXO's
services, attributes and value proposition to the marketplace.

I.Maintain and update the database to ensure that all press releases are faxed
and/or e-mailed to all interested professionals.

J.Target "Buy" and "Sell" side analysts, including those at boutique and 2nd
Tier firms for a "Buy Recommendation", along with analysts representing
institutional money.

K.Contact Brokerage Firms who hold conferences for the purpose of receiving an
invitation for management to present.

L.If appropriate, introduce AXO to possible acquisition and/or joint venture
candidates.

M.Provide progress reports to senior management when appropriate. As AXO attains
a higher market capitalization and share price we will open new doors, which
will enable our firm to introduce AXO to an expanded audience.

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N.Evaluate achievements after the first 180 days and develop a new agenda.

Many of the above items will occur simultaneously. Certain items will have
chronological priority over others, however for the most part agenda items will
progress in unison throughout the initial 180-day period. As AXO grows and
evolves, we will recommend changes to the Agenda that compliment that growth. As
the company continues to execute its strategic growth plan by expanding its
product portfolio and showing continued financial performance, we will have new
doors open, which will enable us to target a different group of brokers,
analysts and portfolio/fund managers. At each stage of growth, the appropriate
approach to the market will be incorporated into the agenda for optimal results.
A new formal Agenda will be created after the 180-day period, or earlier if
necessary.

Assuming a clear and honest reason to believe that AXO's efforts are leading
ultimately to success and greater profitability, the end results of this
financial communication and awareness campaign should be:

*An increase in the number of financial professionals (including brokers,
institutions and analysts) and individual investors well educated and
knowledgeable about AXO: including senior management, the company's services and
technology, as well as its current financial condition and growth opportunities.

*An increase in the number of articles printed in both trade and financial
publications.

*An increase in the realistic price/earnings (P/E), price/cash flow ratio (P/CF)
or price/net asset value, in relation to the overall average P/E or P/CF ratio
of the stock market in any given time.

*An increase in liquidity of the common stock.

*A broader and more diverse shareholder base.

*An increase in AXO's market capitalization.

*Easier access to the capital markets, if attractive acquisitions are found or
additional capital is required.

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EXHIBIT B

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
NEITHER THIS WARRANT NOR ANY INTEREST HEREIN MAY BE SOLD, TRANSFERRED, PLEDGED
OR OTHERWISE DISPOSED OF UNLESS AN APPLICABLE REGISTRATION STATEMENT UNDER SUCH
ACT AND RULES AND REGULATIONS THEREUNDER IS THEN IN EFFECT, OR IN THE OPINION OF
HOLDER'S COUNSEL (WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY), SUCH
REGISTRATION UNDER SUCH ACT IS NOT REQUIRED. BY ITS ACCEPTANCE HEREOF, THE
HOLDER OF THIS CERTIFICATE REPRESENTS THAT IT IS ACQUIRING THE WARRANT FOR
INVESTMENT AND AGREES TO COMPLY IN ALL RESPECTS WITH ARTICLE III OF THIS
WARRANT.

WARRANT
to Purchase Common Stock of
AXS-ONE INC.
Expiring                        ,            

        THIS IS TO CERTIFY THAT, for value received, HAYDEN
COMMUNICATIONS, INC., or its permitted and registered assigns (collectively, the
"Holder"), is entitled to purchase from the Company            shares of Common
Stock at a purchase price payable upon exercise hereof (the "Exercise Price") of
$            per share. The Common Stock and the Exercise Price are subject to
adjustment in accordance with Article IV hereof. Certain terms used in this
Warrant are defined in Article V.

ARTICLE I
Exercise of Warrant

        1.1    Method of Exercise. To exercise this Warrant in whole or in part,
at any time, subject to Section 1.3 below, commencing on the date of issuance of
this Warrant and ending on the expiration date set forth above (the "Expiration
Date"), the Holder shall deliver to the Company, at the Warrant Office
designated pursuant to Section 2.1, (a) a written notice, in substantially the
form of the Subscription Notice attached as Schedule A hereto, of such Holder's
election to exercise this Warrant, which notice shall specify the number of
shares of Common Stock to be purchased, (b) payment of the Exercise Price in
immediately available funds and (c) the signed original of this Warrant. This
Warrant shall be deemed to be exercised on the date when delivery of such
notice, such funds and this Warrant is made, and any such date is referred to
herein as the "Exercise Date." Upon exercise, the Company shall issue only in
the name of, and deliver to, such Holder a certificate or certificates for the
number of full shares of Common Stock to which such Holder is entitled and a
check or cash with respect to any fractional interest in a share of Common Stock
as provided in Section 1.2. The Holder shall be deemed to have become a holder
of record of such issued Common Stock on the applicable Exercise Date. Upon
exercise of only a portion of the number of shares covered by this Warrant, the
Company shall issue and deliver to the Holder, at the expense of the Company, a
new Warrant covering the number of shares representing the unexercised portion
of this Warrant so surrendered.

        1.2    Fractional Shares. No fractional shares of Common Stock or scrip
shall be issued upon exercise of this Warrant. Instead of any fractional shares
of Common Stock which would otherwise be issuable upon exercise of this Warrant,
the Company shall pay a cash adjustment in respect of such fractional interest
in an amount equal to that fractional interest of the then Current Market Price.

        1.3    Listing on National Securities Exchange. The Company shall, prior
to the issuance of any Warrant Shares, at its expense, promptly obtain and
maintain the listing of the Warrant Shares on such principal national securities
exchange or NASDAQ as the other shares of Common Stock are at such time listed.
The Company shall use its best efforts to file the listing application for the
Warrant Shares with said exchange or NASDAQ, as the case may be, within thirty
(30) days following the Company's issuance of this Warrant, and, notwithstanding
any other provision of this Warrant to the contrary, the Holder may not exercise
this Warrant until the Company notifies the Holder in writing that said listing
application has been approved by such exchange or NASDAQ, as the case may be.

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ARTICLE II
Warrant Office; Transfer,
Division or Combination of Warrant

        2.1    Warrant Office. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's office at 301 Route 17 North, Rutherford, New Jersey 07070 and
may subsequently be such other office of the Company or of any transfer agent of
the Common Stock in the continental United States as to which written notice has
previously been given to the Holder.

        2.2    Ownership of Warrant. The Company may deem and treat the person
in whose name this Warrant is then registered as the Holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in this Article II.

        2.3    Transfer of Warrants. The Company agrees to maintain at the
Warrant Office books for the registration of the issuance, exercise and any
transfers of this Warrant and, subject to the provisions of Article III, this
Warrant and all rights hereunder are transferable, in whole or in part, on such
books, upon surrender of this Warrant at such office, together with a written
assignment of this Warrant, in substantially the form of the Assignment attached
as Schedule B hereto, duly executed by the Holder or its duly authorized agent
or attorney and funds sufficient to pay any transfer taxes payable upon the
making of such transfer. Upon such surrender and payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denominations specified (in increments of the lesser of
(i) 20,000 shares, or the number of shares for which this Warrant is then
exercisable) in such instrument of assignment, and this Warrant shall promptly
be cancelled.

ARTICLE III
Restrictions on Transfer and
Registration Under The Act

        3.1    Restrictions on Transfer. Neither this Warrant, the Warrant
Shares nor any interest herein or therein shall be transferable except upon the
conditions specified in Article II and this Article III, which conditions are
intended to ensure compliance with the provisions of the Act in respect of the
transfer of this Warrant or any interest herein. The Holder will cause any
transferee of this Warrant, the Warrant Shares or any interest herein or therein
held by it to agree to take and hold this Warrant, the Warrant Shares or an
interest herein or therein subject to the provisions and upon the conditions
specified in this Article.

        3.2    Restrictive Legend. This Warrant and each Warrant Share shall
(unless otherwise permitted by the provisions of Section 3.3) include a legend
in substantially the following form, referring to this Warrant or Warrant
Shares, as appropriate:

[THIS WARRANT] [THESE SHARES] [HAS] [HAVE] NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND NEITHER [THIS WARRANT] [THESE SHARES] NOR ANY
INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
UNLESS AN APPLICABLE REGISTRATION STATEMENT UNDER SUCH ACT AND RULES AND
REGULATIONS THEREUNDER IS THEN IN EFFECT, OR IN THE OPINION OF HOLDER'S COUNSEL
(WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY), SUCH REGISTRATION
UNDER SUCH ACT IS NOT REQUIRED. BY ITS ACCEPTANCE HEREOF, THE HOLDER OF THIS
CERTIFICATE REPRESENTS THAT IT IS ACQUIRING [THIS WARRANT] [THESE SHARES] FOR
INVESTMENT AND AGREES TO COMPLY IN ALL RESPECTS WITH ARTICLE III OF [THIS
WARRANT] [THE WARRANT FOR THESE SHARES].

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        3.3    Notice of Proposed Transfers. The Holder and any holder of any
Warrant Share by acceptance hereof or thereof agrees to comply in all respects
with the provisions of this Section. Prior to any proposed transfer of this
Warrant or any Warrant Share, the Holder or holder of Warrant Shares, as the
case may be, shall give written notice to the Company of such holder's intention
to effect such transfer. Each such notice shall describe the manner and
circumstance of the proposed transfer in reasonable detail, and shall be
accompanied by (a) a written opinion of counsel for such holder, reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
proposed transfer may be effected without registration under the Act or
(b) written assurance from the staff of the Commission that it will not
recommend that any action be taken by the Commission in the event such transfer
is effected without registration under the Act. Such proposed transfer may be
effected only if the Company shall have received such notice and such opinion of
counsel or written assurance, whereupon the Holder or the holder of Warrant
Shares, as the case may be, shall be entitled to transfer this Warrant or
Warrant Shares in accordance with the terms of this Warrant and of the notice
delivered by said holder to the Company. Each certificate evidencing this
Warrant or Warrant Shares transferred as above provided shall bear the legend
set forth in Section 3.2, except that such certificate shall not bear such
legend if the opinion of counsel or written assurance referred to above is to
the further effect that neither such legend nor the restriction on transfer in
this Article are required to ensure compliance with the Act.

        3.4    Termination of Conditions and Obligations. The conditions
precedent imposed by this Article upon the transferability of the Warrant Shares
(but not of this Warrant) shall terminate as to any particular Warrant Shares
when such shares shall have been effectively registered under the Act and sold
or otherwise disposed of in accordance with the intended method of disposition
by the seller or sellers thereof set forth in the registration statement
covering such shares or at such time as an opinion of counsel as specified in
Section 3.3 shall have been rendered to the effect set forth in the last
sentence of Section 3.3.

        3.5    Registration Rights. The Holder shall be entitled to the benefits
of the registration rights set forth in Schedule C attached hereto.

ARTICLE IV
Antidilution Provisions

        4.1    Adjustments. (a) The Exercise Price and the number of Warrant
Shares issuable upon exercise of this Warrant shall be subject to adjustment
from time to time as follows:

        (i)    Stock Dividends. If the number of shares of Common Stock
outstanding at any time after the date of issuance of this Warrant is increased
by a stock dividend payable in shares of Common Stock or by a subdivision or
split-up of shares of Common Stock, then immediately after the record date fixed
for the determination of holders of Common Stock entitled to receive such stock
dividend or the effective date of such subdivision or split-up, as the case may
be, the Exercise Price shall be appropriately reduced and the number of shares
of Common Stock to be acquired on exercise of this Warrant shall be increased so
that the Holder, upon exercise of this Warrant thereafter, shall be entitled to
receive the number of shares of Common Stock which it would have owned
immediately following such action had this Warrant been exercised immediately
prior thereto at the aggregate Exercise Price effective prior thereto.

        (ii)    Combination of Stock. If the number of shares of Common Stock
outstanding at any time after the date of issuance of this Warrant is decreased
by a combination of the outstanding shares of Common Stock, then, immediately
after the effective date of such combination, the Exercise Price shall be
appropriately increased and the number of shares of Common Stock to be acquired
on exercise of this Warrant shall be decreased so that the Holder, upon exercise
of this Warrant thereafter, shall be entitled to receive the number of shares of
Common Stock which it would have owned immediately following such action had
this Warrant been exercised immediately prior thereto.

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        (iii)    Reorganization, Etc. In case of any capital reorganization of
the Company, or any reclassification of the Common Stock, or in case of the
consolidation of the Company with or the merger of the Company with or into any
other Person or in case of the sale, lease or other transfer of all or
substantially all of the assets of the Company to any other Person, this Warrant
shall, after such capital reorganization, reclassification, consolidation,
merger, sale, lease or other transfer, be convertible into the number of shares
of stock or other securities or property to which the Common Stock issuable (at
the time of such capital reorganization, reclassification, consolidation,
merger, sale, lease or other transfer) upon exercise of this Warrant would have
been entitled upon such capital reorganization, reclassification, consolidation,
merger, sale, lease or other transfer; and in any such case, if necessary, the
provisions set forth herein with respect to the rights and interests thereafter
of the Holder shall be appropriately adjusted so as to be applicable, as nearly
as may reasonably be, to any shares of stock or other securities or property
thereafter deliverable on the exercise of this Warrant. The subdivision or
combination of shares of Common Stock issuable upon exercise of this Warrant at
any time outstanding into a greater or lesser number of shares of Common Stock
of the Company (whether with or without par value) shall not be deemed to be a
reclassification of the Common Stock of the Company for the purposes of this
clause (iii).

        (iv)    Rounding of Calculations; Minimum Adjustment. All calculations
under this Article IV shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. Any provision of this Article IV
to the contrary notwithstanding, no adjustment to the Exercise Price shall be
made if the amount of such adjustment would be less than $.01, but any such
amount shall be carried forward and an adjustment with respect thereto shall be
made at the time of and together with any subsequent adjustment which, together
with such amount and any other amount or amounts so carried forward, shall
aggregate $.01 or more.

        (b)    Statement Regarding Adjustments. Whenever any adjustments shall
be required as provided in Section 4.1(a), the Company shall forthwith file, at
the Warrant Office and, if different, at the principal office of the Company, a
statement showing in detail such adjustments and the facts requiring such
adjustment, which statement shall also be sent to the Holder.

        (c)    Costs. The Company shall pay all documentary, stamp, transfer or
other transactional taxes attributable to the issuance or delivery of shares of
Common Stock of the Company upon exercise of this Warrant. The Holder shall pay
all documentary, stamp, transfer or other transactional taxes attributable to
any transfer of this Warrant or of the Warrant Shares.

        (d)    Reservation of Shares. The Company shall reserve at all times so
long as this Warrant remains outstanding, free from preemptive rights, out of
its treasury stock or its authorized but unissued shares of Common Stock, or
both, solely for the purpose of effecting the exercise of this Warrant,
sufficient shares of Common Stock to provide for the exercise of this Warrant.

        (e)    Exchange Act. The Company shall comply with the reporting
requirements of Sections 13 and 15(d) of the Exchange Act for so long as and to
the extent that such requirements apply to the Company.

        (f)    Valid Issuance. All shares of Common Stock which may be issued
upon exercise of this Warrant will upon issuance by the Company be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof and the Company shall take no
action which will cause a contrary result (including, without limitation, any
action which would cause the Exercise Price to be less than the par value of the
Common Stock).

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ARTICLE V
Terms Defined

        As used in this Warrant, unless the context otherwise requires, the
following terms have the respective meanings set forth below or in the Section
indicated:

        Act—the Securities Act of 1933, as amended, or any similar Federal
statute, and the rules and regulations of the Commission promulgated thereunder,
all as the same shall be in effect at the time.

        Commission—the Securities and Exchange Commission, or any other Federal
agency then administering the Act.

        Common Stock—the Company's authorized Common Stock, par value $.01 per
share, as such class existed on the date hereof, and any other securities as to
which this Warrant becomes exercisable pursuant to Article IV, including stock
of the Company of any class thereafter authorized which ranks, or is entitled to
a participation, as to assets or dividends, substantially on a parity with
Common Stock.

        Company—AXS-One Inc., a Delaware corporation, and any other corporation
assuming or required to assume the obligations undertaken in connection with
this Warrant.

        Current Market Price—the price per share of Common Stock on any date as
determined by the Company's Board of Directors as provided below. The Current
Market Price shall be the average of the daily closing prices per share of
Common Stock for 30 consecutive business days ending no more then 15 business
days before the day in question (as adjusted for any stock dividend, split,
combination or reclassification that took effect during such 30 business-day
period). The closing price for each day shall be the last reported sales price
regular way or, in the case no such reported sales take place on such day, the
average of the last reported bid and asked prices regular way, in either case on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading, or if not listed or admitted to trading on any national
securities exchange, the average of the highest bid and the lowest asked prices
quoted on the National Association of Securities Dealers Automated Quotation
System (NASDAQ), or if not so quoted, as reported by the National Quotation
Bureau, Inc.; provided, however, that if the Common Stock is not traded in such
manner that any of the quotations referred to above are available for the period
required hereunder, Current Market Price per share of Common Stock shall be
deemed to be the fair value thereof as determined by the Board of Directors in
good faith, irrespective of any accounting treatment.

        Exchange Act—the Securities Exchange Act of 1934, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect at the time.

        Exercise Price—as defined in the Preamble.

        Exercise Date—as defined in Section 1.1.

        Expiration Date—as defined in Section 1.1.

        Holder—as defined in the Preamble.

        Outstanding—when used with reference to Common Stock at any date, all
issued shares of Common Stock at such date, except shares then held in the
treasury of the Company.

        Person—any individual, corporation, partnership, trust, unincorporated
organization and any government and any political subdivision, instrumentality
or agency thereof.

        Warrant Office—as defined in Section 2.1.

        Warrant Shares—the shares of Common Stock purchasable or purchased by
the Holder upon the exercise of this Warrant.

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ARTICLE VI
Miscellaneous

        6.1    Entire Agreement. This Warrant contains the entire agreement
between the Holder and the Company with respect to the purchase of the Warrant
Shares and the related transactions and supersedes all prior arrangements or
understandings with respect thereto.

        6.2    Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
conflict of laws.

        6.3    Waiver and Amendment. At any time, any term or provision of this
Warrant may be waived, amended or supplemented only by a writing signed by the
Holder and the Company. A waiver by the Company or the Holder of a breach of any
provision of this Warrant shall not operate as or be construed to be a waiver of
any other breach of such provision or of any other provision of this Warrant.
The failure of the Holder or the Company to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist on strict adherence to
that term or any other term of this Agreement.

        6.4    Assignment by the Company. The Company may not sell, assign,
transfer or otherwise convey any of its rights or delegate any of its duties
under this Warrant except to a corporation succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
business and/or assets, and this Warrant shall be binding on and inure to the
benefit of such successor.

        6.5    Separability. If any provision in this Warrant shall be
determined to be invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in any
other respect and of the remaining provisions of this Warrant in any respect
shall not be in any way impaired.

        6.6    Notice. Any notice or other communication required or permitted
to be given or delivered hereunder shall be in writing and; if to the Holder,
shall be delivered at, or sent by reputable "overnight" courier to, such Holder
at the last address shown on the books of the Company maintained at the Warrant
Office or at any more recent address of which any Holder shall have notified the
Company in writing; and if to the Company, shall be delivered at, or sent by
reputable "overnight" courier to, the General Counsel of the Company at 301
Route 17 North, Rutherford, NJ 07070, or such other address within the United
States of America as shall have been furnished by the Company to the Holder. Any
notice or other communication hereunder shall be deemed given at the time of
receipt thereof.

        6.7    Limitation of Liability; Not Stockholders. No provisions of this
Warrant shall be construed as conferring upon the Holder the right to vote,
consent, receive dividends, or receive notice other than as herein expressly
provided, in respect of meetings of stockholders for the election of directors
of the Company or any other matter whatsoever as a stockholder of the Company.
No provision hereof, in the absence of affirmative action taken by the Holder to
exercise this Warrant and thereby purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of the Holder for the purchase price of any Warrant Shares
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

        6.8    Loss, Destruction, Etc. of Warrant. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any loss, theft or destruction, upon delivery
of a bond indemnity in such form and amount as shall be reasonably satisfactory
to the Company, or in the event of such mutilation upon surrender and
cancellation of this Warrant, the Company will make and deliver a new Warrant,
of like tenor, in replacement of and substitution for such lost, stolen,
destroyed or mutilated Warrant (which shall thereupon become null and void and
of no further effect).

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        IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.

Dated:            ,            

    AXS-ONE INC.
 
 
By:

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    Name:       Title:  

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SCHEDULE A

SUBSCRIPTION NOTICE

        The undersigned, the holder of the Warrant accompanying this Notice,
hereby elects to exercise purchase rights represented by said Warrant for, and
to purchase thereunder,                        shares of the Common Stock
covered by such Warrant and herewith makes payment in full therefor pursuant to
Section 1.1 of such Warrant, and requests (a) that certificates for such
aforesaid number of shares (or any other securities or property issuable upon
such exercise) be issued in the name of and delivered to the undersigned at the
following address:                                                  and (b) if
such shares shall not include all of the shares issuable as provided in such
Warrant, that a new Warrant of like tenor and date for the balance of the shares
issuable thereunder be delivered to the undersigned.

    [HAYDEN COMMUNICATIONS, INC.]
 
 
By:

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Name:
Title:

Dated:

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SCHEDULE B

ASSIGNMENT

        FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto                        , with an address of                        , the
rights to purchase                         shares of Common Stock, par value
$.01 per share, of AXS-One Inc. represented by the Warrant accompanying this
Assignment, and hereby authorizes AXS-One Inc. to transfer said rights on the
books of said corporation and to issue the aforesaid assignee an appropriate
Warrant representing the assigned purchase rights. If the assigned purchase
rights shall not include all of the shares issuable as provided in such Warrant,
a new Warrant of like tenor and date for the balance of the shares issuable
thereunder shall be delivered to the undersigned.

    [HAYDEN COMMUNICATIONS, INC.]
 
 
By:

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Name:
Title:

Dated:

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SCHEDULE C

REGISTRATION RIGHTS OF HOLDER

1. Definitions

        Selling Expenses: All underwriting discounts, selling commissions and
stock transfer taxes applicable to the Warrant Shares registered by the Holder
and all fees and disbursements of counsel and other advisors for the Holder.

        Capitalized terms used in this Schedule C but not otherwise defined
herein shall have the meanings ascribed to such terms in the body of the Warrant
to which this Schedule C is attached.

2. Registration Rights

        (a) If the Company at any time prior to the first anniversary of the
Expiration Date (at which time the rights granted under this Section 2 shall
expire) proposes to register any of its Common Stock under the Act on any form
other than Form S-4 or Form S-8 (or any similar or successor form then in
effect), whether or not for sale for its own account, and if the registration
form proposed to be used may be used for the registration of the Warrant Shares,
then the Company will give prompt written notice to the Holder of its intention
to do so, such notice to specify the proposed numbers of shares to be registered
thereby and the date, not less than 10 days thereafter, by which the Company
must receive the Holder's written indication of whether the Holder wishes to
include its Warrant Shares in such registration statement. Upon the written
request of the Holder made on or before the date specified in such notice (which
request shall specify the number of Warrant Shares intended to be disposed of by
the Holder), the Company will, to the extent permitted under Section 7, use all
commercially reasonable efforts to cause all such Warrant Shares, which the
Holder has so requested the registration thereof, to be registered under the Act
(with the other shares that the Company at the time proposes to register), to
the extent requisite to permit the sale or other disposition by the Holder of
the Warrant Shares to be so registered.

        (b) Notwithstanding anything to the contrary in this Section 2, the
Company shall have the right to discontinue any registration under this
Section 2 at any time prior to the effective date of such registration if the
registration of other shares of Common Stock giving rise to such registration
under this Section 2 is discontinued.

        (c) The obligations of the Company under Section 2(a) hereof shall
terminate (a) if the Holder rejects the opportunity to participate in a
registration with respect to which Holder's Warrant Shares would have been
included but for said rejection by the Holder and such registration has been
declared or ordered effective, or (b) the first registration by Company,
including any of Holder's Warrant Shares, has been declared or ordered
effective.

3. Registration Procedures

        If Holder exercises its registration rights under Section 2(a) hereof,
the Company will, as expeditiously as possible:

        (a) prepare and file with the Commission a registration statement with
respect to such Common Stock to be registered (including the Warrant Shares to
be registered) and use all commercially reasonable efforts to cause such
registration statement to become and remain effective for a period of at least
180 days (or such shorter period if all Common Stock so registered have been
sold); provided that, before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company will furnish to the Holder
for review copies of all such documents proposed to be filed;

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        (b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of at least 180 days (or such shorter period as shall be necessary to complete
the distribution of the Common Stock covered thereby) and to comply with the
provisions of the Act with respect to the sale or other disposition of all
shares covered by such registration statement during such period in accordance
with the intended methods of disposition by the seller or sellers thereof set
forth in such registration statement;

        (c) furnish to the Holder such number of copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus included in
such registration statement (including each preliminary prospectus), in
conformity with the requirements of the Act, in substantially the form in which
they are proposed to be filed with the Commission, needed by the Holder in order
to facilitate the public sale or other disposition of the registered Warrant
Shares;

        (d) use all commercially reasonable efforts to register or qualify such
shares of Common Stock covered by such registration statement under such other
securities or blue sky laws of such United States jurisdictions as the Holder
shall reasonably request, and do any and all other acts and things which may be
necessary or advisable to enable the Holder to consummate the disposition of the
registered Warrant Shares in such jurisdictions, except that the Company shall
not for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction where, but for the requirements of this
clause (d), it would not be obligated to be so qualified, or to subject itself
to taxation in any such jurisdiction;

        (e) use all commercially reasonable efforts to cause such shares of
Common Stock covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the Holder to consummate the disposition of its registered Warrant
Shares in the United States;

        (f) notify the Holder, at any time when a prospectus relating to its
registered Warrant Shares is required to be delivered under the Act, of the
Company's becoming aware that the prospectus included in the related
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly prepare and furnish to the Holder a
reasonable number of copies of a prospectus supplemented or amended so that, as
thereafter delivered to the purchasers of the registered Warrant Shares, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;

        (g) otherwise use all commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission;

        (h) permit the Holder a reasonable time in which (i) to review and
comment on such registration or comparable statement, and (ii) to request the
insertion therein of material, furnished to the Company in writing, which in the
reasonable judgment of the Holder should be included;

        (i) notify the Holder of any stop order threatened or issued by the
Commission and take all actions reasonably necessary to prevent the entry of
such stop order or to remove it if entered.

        The Holder hereby agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in subdivision
(f) above, the Holder will forthwith discontinue its disposition of Warrant
Shares pursuant to the registration statement covering such Warrant Shares until
the Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by said subdivision and, if so directed by the Company, will
deliver to the Company all copies, other than permanent file copies, then in the
Holder's possession of the prospectus covering such Warrant Shares prior to such
supplementation

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or amendment. In the event the Company shall give any such notice, the period
mentioned in subdivision (b) above shall be extended by the number of days
during the period from and including the date of the giving of such notice to
and including the date when the Holder shall have received the copies of the
supplemented or amended prospectus contemplated by subdivision (f) above.

        The Holder shall promptly furnish to the Company in writing such
information and documents regarding it and the distribution of its Warrant
Shares as may reasonably be required to be disclosed in the registration
statement in question by the rules and regulations under the Act or under any
other applicable securities or blue sky laws of the jurisdictions referred to in
subdivision (d) above.

4. Registration Expenses

        In connection with any registration of Warrant Shares pursuant to
Section 2, the Company will, whether or not any such registration shall become
effective, from time to time, pay all expenses (other than Selling Expenses)
incident to its performance of or compliance herewith, including, without
limitation, all registration, filing and NASD fees, fees and expenses of
compliance with securities or blue sky laws, and fees and disbursements of
counsel for the Company and all independent public accountants and other Persons
retained by the Company.

5. Indemnification

        (a) The Company will, and hereby does, indemnify and agree to defend,
the Holder and each Person, if any, who controls the Holder within the meaning
of Section 15 of the Securities Act (collectively, "Holder Indemnified
Parties"), from and against all losses, claims, damages, liabilities and
expenses, joint or several, to which any such Holder Indemnified Party may
become subject under the Act, the Exchange Act and all rules and regulations
under each such Act, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement as contemplated hereby or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus, together with the documents
incorporated by reference therein (as amended or supplemented if the Company
shall have filed with the Commission any amendment thereof or supplement
thereto), or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or (iii) any violation by the Company of any federal, state or
common law rule or regulation applicable to the Company and relating to action
of or inaction by the Company in connection with any such registration; and in
each such case, the Company shall reimburse each such Holder Indemnified Party
for any reasonable legal or other expenses incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability,
expense, action or proceeding; provided, however, that the Company shall not be
liable to any such Holder Indemnified Party insofar as such losses, claims,
damages, liabilities, expenses, actions or proceedings are the result of any
untrue statement or alleged untrue statement made in reliance on or in
conformity with any information furnished to the Company by or on behalf of any
Holder Indemnified Party, or any omission or alleged omission to state a
material fact relating to any information furnished to the Company by or on
behalf of any Holder Indemnified Party required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

        In connection with any registration statement in which the Holder is
participating, the Holder will promptly furnish to the Company such information
as shall be reasonably requested by the Company for use in any such registration
statement or prospectus and each and every Holder Indemnified Party will,
jointly and severally, indemnify, and defend, the Company, its employees,
officers and directors and each

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Person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages, liabilities, expenses,
actions or proceedings resulting from any (i) any action taken by any Holder
Indemnified Party in connection with the sale of the Warrant Securities, or
(ii) untrue statement or alleged untrue statement of a material fact or any
omission or alleged omission of a material fact required to be stated in the
registration statement or prospectus or preliminary prospectus or any amendment
thereof or supplement thereto, or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission or
alleged untrue statement or omission is made in reliance on or in conformity
with any information so furnished by any Holder Indemnified Party.

        Any Person entitled to indemnification under the provisions of this
Section 5 shall (i) give prompt notice to the indemnifying party of any claim
with respect to which it seeks indemnification, (ii) unless in such indemnified
party's reasonable judgment, supported by the written opinion of reputable and
experienced counsel to be supplied to the indemnifying party, a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, permit such indemnifying party to assume control over the defense
and/or settlement of such claim, with reputable and experienced counsel; and if
such defense is so assumed, such indemnified party shall not enter into any
settlement without the consent of the indemnifying party if such settlement
attributes liability to the indemnifying party and such indemnifying party shall
not be subject to any liability for any settlement made without its consent
(which shall not be unreasonably withheld); and (iii) provide such reasonably
requested assistance to the indemnifying party, at the indemnifying party's
expense. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any indemnified party.

        (b) If for any reason the foregoing indemnity is unavailable, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other but also the relative fault of the indemnifying party and the
indemnified party as well as any other relevant equitable considerations. No
Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.

6. Certain Limitations on Registration Rights

        If the Company determines to enter into an underwriting agreement in
connection with a registration provided for in this Schedule C, all shares of
Common Stock to be included in such registration, including all Warrant Shares,
shall be subject to such underwriting agreement and no Person may participate in
such registration unless such Person agrees to sell such Person's securities on
the basis provided in such underwriting agreement and completes and/or executes
all questionnaires, indemnities, and other reasonable documents which must be
executed under the terms of such underwriting agreement.

7. Allocation of Securities Included in Registration Statement

If the Company's managing underwriter shall advise the Company and the Holder in
writing that the inclusion in any registration pursuant hereto of some or all of
the Warrant Shares sought to be registered by the Holder creates a substantial
risk that the proceeds or price per unit that will be derived from such
registration will be reduced or that the number of securities to be registered
is too large a number to be reasonably sold, (i) first, the number of shares of
Common Stock sought to be sold by the Company or other holders exercising
"demand rights" shall be included in such registration, and (ii) next, the
number of Warrant Shares and other shares of Common Stock of other holders
exercising "piggyback rights" shall be included in such registration to the
extent permitted by the Company's managing underwriter (if the offering is
underwritten) to be allocated on a pro rata basis based on the number of Warrant
Shares Holder,and the number of shares of Common Stock each such other holder,
desire to have registered; provided, however, that, if the Holder would be
required pursuant to the provisions of this Section 7 to

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reduce the number of Warrant Shares that it may include in such registration,
the Holder may withdraw all of its Warrant Shares from such registration
whereupon the provisions of Section 2(c) hereof shall not apply to said
registration.

8. Limitations on Sale or Distribution of Securities

If a registration hereunder shall be in connection with an underwritten public
offering, the Holder agrees not to effect any public sale or distribution,
including any sale pursuant to Rule 144 under the Act, of any Warrant Shares and
to use its best efforts not to effect any such public sale or distribution of
any other equity security of the Company or of any security convertible into or
exchangeable or exercisable for any equity security of the Company (other than
as part of such underwritten public offering) within 10 days before or 90 days
after the effective date of such registration statement. In such event, the
Holder agrees to sign the customary market stand-off letter with the Company's
managing underwriter, and to comply with applicable rules and regulations of the
Commission.

9. Rule 144

The Company covenants that it will file the reports required to be filed under
the Act and the Exchange Act and the rules and regulations adopted by the
Commission thereunder (or, in the event that the Company is not required to file
such reports, it will make publicly available information as set forth in
Rule 144(c)(2) promulgated under the Act), and it will take, at Holder's
expense, such further action as the Holder may reasonably request, or to the
extent required from time to time, to enable the Holder to sell its Warrant
Shares without registration under the Act within the limitation of the exemption
provided by (a) Rule 144 under the Act, as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the Commission
(collectively, "Rule 144"). Upon request of the Holder (but not more than twice
in any calendar year), the Company will deliver to the Holder a written
statement as to whether it has complied with such requirements.

10. Transfer of Registration Rights

If and to the extent that the Holder sells or otherwise disposes of Warrant
Shares in any transaction that does not require registration under the Act
(other than a transaction exempted under Rule 144), the rights of the Holder
hereunder with respect to such Warrant Shares will be assignable to the
transferee of such Warrant Shares; provided, however, that (i) such transferee
agrees in writing with the Company to be bound by all of the terms and
conditions of this Schedule C and (ii) the Company's aggregate obligation under
this Section 2 hereof with respect to the Holder and all such transferees shall
not extend to more than one (1) registration in total.

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QuickLinks

ARTICLE I Exercise of Warrant
ARTICLE II Warrant Office; Transfer, Division or Combination of Warrant
ARTICLE III Restrictions on Transfer and Registration Under The Act
ARTICLE IV Antidilution Provisions
ARTICLE V Terms Defined
ARTICLE VI Miscellaneous
SUBSCRIPTION NOTICE
ASSIGNMENT
REGISTRATION RIGHTS OF HOLDER