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AMENDMENT AGREEMENT

This Amendment Agreement (this “Agreement”), dated as of December 30, 2009, is
entered into by and among Axis Technologies Group, Inc., a Delaware corporation
(the “Company”), Axis Technologies, Inc., a Delaware corporation and
wholly-owned subsidiary of the Company (“Guarantor”), GEMINI STRATEGIES, LLC, a
Delaware limited liability company (the “Collateral Agent”), and GEMINI MASTER
FUND, LTD., a Cayman Islands corporation (the “Investor”).  The Company and the
Guarantor are sometimes referred to herein individually as an “Axis Entity” and
collectively as the “Axis Entities”.

R E C I T A L S:

WHEREAS, the Company and the Investor are party to that certain Securities
Purchase Agreement, dated as of April 25, 2008 (the “Purchase Agreement”),
pursuant to which the Company issued to the Investor (i) a 10% Senior Secured
Convertible Note in the original principal amount of $1,388,888.89 (the
“InitialNote”), convertible into shares of common stock of the Company, par
value $0.001 per share (the “Common Stock”), and (ii) a Warrant to purchase
5,341,880 shares of Common Stock (the “Warrant”);

WHEREAS, on or about March 25, 2009, the Investor loaned the Company additional
funds and in consideration therefor the Company issued to the Investor a 10%
Senior Secured Note in the original principal amount of $150,000.00, which was
due on June 23, 2009 (“Second Note”, and together with the “Initial Note”, the
“Notes”);

WHEREAS, the Guarantor has entered into that certain Subsidiary Guarantee, dated
as of April 25, 2008 (the “Guarantee”), pursuant to which each Guarantor has
guaranteed the satisfaction of all the obligations of the Company under the
Existing Transaction Documents (as defined below);

WHEREAS, Guarantor has entered into that certain Intellectual Property Security
Agreement, dated as of April 25, 2008 (the “IP Security Agreement”), pursuant to
which Guarantor granted a security interest in its intellectual property to the
Investor and the Collateral Agent to secure the satisfaction of all the
obligations of the Axis Entities under the Existing Transaction Documents;

WHEREAS, the Company and the Guarantor have entered into that certain Security
Agreement dated as of April 25, 2008 (together with the IP Security Agreement,
the “Security Agreements”), pursuant to which the Company and the Guarantor have
each granted a security interest in its assets and properties to the Investor
and the Collateral Agent to secure the satisfaction of all the obligations of
the Axis Entities under the Existing Transaction Documents;

WHEREAS, the Company has failed to repay the Second Note and failed to make all
Monthly Redemption payments required under the Initial Note, among other things;

WHEREAS, the aggregate Mandatory Default Amount under both Notes together as of
the date hereof is $1,884,097.22; and

 
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WHEREAS, the Company parties wish to extend certain due dates under Notes on the
terms set forth herein;

A G R E E M E N T:

NOW, THEREFORE, in consideration of the foregoing and subject to the terms and
conditions herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1.             DEFINITIONS.

1.1           Certain Defined Terms.  As used in this Agreement, the following
terms shall have the meanings set forth below:

“Existing Transaction Documents” means the Purchase Agreement, the Notes, the
Warrant, the Security Agreements, the Guarantee and all other agreements,
instruments and other documents executed and delivered by or on behalf of the
Axis Entities or any of their officers in connection with any of the foregoing
agreements.

“Transaction Documents” means the Existing Transaction Documents (as amended by
this Agreement), this Agreement, the Amended and Restated Note (as defined
below), the Warrant, and all other agreements, instruments and other documents
executed and delivered by or on behalf of the Axis Entities or any of their
officers in connection with this Agreement.

Each initially capitalized term used herein and not otherwise defined shall have
the meaning set forth in the Existing Transaction Documents.

1.2           Terms Defined in the Purchase Agreement.  Capitalized terms used
in this Agreement and not otherwise defined herein have the respective meanings
ascribed to them in the Purchase Agreement.

2.             AMENDMENT AND RESTATEMENT OF NOTES.

2.1           The Note.  The Notes are hereby amended and are being combined
into a single restated Note in the form attached hereto as Exhibit A (the
“Amended and Restated Note”), which shall provide, among other things, that (i)
the original principal face amount of the Amended and Restated Note is
$1,884,097.22, (ii) the Conversion Price (as defined therein) in effect as of
the date hereof is the lesser of $0.10 (subject to further adjustment as
provided therein) and 80% of the lowest closing bid price during the 20 Trading
Days preceding conversion; (iii) the Maturity Date shall be April 25, 2010
without any Monthly Redemptions; and (iv) the Company may prepay the Amended and
Restated Note at any time with ten (10) Trading Days prior written notice.

 
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2.2           Delivery.  The Company hereby irrevocably commits to deliver the
Amended and Restated Note to the Investor on or prior to December 31, 2009 in
exchange for the Notes.

3.             ADDITONAL AMENDMENTS AND OTHER AGREEMENTS.

3.1           Reservation of Common Stock.  At all times hereafter the Company
shall cause to be authorized and reserved for issuance to the Investor from its
duly authorized capital stock a number of shares of Common Stock for issuance of
the Underlying Shares at least equal to the Required Minimum (after taking into
account the amendments contemplated hereby).

3.2           References to Notes and Transaction Documents.  All references in
the Existing Transaction Documents to (i) “Note” shall be deemed to be
references to the Amended and Restated Note (together with any future Notes
issued pursuant to the Purchase Agreement), and (ii) “Transaction Documents”
shall be deemed to mean the Existing Transaction Documents (as amended by this
Agreement), this Agreement, the Amended and Restated Note (together with any
future Notes issued pursuant to the Purchase Agreement), and all other
agreements, instruments and other documents executed and delivered by or on
behalf of the Axis Entities or any of their officers in connection with this
Agreement.

3.3           Indemnification of Investor and Collateral Agent.  Each of the
Axis Entities will jointly and severally indemnify and hold the Investor and
Collateral Agent and each of their directors, managers, officers, shareholders,
members, partners, employees and agents (each, an “Investor Party”) harmless
from any and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys’ fees and costs of
investigation that any such Investor Party may suffer or incur as a result of or
relating to (a) any breach of any of the representations, warranties, covenants
or agreements made by an Axis Entity in this Agreement or in the other
Transaction Documents or (b) any action instituted against the Investor, or any
of its Affiliates, by any shareholder of an Axis Entity who is not an Affiliate
of the Investor, with respect to any of the transactions contemplated by the
Transaction Documents.

3.4           No Novation; Rule 144.  The Amended and Restated Note issued
hereunder is in substitution for and not in satisfaction of the Notes.  Such
Amended and Restated Note shall not constitute a novation or satisfaction and
accord of the Notes.  The Company hereby acknowledges and agrees that such
Amended and Restated Note shall amend, restate, modify, renew and continue the
terms and provisions contained in the Notes and shall not extinguish or release
the Company or Guarantor under any Transaction Document or otherwise constitute
a novation of their obligations thereunder.  For purposes of Rule 144
promulgated under the Securities Act, the holding period of the Amended and
Restated Note shall be tacked to the applicable holding period of the
Notes.  Without limiting the foregoing, if at any time it is determined that
such holding period does not so tack, the Company will promptly, but no later
than 30 days thereafter, cause the registration of all such Underlying Shares
under the Securities Act (without regard to any beneficial ownership or issuance
limitations contained in the Amended and Restated Note).  In connection with any
registration of Underlying Shares pursuant to this Section, the Company and the
Investor shall enter into a registration rights agreement containing customary
and reasonable provisions regarding the registration of securities under the
Securities Act.

 
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4.7           Security Continued.  The Axis Entities’ obligations under all the
Transaction Documents, including without limitation this Agreement, the Amended
and Restated Note and the Warrant, shall be secured by all the assets of the
Axis Entities pursuant to the Security Agreements (and guaranteed by the
Guarantor under the Guarantee) as if this Agreement and the Amended and Restated
Note were each in effect at the time of execution of such Security Agreements
and referenced therein.  The Company shall execute such other agreements,
documents and financing statements reasonably requested by Investor, which will
be filed at the Company’s expense with the applicable jurisdictions and
authorities.

4.8           Disclosure.  The Company shall, by 8:30 a.m. (New York City time)
on December 31, 2009, issue a press release disclosing the material terms of the
transactions contemplated hereby.  The Company and the Investor shall consult
with each other in issuing such press release and any other press releases with
respect to the transactions contemplated hereby.

4.             REPRESENTATIONS AND WARRANTIES OF THE AXIS ENTITIES.

Each of the Axis Entities hereby jointly and severally represents and warrants
to the Investor as of the date hereof:

4.1           Organization.  Such Axis Entity is duly organized, validly
existing and in good standing under the laws of its organization.

4.2           Authorization.  Such Axis Entity has the requisite corporate power
and authority to execute, deliver and perform this Agreement and the other
Transaction Documents to which it is a party.  All corporate action on the part
of such Axis Entity and by its officers, directors and shareholders necessary
for the authorization, execution and delivery of, and the performance by such
Axis Entity of its obligations under this Agreement and the other Transaction
Documents to which it is a party has been taken, and no further consent or
authorization of any other party is required.

4.3           Enforceability.  This Agreement and the other Transaction
Documents to which such Axis Entity is a party constitute such Axis Entity’s
valid and legally binding obligation, enforceable in accordance with its terms,
subject to (i) applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws of general application relating
to or affecting the enforcement of creditors’ rights generally and (ii) general
principles of equity.

4.4           No Conflicts.  The execution, delivery and performance of this
Agreement and the other Transaction Documents to which such Axis Entity is a
party, and the consummation of the transactions contemplated hereby and thereby,
will not result in any violation of any provisions of any of such Axis Entity’s
organizational documents or in a default under any provision of any instrument
or contract to which such Axis Entity is a party or by which any of its assets
are bound, or in violation of any provision of any governmental requirement
applicable to such Axis Entity or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument or contract or the triggering of any preemptive or
anti-dilution rights (including without limitation pursuant to any “reset” or
similar provisions) or rights of first refusal or first offer.

 
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4.5           Valid Issuance.  The Amended and Restated Note has been duly
authorized and, when issued and delivered in accordance with the terms of this
Agreement, will be duly and validly issued, free and clear of any Liens imposed
by or through any of the Axis Entities.

5.             REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.

The Investor represents and warrants to the Company as of the date hereof:

5.1           Organization.  The Investor is duly organized, validly existing
and in good standing under the laws of its organization.

5.2           Authorization.  The Investor has the requisite corporate power and
authority to execute, deliver and perform this Agreement and the other
Transaction Documents to which it is a party.  All corporate action on the part
of the Investor and by its officers, directors and shareholders necessary for
the authorization, execution and delivery of, and the performance by the
Investor of its obligations under this Agreement and the other Transaction
Documents to which it is a party has been taken, and no further consent or
authorization of any other party is required.

5.3           Enforceability.  This Agreement and the other Transaction
Documents to which the Investor is a party constitute the Investor’s valid and
legally binding obligation, enforceable in accordance with its terms, subject to
(i) applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws of general application relating to or affecting
the enforcement of creditors’ rights generally and (ii) general principles of
equity.

5.4           No Conflicts.  The execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Investor is a party,
and the consummation of the transactions contemplated hereby and thereby, will
not result in any violation of any provisions of any of the Investor’s
organizational documents or in a default under any provision of any instrument
or contract to which the Investor is a party or by which any of its assets are
bound, or in violation of any provision of any governmental requirement
applicable to the Investor or be in conflict with or constitute, with or without
the passage of time and giving of notice, a default under any such provision,
instrument or contract.

6.             MISCELLANEOUS.

6.1           Severability.  In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that in such case the parties shall negotiate
in good faith to replace such provision with a new provision which is not
illegal, unenforceable or void, as long as such new provision does not
materially change the economic benefits of this Agreement to the parties.

 
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6.2           Successors and Assigns.  The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties.  Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. The Investor may assign its
rights and obligations hereunder, as long as, as a condition precedent to such
transfer, the transferee executes an acknowledgment agreeing to be bound by the
applicable provisions of this Agreement, in which case the term “Investor” shall
be deemed to refer to such transferee as though such transferee were an original
signatory hereto.  None of the Axis Entities may assign its rights or
obligations under this Agreement.

6.3           No Reliance.  Each party acknowledges that (i) it has such
knowledge in business and financial matters as to be fully capable of evaluating
this Agreement and the transactions contemplated hereby and thereby, (ii) it is
not relying on any advice or representation of any other party in connection
with entering into this Agreement or such transactions (other than the
representations made in this Agreement), (iii) it has not received from any
other party any assurance or guarantee as to the merits (whether legal,
regulatory, tax, financial or otherwise) of entering into this Agreement or the
performance of its obligations hereunder and thereunder, and (iv) it has
consulted with its own legal, regulatory, tax, business, investment, financial
and accounting advisors to the extent that it has deemed necessary, and has
entered into this Agreement based on its own independent judgment and, if
applicable, on the advice of such advisors, and not on any view (whether written
or oral) expressed by any other party.

6.4           Injunctive Relief.  Each of the Axis Entities acknowledges and
agrees that a breach by it of its obligations hereunder will cause irreparable
harm to the Investor and that the remedy or remedies at law for any such breach
will be inadequate and agrees, in the event of any such breach, in addition to
all other available remedies, the Investor shall be entitled to an injunction
restraining any breach and requiring immediate and specific performance of such
obligations without the necessity of showing economic loss or the posting of any
bond.

6.5           Governing Law; Jurisdiction; Waiver of Jury Trial.  (a)  This
Agreement shall be governed by and construed under the laws of the State of New
York applicable to contracts made and to be performed entirely within the State
of New York.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City and County of
New York for the adjudication of any dispute hereunder or any other Transaction
Document or in connection herewith or therewith or with any transaction
contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address in effect
for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.

 
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(b) EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY DISPUTE OR
CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION
DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR
VALIDITY OF THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

6.6           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.  This Agreement may be
executed and delivered by facsimile transmission or by email of a digital image
format file.

6.7           Headings.  The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.

6.8           Notices.  Any notice, demand or request required or permitted to
be given by an Axis Entity or the Investor pursuant to the terms of this
Agreement shall be in writing and shall be deemed delivered (i) when delivered
personally or by verifiable facsimile transmission, unless such delivery is made
on a day that is not a Business Day, in which case such delivery will be deemed
to be made on the next succeeding Business Day, (ii) on the next Business Day
after timely delivery to an overnight courier and (iii) on the Business Day
actually received if deposited in the U.S. mail (certified or registered mail,
return receipt requested, postage prepaid), addressed in accordance with the
notice provisions contained in the Purchase Agreement.

6.9           Entire Agreement; Amendments.  This Agreement and the other
Transaction Documents constitute the entire agreement between the parties with
regard to the subject matter hereof and thereof, superseding all prior
agreements or understandings, whether written or oral, between or among the
parties.

6.10         Full Force and Effect.  Except as specifically waived and amended
hereby and for the purposes described herein, the Existing Transaction Documents
shall remain in full force and effect in accordance with their respective
terms.  Except for the waiver and amendment contained herein, this Agreement
shall not in any way waive or prejudice any of the rights of the Investor or
obligations of the Company under the Transaction Documents, or under any law, in
equity or otherwise, and such waiver and amendment shall not constitute a waiver
or amendment of any other provision of the Transaction Documents nor a waiver or
amendment of any subsequent default or breach of any obligation of the Company
or of any subsequent right of the Investor.

6.10         Fees and Expenses.  The Axis Entities and the Investor shall pay
all costs and expenses that it incurs in connection with the negotiation,
execution, delivery and performance of this Agreement and the other Transaction
Documents, provided, however, that the Company shall, concurrently with the
execution of this Agreement, pay the Investor the non-accountable sum of $10,000
in immediately available funds for its expenses (including without limitation
legal fees and expenses) incurred or to be incurred by it in connection with the
Company’s defaults described herein and with the negotiation and preparation of
this Agreement and the other Transaction Documents to be delivered in connection
herewith.

[Signature Page to Follow]

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the day and year first above written.

AXIS TECHNOLOGIES GROUP, INC.
 
GEMINI MASTER FUND, LTD.
     
By:
GEMINI STRATEGIES, LLC, as investment manager
         
By:
/S/ Jim Erickson
     
Name:
Jim Erickson
 
By:
/S/ Steven Winters
Title:
President
 
Name:
Steven Winters
     
Title:
President
                             
AXIS TECHNOLOGIES, INC.
 
GEMINI STRATEGIES, LLC
                   
By:
/S/ Jim Erickson
 
By:
/S/ Steven Winters
Name:
Jim Erickson
 
Name:
Steven Winters
Title:
President
 
Title:
President

 
 

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