**Exhibit4.5**

 

THIS WARRANT HAS NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933 AND NEITHER THIS WARRANT NOR ANYINTEREST HEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OFUNLESS AN APPLICABLE REGISTRATION STATEMENT UNDER SUCH ACT AND RULES ANDREGULATIONS THEREUNDER IS THEN IN EFFECT, OR IN THE OPINION OF HOLDER’S COUNSEL(WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY), SUCH REGISTRATIONUNDER SUCH ACT IS NOT REQUIRED.  BY ITSACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE REPRESENTS THAT IT ISACQUIRING THE WARRANT FOR INVESTMENT AND AGREES TO COMPLY IN ALL RESPECTS WITHARTICLE III OF THIS WARRANT.

 

WARRANT

 

to Purchase CommonStock of

 

AXS-ONE INC.

 

ExpiringSeptember 30, 2006

 

THIS IS TO CERTIFY THAT,for value received, HAYDEN COMMUNICATIONS, INC., or its permitted andregistered assigns (collectively, the “Holder”), is entitled to purchase fromthe Company 60,000 shares of Common Stock at a purchase price payable uponexercise hereof (the “Exercise Price”) of $0.41 per share.  The Common Stock and the Exercise Price aresubject to adjustment in accordance with Article IV hereof.  Certain terms used in this Warrant aredefined in Article V.

 

ARTICLE I

 

Exercise ofWarrant

 

1.1                                 Methodof Exercise.  To exercise thisWarrant 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 expirationdate set forth above (the “Expiration Date”), the Holder shall deliver to theCompany, at the Warrant Office designated pursuant to Section 2.1, (a) awritten notice, in substantially the form of the Subscription Notice attachedas Schedule A hereto, of such Holder’s election to exercise thisWarrant, which notice shall specify the number of shares of Common Stock to bepurchased, (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 deliveryof such notice, such funds and this Warrant is made, and any such date isreferred to herein as the “Exercise Date.” Upon exercise, the Company shall issue only in the name of, and deliverto, such Holder a certificate or certificates for the number of full shares ofCommon Stock to which such Holder is entitled and a check or cash with respectto any fractional interest in a share of Common Stock as provided inSection 1.2.  The Holder shall bedeemed to have become a holder of record of such issued Common Stock on theapplicable Exercise Date.  Upon exerciseof only a portion of the number of shares covered by this Warrant, the Companyshall issue and deliver to the Holder, at the expense of the Company, a newWarrant covering the number of shares representing the unexercised portion ofthis Warrant so surrendered.

 

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

 

1.3                                 Listingon National Securities Exchange. The Company shall, prior to the issuance of any Warrant Shares, at itsexpense, promptly obtain and maintain the listing of the Warrant Shares on suchprincipal national securities exchange or NASDAQ as the other shares of CommonStock are at such time listed.  TheCompany shall use its best efforts to file the listing application for theWarrant 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 Holdermay not exercise this Warrant until the Company notifies the Holder in writingthat said listing application has been approved by such exchange or NASDAQ, asthe case may be.

 

ARTICLE II

 

Warrant Office;Transfer,Division or Combination of Warrant

 

2.1                                 WarrantOffice.  The Company shall maintainan office for certain purposes specified herein (the “Warrant Office”), whichoffice shall initially be the Company’s office at 301 Route 17 North,Rutherford, New Jersey 07070 and may subsequently be such other office of theCompany or of any transfer agent of the Common Stock in the continental UnitedStates as to which written notice has previously been given to the Holder.

 

2.2                                 Ownershipof Warrant.  The Company may deemand treat the person in whose name this Warrant is then registered as theHolder and owner hereof (notwithstanding any notations of ownership or writinghereon made by anyone other than the Company) for all purposes and shall not beaffected by any notice to the contrary, until presentation of this Warrant forregistration of transfer as provided in this Article II.

 

2.3                                 Transferof Warrants.  The Company agrees tomaintain at the Warrant Office books for the registration of the issuance,exercise and any transfers of this Warrant and, subject to the provisions ofArticle III, this Warrant and all rights hereunder are transferable, inwhole 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 formof the Assignment attached as Schedule B hereto, duly executed bythe Holder or its duly authorized agent or attorney and funds sufficient to payany transfer taxes payable upon the making of such transfer.  Upon such surrender and payment, the Companyshall execute and deliver a new Warrant or Warrants in the name of the assigneeor 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 thenexercisable) in such instrument of assignment, and this Warrant shall promptlybe cancelled.

 

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ARTICLE III

 

Restrictions onTransfer andRegistration Under The Act

 

3.1                                 Restrictionson Transfer.  Neither this Warrant,the Warrant Shares nor any interest herein or therein shall be transferableexcept upon the conditions specified in Article II and thisArticle III, which conditions are intended to ensure compliance with theprovisions of the Act in respect of the transfer of this Warrant or any interestherein.  The Holder will cause anytransferee of this Warrant, the Warrant Shares or any interest herein ortherein held by it to agree to take and hold this Warrant, the Warrant Sharesor an interest herein or therein subject to the provisions and upon theconditions specified in this Article.

 

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

 

[THIS WARRANT] [THESESHARES] [HAS] [HAVE] NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ANDNEITHER [THIS WARRANT] [THESE SHARES] NOR ANY INTEREST THEREIN MAY BESOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS AN APPLICABLEREGISTRATION STATEMENT UNDER SUCH ACT AND RULES AND REGULATIONS THEREUNDER ISTHEN IN EFFECT, OR IN THE OPINION OF HOLDER’S COUNSEL (WHICH OPINION ISREASONABLY SATISFACTORY TO THE COMPANY), SUCH REGISTRATION UNDER SUCH ACT ISNOT 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 WITHARTICLE III OF [THIS WARRANT] [THE WARRANT FOR THESE SHARES].

 

3.3                                 Noticeof Proposed Transfers.  The Holderand any holder of any Warrant Share by acceptance hereof or thereof agrees tocomply in all respects with the provisions of this Section.  Prior to any proposed transfer of thisWarrant or any Warrant Share, the Holder or holder of Warrant Shares, as thecase may be, shall give written notice to the Company of such holder’sintention to effect such transfer.  Eachsuch notice shall describe the manner and circumstance of the proposed transferin reasonable detail, and shall be accompanied by (a) a written opinion ofcounsel for such holder, reasonably satisfactory to the Company, addressed tothe Company, to the effect that the proposed transfer may be effected withoutregistration under the Act or (b) written assurance from the staff of theCommission that it will not recommend that any action be taken by theCommission in the event such transfer is effected without registration underthe Act.  Such proposed transfer may beeffected only if the Company shall have received such notice and such opinionof counsel or written assurance, whereupon the Holder or the holder of WarrantShares, as the case may be, shall be entitled to transfer this Warrant orWarrant Shares in accordance with the terms of this Warrant and of the noticedelivered by said holder to the Company. Each certificate evidencing this Warrant or Warrant Shares transferredas above provided shall bear the legend set forth in Section 3.2, exceptthat such certificate shall not bear such legend if the opinion of counsel orwritten assurance referred to above is to the further effect that neither suchlegend nor the restriction on transfer in this Article are required toensure compliance with the Act.

 

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3.4                                 Terminationof Conditions and Obligations.  Theconditions precedent imposed by this Article upon the transferability ofthe Warrant Shares (but not of this Warrant) shall terminate as to anyparticular Warrant Shares when such shares shall have been effectivelyregistered under the Act and sold or otherwise disposed of in accordance withthe intended method of disposition by the seller or sellers thereof set forthin the registration statement covering such shares or at such time as anopinion of counsel as specified in Section 3.3 shall have been rendered tothe effect set forth in the last sentence of Section 3.3.

 

3.5                                 RegistrationRights. The Holder shall be entitled to the benefits of the registrationrights set forth in Schedule C attached hereto.

 

ARTICLE IV

 

AntidilutionProvisions

 

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

 

(i)                                     StockDividends.  If the number of sharesof Common Stock outstanding at any time after the date of issuance of thisWarrant is increased by a stock dividend payable in shares of Common Stock orby a subdivision or split-up of shares of Common Stock, then immediately afterthe record date fixed for the determination of holders of Common Stock entitledto receive such stock dividend or the effective date of such subdivision orsplit-up, as the case may be, the Exercise Price shall be appropriately reducedand the number of shares of Common Stock to be acquired on exercise of thisWarrant shall be increased so that the Holder, upon exercise of this Warrantthereafter, shall be entitled to receive the number of shares of Common Stockwhich it would have owned immediately following such action had this Warrantbeen exercised immediately prior thereto at the aggregate Exercise Priceeffective prior thereto.

 

(ii)                                  Combinationof Stock.  If the number of sharesof Common Stock outstanding at any time after the date of issuance of thisWarrant is decreased by a combination of the outstanding shares of CommonStock, then, immediately after the effective date of such combination, theExercise Price shall be appropriately increased and the number of shares ofCommon Stock to be acquired on exercise of this Warrant shall be decreased sothat the Holder, upon exercise of this Warrant thereafter, shall be entitled toreceive the number of shares of Common Stock which it would have ownedimmediately following such action had this Warrant been exercised immediatelyprior thereto.

 

(iii)                               Reorganization,Etc.  In case of any capitalreorganization of the Company, or any reclassification of the Common Stock, orin case of the consolidation of the Company with or the merger of the Companywith or into any other Person or in case of the sale, lease or other transferof 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 thenumber of shares of stock or other securities or property to which the CommonStock issuable (at the time of such capital reorganization, reclassification,consolidation, merger, sale, lease or other transfer) upon exercise of thisWarrant would have been entitled upon such capital reorganization,reclassification, consolidation, merger, sale, lease or

 

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other transfer; and inany such case, if necessary, the provisions set forth herein with respect tothe rights and interests thereafter of the Holder shall be appropriatelyadjusted so as to be applicable, as nearly as may reasonably be, to any sharesof stock or other securities or property thereafter deliverable on the exerciseof this Warrant.  The subdivision orcombination of shares of Common Stock issuable upon exercise of this Warrant atany time outstanding into a greater or lesser number of shares of Common Stockof the Company (whether with or without par value) shall not be deemed to be areclassification of the Common Stock of the Company for the purposes of thisclause (iii).

 

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

 

(b)                                 StatementRegarding Adjustments.  Whenever anyadjustments shall be required as provided in Section 4.1(a), the Companyshall forthwith file, at the Warrant Office and, if different, at the principaloffice of the Company, a statement showing in detail such adjustments and thefacts requiring such adjustment, which statement shall also be sent to theHolder.

 

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

 

(d)                                 Reservationof Shares.  The Company shallreserve at all times so long as this Warrant remains outstanding, free frompreemptive rights, out of its treasury stock or its authorized but unissuedshares of Common Stock, or both, solely for the purpose of effecting theexercise of this Warrant, sufficient shares of Common Stock to provide for theexercise of this Warrant.

 

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

 

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

 

ARTICLE V

 

Terms Defined

 

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

 

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

 

Commission– the Securities and Exchange Commission, or any other Federal agency thenadministering the Act.

 

CommonStock – 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 whichthis Warrant becomes exercisable pursuant to Article IV, including stockof the Company of any class thereafter authorized which ranks, or is entitledto a participation, as to assets or dividends, substantially on a parity withCommon Stock.

 

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

 

Current MarketPrice – the price per share of Common Stock on any date asdetermined by the Company’s Board of Directors as provided below.  The Current Market Price shall be theaverage of the daily closing prices per share of Common Stock for 30consecutive business days ending no more then 15 business days before the dayin question (as adjusted for any stock dividend, split, combination orreclassification that took effect during such 30 business-day period).  The closing price for each day shall be thelast reported sales price regular way or, in the case no such reported salestake place on such day, the average of the last reported bid and asked pricesregular way, in either case on the principal national securities exchange onwhich the Common Stock is listed or admitted to trading, or if not listed oradmitted to trading on any national securities exchange, the average of thehighest bid and the lowest asked prices quoted on the National Association of SecuritiesDealers Automated Quotation System (NASDAQ), or if not so quoted, as reportedby the National Quotation Bureau, Inc.; provided, however, thatif the Common Stock is not traded in such manner that any of the quotationsreferred to above are available for the period required hereunder, CurrentMarket Price per share of Common Stock shall be deemed to be the fair valuethereof as determined by the Board of Directors in good faith, irrespective ofany accounting treatment.

 

Exchange Act– the Securities Exchange Act of 1934, as amended, or any similar Federalstatute, and the rules and regulations of the Commission promulgatedthereunder, 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 ofCommon Stock at such date, except shares then held in the treasury of theCompany.

 

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Person– any individual, corporation, partnership, trust, unincorporated organizationand any government and any political subdivision, instrumentality or agencythereof.

 

Warrant Office– as defined in Section 2.1.

 

Warrant Shares– the shares of Common Stock purchasable or purchased by the Holder upon theexercise of this Warrant.

 

ARTICLE VI

 

Miscellaneous

 

6.1                                 EntireAgreement.  This Warrant containsthe entire agreement between the Holder and the Company with respect to thepurchase of the Warrant Shares and the related transactions and supersedes allprior arrangements or understandings with respect thereto.

 

6.2                                 GoverningLaw.  This Warrant shall be governedby and construed in accordance with the laws of the State of Delaware withoutgiving effect to the conflict of laws.

 

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

 

6.4                                 Assignmentby the Company.  The Company may notsell, assign, transfer or otherwise convey any of its rights or delegate any ofits duties under this Warrant except to a corporation succeeding to the Companyby merger, consolidation or acquisition of all or substantially all of theCompany’s business and/or assets, and this Warrant shall be binding on andinure to the benefit of such successor.

 

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

 

6.6                                 Notice.  Any notice or other communication requiredor permitted to be given or delivered hereunder shall be in writing and; if tothe 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 atthe Warrant Office or at any more recent address of which any Holder shall havenotified 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 Companyat 301 Route 17 North, Rutherford, NJ 07070, or such other address within theUnited States of America as shall have been furnished by the Company to theHolder.  Any notice or othercommunication hereunder shall be deemed given at the time of receipt thereof.

 

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6.7                                 Limitationof Liability; Not Stockholders.  Noprovisions of this Warrant shall be construed as conferring upon the Holder theright to vote, consent, receive dividends, or receive notice other than asherein expressly provided, in respect of meetings of stockholders for theelection of directors of the Company or any other matter whatsoever as astockholder of the Company.  Noprovision hereof, in the absence of affirmative action taken by the Holder toexercise this Warrant and thereby purchase shares of Common Stock, and no mereenumeration herein of the rights or privileges of the Holder hereof, shall giverise to any liability of the Holder for the purchase price of any WarrantShares or as a stockholder of the Company, whether such liability is assertedby the Company or by creditors of the Company.

 

6.8                                 Loss,Destruction, Etc. of Warrant.  Uponreceipt of evidence satisfactory to the Company of the loss, theft, mutilationor destruction of this Warrant, and in the case of any loss, theft ordestruction, upon delivery of a bond indemnity in such form and amount as shallbe reasonably satisfactory to the Company, or in the event of such mutilationupon surrender and cancellation of this Warrant, the Company will make anddeliver a new Warrant, of like tenor, in replacement of and substitution forsuch lost, stolen, destroyed or mutilated Warrant (which shall thereupon becomenull and void and of no further effect).

 

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

 

 

Dated:  September 30, 2003

 
|   | AXS-ONE INC.                                          |
|--------|-------------------------------------------------------|
|   |                                                  |
|   |                                                  |
|   | By                                                    | /s/  PAUL ABEL |   |
|   | Name:  Paul Abel                                 |
|   | Title: Vice President,  Secretary and General Counsel |

 

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SCHEDULE A

 

SUBSCRIPTIONNOTICE

 

The undersigned, theholder of the Warrant accompanying this Notice, hereby elects to exercisepurchase rights represented by said Warrant for, and to purchasethereunder,                    sharesof the Common Stock covered by such Warrant and herewith makes payment in fulltherefor pursuant to Section 1.1 of such Warrant, and requests (a) thatcertificates for such aforesaid number of shares (or any other securities orproperty issuable upon such exercise) be issued in the name of and delivered tothe undersigned at the followingaddress:                                        and(b) if such shares shall not include all of the shares issuable as provided insuch Warrant, that a new Warrant of like tenor and date for the balance of theshares issuable thereunder be delivered to the undersigned.

 
|   | [HAYDEN COMMUNICATIONS,  INC.] |
|--------|--------------------------------|
|   |                           |
|   | By:                            |   |   |
|   | Name:                          |
|   | Title:                         |

 

Dated:

 

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SCHEDULE B

 

ASSIGNMENT

 

FOR VALUE RECEIVED, theundersigned hereby sells, assigns and transfers unto                    ,with an address of                                         ,the rights to purchase                                         sharesof Common Stock, par value $.0l per share, of AXS-One Inc. represented by theWarrant accompanying this Assignment, and hereby authorizes AXS-One Inc. totransfer said rights on the books of said corporation and to issue theaforesaid assignee an appropriate Warrant representing the assigned purchaserights.  If the assigned purchase rightsshall not include all of the shares issuable as provided in such Warrant, a newWarrant of like tenor and date for the balance of the shares issuablethereunder shall be delivered to the undersigned.

 
|   | [HAYDEN COMMUNICATIONS,  INC.] |
|--------|--------------------------------|
|   |                           |
|   | By:                            |   |   |
|   | Name:                          |
|   | Title:                         |

 

Dated:

 

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SCHEDULE C

 

REGISTRATION RIGHTS OFHOLDER

#### **1.**                                      Definitions

 

Selling Expenses:  All underwriting discounts, sellingcommissions and stock transfer taxes applicable to the Warrant Sharesregistered by the Holder and all fees and disbursements of counsel and otheradvisors for the Holder.

 

Capitalized termsused in this Schedule C but not otherwise defined herein shall havethe meanings ascribed to such terms in the body of the Warrant to which this Schedule Cis attached.

 

#### **2.**                                      RegistrationRights

 

(a)                                  Ifthe 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 otherthan 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 formproposed 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 intentionto do so, such notice to specify the proposed numbers of shares to beregistered thereby and the date, not less than 10 days thereafter, by which theCompany must receive the Holder’s written indication of whether the Holderwishes to include its Warrant Shares in such registration statement.  Upon the written request of the Holder madeon or before the date specified in such notice (which request shall specify thenumber of Warrant Shares intended to be disposed of by the Holder), the Companywill, to the extent permitted under Section 7, use all commerciallyreasonable efforts to cause all such Warrant Shares, which the Holder has sorequested the registration thereof, to be registered under the Act (with theother shares that the Company at the time proposes to register), to the extentrequisite to permit the sale or other disposition by the Holder of the WarrantShares to be so registered.

 

(b)                                 Notwithstandinganything to the contrary in this Section 2, the Company shall have theright to discontinue any registration under this Section 2 at any timeprior to the effective date of such registration if the registration of othershares of Common Stock giving rise to such registration under thisSection 2 is discontinued.

 

(c)                                  Theobligations of the Company under Section 2(a) hereof shall terminate (a)if the Holder rejects the opportunity to participate in a registration withrespect to which Holder’s Warrant Shares would have been included but for saidrejection by the Holder and such registration has been declared or orderedeffective, or (b) the first registration by Company, including any of Holder’sWarrant Shares, has been declared or ordered effective.

#### ** **

#### **3.**                                      RegistrationProcedures

 

If Holderexercises its registration rights under Section 2(a) hereof, the Companywill, as expeditiously as possible:

 

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

 

###### **(b)**                                 prepare and file with the Commission such amendmentsand supplements to such registration statement and the prospectus used inconnection therewith as may be necessary to keep such registration statementeffective for a period of at least 180 days (or such shorter period as shall benecessary to complete the distribution of the Common Stock covered thereby) andto comply with the provisions of the Act with respect to the sale or otherdisposition of all shares covered by such registration statement during suchperiod in accordance with the intended methods of disposition by the seller orsellers thereof set forth in such registration statement;

 

###### **(c)**                                  furnish to the Holder such number of copies of suchregistration statement and of each such amendment and supplement thereto (ineach case including all exhibits), such number of copies of the prospectusincluded in such registration statement (including each preliminaryprospectus), in conformity with the requirements of the Act, in substantiallythe form in which they are proposed to be filed with the Commission, needed bythe Holder in order to facilitate the public sale or other disposition of theregistered Warrant Shares;

 

###### **(d)**                                 use all commercially reasonable efforts to registeror qualify such shares of Common Stock covered by such registration statementunder such other securities or blue sky laws of such United Statesjurisdictions as the Holder shall reasonably request, and do any and all otheracts and things which may be necessary or advisable to enable the Holder toconsummate the disposition of the registered Warrant Shares in suchjurisdictions, except that the Company shall not for any such purpose berequired to qualify generally to do business as a foreign corporation in anyjurisdiction where, but for the requirements of this clause (d), it would notbe obligated to be so qualified, or to subject itself to taxation in any suchjurisdiction;

 

###### **(e)**                                  use all commercially reasonable efforts to causesuch shares of Common Stock covered by such registration statement to beregistered with or approved by such other governmental agencies or authoritiesas may be necessary to enable the Holder to consummate the disposition of itsregistered Warrant Shares in the United States;

 

###### **(f)**                                    notify the Holder, at any time when a prospectusrelating to its registered Warrant Shares is required to be delivered under theAct, of the Company’s becoming aware that the prospectus included in therelated registration statement, as then in effect, includes an untrue statementof a material fact or omits to state any material fact required to be statedtherein or necessary to make the statements therein not misleading in light ofthe circumstances then existing, and promptly prepare and furnish to the Holdera 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 omitto state a material fact required to be stated therein or necessary to make thestatements therein not misleading in the light of the circumstances thenexisting;

 

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###### **(g)**                                 otherwise use all commercially reasonable efforts tocomply with all applicable rules and regulations of the Commission;

 

###### **(h)**                                 permit the Holder a reasonable time in which (i) toreview and comment on such registration or comparable statement, and (ii) torequest 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 orissued by the Commission and take all actions reasonably necessary to preventthe entry of such stop order or to remove it if entered.

 

The Holder herebyagrees that, upon receipt of any notice from the Company of the happening ofany event of the kind described in subdivision (f) above, the Holder willforthwith discontinue its disposition of Warrant Shares pursuant to theregistration statement covering such Warrant Shares until the Holder’s receiptof the copies of the supplemented or amended prospectus contemplated by saidsubdivision and, if so directed by the Company, will deliver to the Company allcopies, other than permanent file copies, then in the Holder’s possession ofthe prospectus covering such Warrant Shares prior to such supplementation oramendment.  In the event the Companyshall give any such notice, the period mentioned in subdivision (b) above shallbe extended by the number of days during the period from and including the dateof the giving of such notice to and including the date when the Holder shallhave received the copies of the supplemented or amended prospectus contemplatedby subdivision (f) above.

 

The Holder shall promptly furnish to the Company in writing suchinformation and documents regarding it and the distribution of its WarrantShares as may reasonably be required to be disclosed in the registrationstatement in question by the rules and regulations under the Act or under anyother applicable securities or blue sky laws of the jurisdictions referred toin subdivision (d) above.

 

#### **4.**                                      RegistrationExpenses

 

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

 

#### **5.**                                      Indemnification

 

###### **(a)**                                  The Company will, and hereby does, indemnify andagree to defend, the Holder and each Person, if any, who controls the Holderwithin 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 HolderIndemnified Party may become subject under the Act, the Exchange Act and allrules and regulations under each such Act, at common law or otherwise, insofaras such losses, claims, damages, liabilities or expenses (or actions orproceedings, whether commenced or threatened, in respect thereof) arise out ofor are based upon (i) any untrue statement or alleged untrue statement of amaterial fact contained in any registration statement as contemplated hereby orany omission or alleged omission to state therein a material fact required tobe stated therein or necessary to make the statements therein not misleading,(ii) any untrue statement or alleged untrue statement of a material factcontained in any preliminary, final or summary prospectus, together with the

 

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documents incorporated by reference therein (as amended or supplementedif the Company shall have filed with the Commission any amendment thereof orsupplement thereto), or any omission or alleged omission to state therein amaterial fact required to be stated therein or necessary in order to make thestatements therein, in the light of the circumstances under which they weremade, not misleading, or (iii) any violation by the Company of any federal,state or common law rule or regulation applicable to the Company and relatingto action of or inaction by the Company in connection with any suchregistration; and in each such case, the Company shall reimburse each suchHolder Indemnified Party for any reasonable legal or other expenses incurred byany of them in connection with investigating or defending any such loss, claim,damage, liability, expense, action or proceeding; provided, however, that theCompany shall not be liable to any such Holder Indemnified Party insofar assuch losses, claims, damages, liabilities, expenses, actions or proceedings arethe result of any untrue statement or alleged untrue statement made in relianceon or in conformity with any information furnished to the Company by or onbehalf of any Holder Indemnified Party, or any omission or alleged omission tostate a material fact relating to any information furnished to the Company byor on behalf of any Holder Indemnified Party required to be stated therein ornecessary in order to make the statements therein, in the light of thecircumstances under which they were made, not misleading.

 

In connection withany registration statement in which the Holder is participating, the Holderwill promptly furnish to the Company such information as shall be reasonablyrequested by the Company for use in any such registration statement orprospectus and each and every Holder Indemnified Party will, jointly andseverally, indemnify, and defend, the Company, its employees, officers anddirectors and each Person, if any, who controls the Company within the meaningof Section 15 of the Securities Act, against any losses, claims, damages,liabilities, expenses, actions or proceedings resulting from any (i) any actiontaken by any Holder Indemnified Party in connection with the sale of theWarrant Securities, or (ii) untrue statement or alleged untrue statement of amaterial fact or any omission or alleged omission of a material fact requiredto be stated in the registration statement or prospectus or preliminaryprospectus or any amendment thereof or supplement thereto, or necessary to makethe statements therein not misleading, but only to the extent that such untruestatement or omission or alleged untrue statement or omission is made inreliance on or in conformity with any information so furnished by any HolderIndemnified Party.

 

Any Personentitled to indemnification under the provisions of this Section 5 shall(i) give prompt notice to the indemnifying party of any claim with respect towhich it seeks indemnification, (ii) unless in such indemnified party’sreasonable judgment, supported by the written opinion of reputable andexperienced counsel to be supplied to the indemnifying party, a conflict ofinterest between such indemnified and indemnifying parties may exist in respectof such claim, permit such indemnifying party to assume control over thedefense and/or settlement of such claim, with reputable and experiencedcounsel; and if such defense is so assumed, such indemnified party shall notenter into any settlement without the consent of the indemnifying party if suchsettlement attributes liability to the indemnifying party and such indemnifyingparty shall not be subject to any liability for any settlement made without itsconsent (which shall not be unreasonably withheld); and (iii) provide suchreasonably requested assistance to the indemnifying party, at the indemnifyingparty’s expense.  Such indemnity shallremain in full force and effect regardless of any investigation made by or onbehalf of any indemnified party.

 

###### **(b)**                                 If for any reason the foregoing indemnity isunavailable, then the indemnifying party shall contribute to the amount paid orpayable by the indemnified party as a result of such losses, claims, damages,liabilities or expenses in such proportion as is appropriate to reflect notonly the relative benefits received by the indemnifying party on the one handand the indemnified party on the other but

 

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also the relative fault of the indemnifying party and the indemnifiedparty as well as any other relevant equitable considerations.  No Person guilty of fraudulentmisrepresentation (within the meaning of Section 11(f) of the Act) shallbe entitled to contribution from any Person who was not guilty of suchfraudulent misrepresentation.

 

#### **6.**                                      CertainLimitations on Registration Rights

 

If the Company determines to enter into an underwriting agreement inconnection with a registration provided for in this Schedule C, allshares of Common Stock to be included in such registration, including allWarrant Shares, shall be subject to such underwriting agreement and no Personmay participate in such registration unless such Person agrees to sell suchPerson’s securities on the basis provided in such underwriting agreement andcompletes and/or executes all questionnaires, indemnities, and other reasonabledocuments which must be executed under the terms of such underwritingagreement.

 

#### **7.**                                      Allocationof Securities Included in Registration Statement

 

If the Company’smanaging underwriter shall advise the Company and the Holder in writing thatthe inclusion in any registration pursuant hereto of some or all of the WarrantShares sought to be registered by the Holder creates a substantial risk thatthe proceeds or price per unit that will be derived from such registration willbe reduced or that the number of securities to be registered is too large a numberto be reasonably sold, (i) first, the number of shares of Common Stock soughtto be sold by the Company or other holders exercising “demand rights” shall beincluded in such registration, and (ii) next, the number of Warrant Shares andother shares of Common Stock of other holders exercising “piggyback rights”shall be included in such registration to the extent permitted by the Company’smanaging underwriter (if the offering is underwritten) to be allocated on a prorata basis based on the number of Warrant Shares Holder,and the number ofshares of Common Stock each such other holder, desire to have registered;provided, however, that, if the Holder would be required pursuant to theprovisions of this Section 7 to reduce the number of Warrant Shares thatit may include in such registration, the Holder may withdraw all of its WarrantShares from such registration whereupon the provisions of Section 2(c)hereof shall not apply to said registration.

 

#### **8.**                                      Limitationson Sale or Distribution of Securities

 

If a registrationhereunder shall be in connection with an underwritten public offering, theHolder agrees not to effect any public sale or distribution, including any salepursuant to Rule 144 under the Act, of any Warrant Shares and to use its bestefforts not to effect any such public sale or distribution of any other equitysecurity of the Company or of any security convertible into or exchangeable orexercisable for any equity security of the Company (other than as part of suchunderwritten public offering) within 10 days before or 90 days after theeffective date of such registration statement. In such event, the Holder agrees to sign the customary market stand-offletter with the Company’s managing underwriter, and to comply with applicablerules and regulations of the Commission.

 

#### **9.**                                      Rule144

 

The Companycovenants that it will file the reports required to be filed under the Act andthe Exchange Act and the rules and regulations adopted by the Commissionthereunder (or, in the event that the Company is not required to file suchreports, it will make publicly available information as set forth in Rule144(c)(2) promulgated under the Act), and it will take, at Holder’s expense,such further action as

 

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the Holder may reasonably request, or to the extent required from timeto time, to enable the Holder to sell its Warrant Shares without registrationunder the Act within the limitation of the exemption provided by (a) Rule 144under the Act, as such Rule may be amended from time to time, or (b) anysimilar 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 theHolder a written statement as to whether it has complied with suchrequirements.

 

#### **10.**                               Transferof Registration Rights

 

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

 

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THIS WARRANT HAS NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933 AND NEITHER THIS WARRANT NOR ANYINTEREST HEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OFUNLESS AN APPLICABLE REGISTRATION STATEMENT UNDER SUCH ACT AND RULES ANDREGULATIONS THEREUNDER IS THEN IN EFFECT, OR IN THE OPINION OF HOLDER’S COUNSEL(WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY), SUCH REGISTRATIONUNDER SUCH ACT IS NOT REQUIRED.  BY ITSACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE REPRESENTS THAT IT ISACQUIRING THE WARRANT FOR INVESTMENT AND AGREES TO COMPLY IN ALL RESPECTS WITHARTICLE III OF THIS WARRANT.

 

WARRANT

 

to Purchase CommonStock of

 

AXS-ONE INC.

 

ExpiringSeptember 30, 2006

 

THIS IS TO CERTIFY THAT,for value received, HAYDEN COMMUNICATIONS, INC., or its permitted andregistered assigns (collectively, the “Holder”), is entitled to purchase fromthe Company 60,000 shares of Common Stock at a purchase price payable uponexercise hereof (the “Exercise Price”) of $0.59 per share.  The Common Stock and the Exercise Price aresubject to adjustment in accordance with Article IV hereof.  Certain terms used in this Warrant aredefined in Article V.

 

ARTICLE I

 

Exercise ofWarrant

 

1.1                                 Methodof Exercise.  To exercise thisWarrant 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 expirationdate set forth above (the “Expiration Date”), the Holder shall deliver to theCompany, at the Warrant Office designated pursuant to Section 2.1, (a) awritten notice, in substantially the form of the Subscription Notice attachedas Schedule A hereto, of such Holder’s election to exercise thisWarrant, which notice shall specify the number of shares of Common Stock to bepurchased, (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 deliveryof such notice, such funds and this Warrant is made, and any such date isreferred to herein as the “Exercise Date.” Upon exercise, the Company shall issue only in the name of, and deliverto, such Holder a certificate or certificates for the number of full shares ofCommon Stock to which such Holder is entitled and a check or cash with respectto any fractional interest in a share of Common Stock as provided inSection 1.2.  The Holder shall bedeemed to have become a holder of record of such issued Common Stock on the applicableExercise Date.  Upon exercise of only aportion of the number of shares covered by this Warrant, the Company shallissue and deliver to the Holder, at the expense of the Company, a new Warrantcovering the number of shares representing the unexercised portion of thisWarrant so surrendered.

 

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

 

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

 

ARTICLE II

 

Warrant Office;Transfer,Division or Combination of Warrant

 

2.1                                 WarrantOffice.  The Company shall maintainan office for certain purposes specified herein (the “Warrant Office”), whichoffice shall initially be the Company’s office at 301 Route 17 North,Rutherford, New Jersey 07070 and may subsequently be such other office of theCompany or of any transfer agent of the Common Stock in the continental UnitedStates as to which written notice has previously been given to the Holder.

 

2.2                                 Ownershipof Warrant.  The Company may deemand treat the person in whose name this Warrant is then registered as theHolder and owner hereof (notwithstanding any notations of ownership or writinghereon made by anyone other than the Company) for all purposes and shall not beaffected by any notice to the contrary, until presentation of this Warrant forregistration of transfer as provided in this Article II.

 

2.3                                 Transferof Warrants.  The Company agrees tomaintain at the Warrant Office books for the registration of the issuance,exercise and any transfers of this Warrant and, subject to the provisions ofArticle III, this Warrant and all rights hereunder are transferable, inwhole 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 formof the Assignment attached as Schedule B hereto, duly executed bythe Holder or its duly authorized agent or attorney and funds sufficient to payany transfer taxes payable upon the making of such transfer.  Upon such surrender and payment, the Companyshall execute and deliver a new Warrant or Warrants in the name of the assigneeor 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 thenexercisable) in such instrument of assignment, and this Warrant shall promptlybe cancelled.

 

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ARTICLE III

 

Restrictions onTransfer andRegistration Under The Act

 

3.1                                 Restrictionson Transfer.  Neither this Warrant,the Warrant Shares nor any interest herein or therein shall be transferableexcept upon the conditions specified in Article II and thisArticle III, which conditions are intended to ensure compliance with theprovisions of the Act in respect of the transfer of this Warrant or anyinterest herein.  The Holder will causeany transferee of this Warrant, the Warrant Shares or any interest herein ortherein held by it to agree to take and hold this Warrant, the Warrant Sharesor an interest herein or therein subject to the provisions and upon theconditions specified in this Article.

 

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

 

[THIS WARRANT] [THESESHARES] [HAS] [HAVE] NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ANDNEITHER [THIS WARRANT] [THESE SHARES] NOR ANY INTEREST THEREIN MAY BESOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS AN APPLICABLEREGISTRATION STATEMENT UNDER SUCH ACT AND RULES AND REGULATIONS THEREUNDER ISTHEN IN EFFECT, OR IN THE OPINION OF HOLDER’S COUNSEL (WHICH OPINION ISREASONABLY SATISFACTORY TO THE COMPANY), SUCH REGISTRATION UNDER SUCH ACT ISNOT 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 WITHARTICLE III OF [THIS WARRANT] [THE WARRANT FOR THESE SHARES].

 

3.3                                 Noticeof Proposed Transfers.  The Holderand any holder of any Warrant Share by acceptance hereof or thereof agrees tocomply in all respects with the provisions of this Section.  Prior to any proposed transfer of thisWarrant or any Warrant Share, the Holder or holder of Warrant Shares, as thecase may be, shall give written notice to the Company of such holder’sintention to effect such transfer.  Eachsuch notice shall describe the manner and circumstance of the proposed transferin reasonable detail, and shall be accompanied by (a) a written opinion ofcounsel for such holder, reasonably satisfactory to the Company, addressed tothe Company, to the effect that the proposed transfer may be effected withoutregistration under the Act or (b) written assurance from the staff of theCommission that it will not recommend that any action be taken by theCommission in the event such transfer is effected without registration underthe Act.  Such proposed transfer may beeffected only if the Company shall have received such notice and such opinionof counsel or written assurance, whereupon the Holder or the holder of WarrantShares, as the case may be, shall be entitled to transfer this Warrant orWarrant Shares in accordance with the terms of this Warrant and of the noticedelivered by said holder to the Company. Each certificate evidencing this Warrant or Warrant Shares transferredas above provided shall bear the legend set forth in Section 3.2, exceptthat such certificate shall not bear such legend if the opinion of counsel orwritten assurance referred to above is to the further effect that neither suchlegend nor the restriction on transfer in this Article are required toensure compliance with the Act.

 

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3.4                                 Terminationof Conditions and Obligations.  Theconditions precedent imposed by this Article upon the transferability ofthe Warrant Shares (but not of this Warrant) shall terminate as to anyparticular Warrant Shares when such shares shall have been effectivelyregistered under the Act and sold or otherwise disposed of in accordance withthe intended method of disposition by the seller or sellers thereof set forthin the registration statement covering such shares or at such time as anopinion of counsel as specified in Section 3.3 shall have been rendered tothe effect set forth in the last sentence of Section 3.3.

 

3.5                                 RegistrationRights. The Holder shall be entitled to the benefits of the registrationrights set forth in Schedule C attached hereto.

 

ARTICLE IV

 

AntidilutionProvisions

 

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

 

(i)                                     StockDividends.  If the number of sharesof Common Stock outstanding at any time after the date of issuance of thisWarrant is increased by a stock dividend payable in shares of Common Stock orby a subdivision or split-up of shares of Common Stock, then immediately afterthe record date fixed for the determination of holders of Common Stock entitledto receive such stock dividend or the effective date of such subdivision orsplit-up, as the case may be, the Exercise Price shall be appropriately reducedand the number of shares of Common Stock to be acquired on exercise of thisWarrant shall be increased so that the Holder, upon exercise of this Warrantthereafter, shall be entitled to receive the number of shares of Common Stockwhich it would have owned immediately following such action had this Warrantbeen exercised immediately prior thereto at the aggregate Exercise Priceeffective prior thereto.

 

(ii)                                  Combinationof Stock.  If the number of sharesof Common Stock outstanding at any time after the date of issuance of thisWarrant is decreased by a combination of the outstanding shares of CommonStock, then, immediately after the effective date of such combination, theExercise Price shall be appropriately increased and the number of shares ofCommon Stock to be acquired on exercise of this Warrant shall be decreased sothat the Holder, upon exercise of this Warrant thereafter, shall be entitled toreceive the number of shares of Common Stock which it would have ownedimmediately following such action had this Warrant been exercised immediatelyprior thereto.

 

(iii)                               Reorganization,Etc.  In case of any capitalreorganization of the Company, or any reclassification of the Common Stock, orin case of the consolidation of the Company with or the merger of the Companywith or into any other Person or in case of the sale, lease or other transferof 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 thenumber of shares of stock or other securities or property to which the CommonStock issuable (at the time of such capital reorganization, reclassification,consolidation, merger, sale, lease or other transfer) upon exercise of thisWarrant would have been entitled upon such capital reorganization,reclassification, consolidation, merger, sale, lease or

 

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other transfer; and in any such case, if necessary,the provisions set forth herein with respect to the rights and intereststhereafter of the Holder shall be appropriately adjusted so as to beapplicable, as nearly as may reasonably be, to any shares of stock or othersecurities or property thereafter deliverable on the exercise of thisWarrant.  The subdivision or combinationof shares of Common Stock issuable upon exercise of this Warrant at any timeoutstanding into a greater or lesser number of shares of Common Stock of theCompany (whether with or without par value) shall not be deemed to be areclassification of the Common Stock of the Company for the purposes of thisclause (iii).

 

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

 

(b)                                 StatementRegarding Adjustments.  Whenever anyadjustments shall be required as provided in Section 4.1(a), the Companyshall forthwith file, at the Warrant Office and, if different, at the principaloffice of the Company, a statement showing in detail such adjustments and thefacts requiring such adjustment, which statement shall also be sent to theHolder.

 

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

 

(d)                                 Reservationof Shares.  The Company shallreserve at all times so long as this Warrant remains outstanding, free frompreemptive rights, out of its treasury stock or its authorized but unissuedshares of Common Stock, or both, solely for the purpose of effecting theexercise of this Warrant, sufficient shares of Common Stock to provide for theexercise of this Warrant.

 

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

 

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

 

ARTICLE V

 

Terms Defined

 

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

 

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

 

Commission– the Securities and Exchange Commission, or any other Federal agency thenadministering the Act.

 

CommonStock – 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 whichthis Warrant becomes exercisable pursuant to Article IV, including stockof the Company of any class thereafter authorized which ranks, or is entitledto a participation, as to assets or dividends, substantially on a parity withCommon Stock.

 

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

 

Current MarketPrice – the price per share of Common Stock on any date asdetermined by the Company’s Board of Directors as provided below.  The Current Market Price shall be theaverage of the daily closing prices per share of Common Stock for 30consecutive business days ending no more then 15 business days before the dayin question (as adjusted for any stock dividend, split, combination orreclassification that took effect during such 30 business-day period).  The closing price for each day shall be thelast reported sales price regular way or, in the case no such reported sales takeplace on such day, the average of the last reported bid and asked pricesregular way, in either case on the principal national securities exchange onwhich the Common Stock is listed or admitted to trading, or if not listed oradmitted to trading on any national securities exchange, the average of thehighest bid and the lowest asked prices quoted on the National Association ofSecurities Dealers Automated Quotation System (NASDAQ), or if not so quoted, asreported by the National Quotation Bureau, Inc.; provided, however,that if the Common Stock is not traded in such manner that any of thequotations referred to above are available for the period required hereunder,Current Market Price per share of Common Stock shall be deemed to be the fairvalue 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 Federalstatute, and the rules and regulations of the Commission promulgatedthereunder, 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 ofCommon Stock at such date, except shares then held in the treasury of theCompany.

 

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Person– any individual, corporation, partnership, trust, unincorporated organizationand any government and any political subdivision, instrumentality or agencythereof.

 

Warrant Office– as defined in Section 2.1.

 

Warrant Shares– the shares of Common Stock purchasable or purchased by the Holder upon theexercise of this Warrant.

 

ARTICLE VI

 

Miscellaneous

 

6.1                                 EntireAgreement.  This Warrant containsthe entire agreement between the Holder and the Company with respect to thepurchase of the Warrant Shares and the related transactions and supersedes allprior arrangements or understandings with respect thereto.

 

6.2                                 GoverningLaw.  This Warrant shall be governedby and construed in accordance with the laws of the State of Delaware withoutgiving effect to the conflict of laws.

 

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

 

6.4                                 Assignmentby the Company.  The Company may notsell, assign, transfer or otherwise convey any of its rights or delegate any ofits duties under this Warrant except to a corporation succeeding to the Companyby merger, consolidation or acquisition of all or substantially all of theCompany’s business and/or assets, and this Warrant shall be binding on andinure to the benefit of such successor.

 

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

 

6.6                                 Notice.  Any notice or other communication requiredor permitted to be given or delivered hereunder shall be in writing and; if tothe 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 atthe Warrant Office or at any more recent address of which any Holder shall havenotified 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 Companyat 301 Route 17 North, Rutherford, NJ 07070, or such other address within theUnited States of America as shall have been furnished by the Company to theHolder.  Any notice or othercommunication hereunder shall be deemed given at the time of receipt thereof.

 

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6.7                                 Limitationof Liability; Not Stockholders.  Noprovisions of this Warrant shall be construed as conferring upon the Holder theright to vote, consent, receive dividends, or receive notice other than asherein expressly provided, in respect of meetings of stockholders for theelection of directors of the Company or any other matter whatsoever as astockholder of the Company.  Noprovision hereof, in the absence of affirmative action taken by the Holder toexercise this Warrant and thereby purchase shares of Common Stock, and no mereenumeration herein of the rights or privileges of the Holder hereof, shall giverise to any liability of the Holder for the purchase price of any WarrantShares or as a stockholder of the Company, whether such liability is assertedby the Company or by creditors of the Company.

 

6.8                                 Loss,Destruction, Etc. of Warrant.  Uponreceipt of evidence satisfactory to the Company of the loss, theft, mutilationor destruction of this Warrant, and in the case of any loss, theft ordestruction, upon delivery of a bond indemnity in such form and amount as shallbe reasonably satisfactory to the Company, or in the event of such mutilationupon surrender and cancellation of this Warrant, the Company will make anddeliver a new Warrant, of like tenor, in replacement of and substitution forsuch lost, stolen, destroyed or mutilated Warrant (which shall thereupon becomenull and void and of no further effect).

 

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

 

 

Dated:  September 30, 2003

 
|   | AXS-ONE INC.                                                |
|--------|-------------------------------------------------------------|
|   |                                                        |
|   |                                                        |
|   | By                                                          | /s/ PAUL ABEL |   |
|   | Name:  Paul Abel                                       |
|   | Title:  Vice President, Secretary and General  Counsel |

 

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SCHEDULE A

 

SUBSCRIPTIONNOTICE

 

The undersigned, theholder of the Warrant accompanying this Notice, hereby elects to exercisepurchase rights represented by said Warrant for, and to purchase thereunder,                    sharesof the Common Stock covered by such Warrant and herewith makes payment in fulltherefor pursuant to Section 1.1 of such Warrant, and requests (a) thatcertificates for such aforesaid number of shares (or any other securities orproperty issuable upon such exercise) be issued in the name of and delivered tothe undersigned at the followingaddress:                                                            and(b) if such shares shall not include all of the shares issuable as provided insuch Warrant, that a new Warrant of like tenor and date for the balance of theshares issuable thereunder be delivered to the undersigned.

 
|   | [HAYDEN COMMUNICATIONS,  INC.] |
|--------|--------------------------------|
|   |                           |
|   | By:                            |   |   |
|   | Name:                          |
|   | Title:                         |

 

Dated:

 

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