_____________________________________________________________________________
	 

	 
		CONVERTIBLE NOTE AND WARRANT PURCHASE
		AGREEMENT
	 

	 
		by and among
	 

	 
		AXS-One Inc.
	 

	 
		and
	 

	 
		the parties named herein on Schedule 1, as
		Purchasers
	 

	 
		May 29, 2007
	 

	 
		_____________________________________________________________________________
	 

	 
		 
	 

	 
		 
	 

	 
		

	 

	 
		 
	 



	 
	 

	 

	 
		This CONVERTIBLE NOTE AND WARRANT PURCHASE
		AGREEMENT (this “Agreement”)
		is dated as of May 29, 2007, among AXS-One Inc., a Delaware corporation (the
		“Company”), and the purchasers identified on
		Schedule 1 hereto (each a “Purchaser”
		and collectively the “Purchasers”).
	 

	 
		WHEREAS, subject to the terms and conditions
		set forth in this Agreement and pursuant to Section 4(2) of the Securities Act
		(as defined below), and Rule 506 promulgated thereunder, the Company desires to
		issue and sell to the Purchasers, and the Purchasers, severally and not
		jointly, desire to purchase from the Company (i) an aggregate original
		principal amount of $2,500,000 of Series A Secured Convertible Promissory Notes
		(the “Series A
		Notes”), (ii) an aggregate
		original principal amount of $2,500,000 of Series B Secured Convertible
		Promissory Notes (the “Series B
		Notes”, and together with the
		Series A Notes, collectively the “Notes”) and
		(iii) Common Stock Purchase Warrants (the “Warrants”)
		entitling the holders thereof to purchase an aggregate of
		2,000,000 shares of the Company’s Common Stock as more fully
		set forth herein.
	 

	 
		NOW, THEREFORE, in consideration of the
		mutual covenants contained in this Agreement, and for other good and valuable
		consideration the receipt and adequacy of which are hereby acknowledged, the
		Company and each Purchaser agree as follows:
	 

	 
		ARTICLE I
	 

	 
		DEFINITIONS AND TERMS OF NOTES AND
		WARRANTS
	 

	 
		1.1 Definitions. 
	 

	 
		In addition to the terms defined elsewhere
		in this Agreement, for all purposes of this Agreement, the following terms have
		the meanings indicated in this Section 1.1:
	 

	 
		“Action”
		shall have the meaning ascribed to such term in Section 3.1(i). 
	 

	 
		“Affiliate”
		means any Person that, directly or indirectly through one or more
		intermediaries, controls or is controlled by or is under common control with a
		Person, as such terms are used in and construed under Rule 144. With respect to
		a Purchaser, any investment fund or managed account that is managed on a
		discretionary basis by the same investment manager as such Purchaser will be
		deemed to be an Affiliate of such Purchaser.
	 

	 
		“Agent”
		shall have the meaning ascribed to such term in the Security Agreement.
	 

	 
		“Agreement”
		shall have the meaning ascribed to such term in the Preamble.
	 

	 
		“Blue Sky Laws” shall have the meaning ascribed to such term in
		Section 3.1(f)(ii).
	 

	 
		“Business Day” means any day except Saturday, Sunday and any day
		which shall be a federal legal holiday or a day on which banking institutions
		in the State of New Jersey are authorized or required by law or other
		governmental action to close.
	 

	 
		“Closing”
		shall have the meaning ascribed to such term in Section 2.1(a).
	 

	 
		 
	 

	 
		

	 

	 
		 
	 



	 
	 

	 

	 
		“Closing Date” shall have the meaning ascribed to such term in
		Section 2.1(a).
	 

	 
		“Commission”
		means the Securities and Exchange Commission. 
	 

	 
		“Common Stock” means the common stock of the Company, $0.01 par
		value per share, and any securities into which such common stock may hereafter
		be reclassified. 
	 

	 
		“Common Stock Equivalents” means any securities of the Company or its
		Subsidiaries which would entitle the holder thereof to acquire at any time
		Common Stock, including without limitation, any debt, preferred stock, rights,
		options, warrants or other instrument that is at any time convertible into or
		exchangeable for, or otherwise entitles the holder thereof to receive, Common
		Stock. 
	 

	 
		“Company”
		shall have the meaning ascribed to such term in the Preamble.
	 

	 
			
				
				   
				

			 	
				
				  “Company IP”
				  shall have the meaning ascribed to such term in Section 3.1(k).
				

			 

 

	 
		“Contemplated Transactions” shall have the meaning ascribed to such term in
		Section 3.1(a)(ii).
	 

	 
		“Conversion Shares” means the shares of Common Stock issuable upon
		conversion of the Notes.
	 

	 
		“Disclosure Schedules” means the Disclosure Schedules concurrently
		delivered herewith. 
	 

	 
		“Exchange Act” means the Securities Exchange Act of 1934, as
		amended.
	 

	 
		“Financial Statements” shall have the meaning ascribed to such term in
		Section 3.1(h)(iv).
	 

	 
		“GAAP” shall
		have the meaning ascribed to such term in Section 3.1(h)(v).
	 

	 
			
				
				   
				

			 	
				
				  “Governmental Body” shall have the meaning ascribed to such term in
				  Section 3.1(f)(ii).
				

			 

 

	 
		“Indemnified Party” shall have the meaning ascribed to such term in
		Section 5.3.
	 

	 
		“Indemnifying Party” shall have the meaning ascribed to such term in
		Section 5.3.
	 

	 
		“Investor Rights Agreement” means the Investor Rights Agreement between the
		Company and each of the Purchasers, in the form of Exhibit A
		hereto.
	 

	 
		“Legal Requirement” shall have the meaning ascribed to such term in
		Section 3.1(g).
	 

	 
		“Lien” means
		a lien, charge, security interest, encumbrance, right of first refusal or other
		restriction, except for a lien for current taxes not yet due and payable and a
		minor imperfection of title, if any, not material in nature or amount and not
		materially detracting from the value or impairing the use of the property
		subject thereto or impairing the operations or proposed operations of the
		Company. 
	 

	 
		 
	 

	 
		3
	 

	 
		 
	 



	 
	 

	 

	 
		“Material Adverse Effect” shall have the meaning ascribed to such term in
		Section 3.1(a)(i). 
	 

	 
		“Material Agreements” shall have the meaning ascribed to such term in
		Section 3.1(f)(i).
	 

	 
		“Notes”
		shall have the meaning ascribed to such term in the recitals hereto.
	 

	 
		“Person”
		means an individual or corporation, partnership, trust, incorporated or
		unincorporated association, joint venture, limited liability company, joint
		stock company, government (or an agency or subdivision thereof) or other entity
		of any kind. 
	 

	 
		“Purchaser”
		shall have the meaning ascribed to such term in the Preamble.
	 

	 
		“Purchaser Board Seat”
		shall have the meaning ascribed to such
		term in Section 4.7.
	 

	 
		“Purchaser Director Designee” shall have the meaning ascribed to such term in
		Section 4.7.
	 

	 
		“Rule 144”
		means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
		such Rule may be amended from time to time, or any similar rule or regulation
		hereafter adopted by the Commission having substantially the same effect as
		such Rule. 
	 

	 
		“SEC Documents” shall have the meaning ascribed to such term in
		Section 3.1(h)(i). 
	 

	 
		“Securities”
		means the Notes, the Conversion Shares, the Warrants and the Warrant
		Shares.
	 

	 
		“Securities Act” means the Securities Act of 1933, as
		amended.
	 

	 
		“Security Agreement” means the Security Agreement between the Company
		and each of the Purchasers, in the form of Exhibit B
		hereto.
	 

	 
		“Series A Notes” shall have the meaning ascribed to such term in
		the recitals hereto.
	 

	 
		“Series B Notes” shall have the meaning ascribed to such term in
		the recitals hereto.
	 

	 
		“Silicon Agreement” means the Loan and Security Agreement, dated as
		of September 13, 2005, as amended from time to time, between the Company and
		Silicon Valley Bank.
	 

	 
		“Subordination Agreement” means the Subordination Agreement between the
		Agent, acting on behalf of Purchasers, and Silicon Valley Bank, in the form of
		Exhibit G hereto.
	 

	 
		“Subscription Amount” means, as to each Purchaser, the amount set forth
		beside such Purchaser’s name on Schedule 1
		hereto, in United States dollars and in immediately available funds.
	 

	 
		“Subsidiary”
		means, with respect to any entity, any corporation or other organization of
		which securities or other ownership interest having ordinary voting power to
		elect a majority of the board of directors or other persons performing similar
		functions, are directly or indirectly 
	 

	 
		 
	 

	 
		4
	 

	 
		 
	 



	 
	 

	 

	 
		owned by such entity or of which such entity
		is a partner or is, directly or indirectly, the beneficial owner of 50% or more
		of any class of equity securities or equivalent profit participation
		interests.
	 

	 
		“Trading Day” means (i) a day on which the Common Stock is
		traded on a Trading Market, or (ii) if the Common Stock is not listed on a
		Trading Market, a day on which the Common Stock is traded on the
		over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
		Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common
		Stock is quoted in the over-the-counter market as reported by Pink Sheets LLC
		(or any similar organization or agency succeeding to its functions of reporting
		prices); provided, that in the event that the Common Stock is not listed or
		quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean
		a Business Day.
	 

	 
		“Trading Market” means the following markets or exchanges on which
		the Common Stock is listed or quoted for trading on the date in question: the
		American Stock Exchange, the New York Stock Exchange, the Nasdaq Global Market
		or the Nasdaq Capital Market.
	 

	 
		“Transaction Documents” means this Agreement, the Notes, the Security
		Agreement, the Investor Rights Agreement, the Warrants, the Subordination
		Agreement and any other documents or agreements executed in connection with the
		transactions contemplated hereunder.
	 

	 
		“Warrants”
		shall have the meaning ascribed to such term in the recitals hereto. 
	 

	 
		“Warrant Shares” means the shares of Common Stock issuable upon
		exercise of the Warrants.
	 

	 
		1.2 Terms of the Notes and Warrants. The terms and
		provisions of the Series A Notes are set forth in the form of Series A Secured
		Convertible Promissory Note, attached hereto as Exhibit C, and
		the terms and provisions of the Series B Notes are set forth in the form of
		Series B Secured Convertible Promissory Note, attached hereto as
		Exhibit D. The terms and provisions of the Warrants are more
		fully set forth in the form of Warrant, attached hereto as Exhibit E.
	 

	 
		ARTICLE II
	 

	 
		PURCHASE AND SALE
	 

	 
		2.1 Closing.
	 

	 
		(a) The closing of the transactions
		contemplated under this Agreement (the “Closing”)
		will take place upon the execution of this Agreement by the Company and the
		Purchasers immediately following satisfaction or waiver of the conditions set
		forth in Sections 2.2 and 2.3 (other than those conditions which by their terms
		are not to be satisfied or waived until the Closing), at the offices of Wiggin
		and Dana LLP, 400 Atlantic Street, Stamford, CT 06901 (or remotely via exchange
		of documents and signatures) or at such other place or day as may be mutually
		acceptable to the Purchasers and the Company. The date on which the Closing
		occurs is the “Closing
		Date”.
	 

	 
		 
	 

	 
		 
	 

	 
		5
	 

	 
		 
	 



	 
	 

	 

	 
		(b) At the Closing, the Purchasers shall
		purchase, severally and not jointly, and the Company shall issue and sell, (i)
		an aggregate original principal amount of $5,000,000 of Notes (consisting of
		$2,500,000 of Series A Notes and $2,500,000 of Series B Notes) and (ii)
		Warrants to purchase 2,000,000
		shares of Common Stock. Each Purchaser
		shall purchase from the Company, and the Company shall issue and sell to each
		Purchaser, an equal amount of Series A Notes and Series B Notes in such
		aggregate principal amount and a Warrant to purchase such number of Warrant
		Shares, in each case, as is set forth next to such Purchaser’s name on
		Schedule 1.
	 

	 
		2.2 Conditions to Obligations of Purchasers to Effect the
		Closing.
	 

	 
		The obligations of each Purchaser to effect
		the Closing and the transactions contemplated by this Agreement shall be
		subject to the satisfaction at or prior to the Closing of each of the following
		conditions, any of which may be waived, in writing, by such Purchaser:
	 

	 
		(a) At the Closing (unless otherwise
		specified below) the Company shall deliver or cause to be delivered to each
		Purchaser the following: 
	 

	 
		(i) this Agreement, duly executed by the
		Company;
	 

	 
		(ii) an original Series A Note and an
		original Series B Note for such Purchaser in the principal amount that is set
		forth on Schedule 1 hereto next to such Purchaser’s name;
	 

	 
		(iii) an original Warrant, registered in the
		name of such Purchaser, pursuant to which such Purchaser shall have the right
		to acquire up to the number of shares of Common Stock, as set forth next to
		such Purchaser’s name on Schedule
		1 hereto;
	 

	 
		(iv) the Investor Rights Agreement, duly
		executed by the Company;
	 

	 
		(v) the Security Agreement, duly executed by
		the Company;
	 

	 
		(vi) a legal opinion of Wiggin and Dana
		LLP, counsel to the Company, in the form of Exhibit F
		hereto; 
	 

	 
		(vii) the Subordination Agreement, duly
		executed by Silicon Valley Bank and the Company; and
	 

	 
		(viii) a certificate of the Secretary of the
		Company (the “Secretary’s
		Certificate”), attaching a true
		copy of the certificate of incorporation and bylaws of the Company, as amended
		to the Closing Date, and attaching true and complete copies of the resolutions
		of the Board of Directors of the Company authorizing the execution, delivery
		and performance of this Agreement and the other Transaction Documents.
	 

	 
		(b) All representations and warranties of
		the Company contained in the Transaction Documents shall remain true and
		correct in all material respects as of the Closing Date as though such
		representations and warranties were made on such date (except those
		representations and warranties that address matters only as of a particular
		date will remain true and correct as of such date).
	 

	 
		 
	 

	 
		6
	 

	 
		 
	 



	 
	 

	 

	 
		(c) As of the Closing Date, there shall have
		been no Material Adverse Effect with respect to the Company since the date
		hereof.
	 

	 
		(d) From the date hereof to the Closing
		Date, trading in the Common Stock shall not have been suspended by the
		Commission (except for any suspension of trading of limited duration agreed to
		by the Company, which suspension shall be terminated prior to the Closing),
		and, at any time prior to the Closing Date, trading in securities generally as
		reported by Bloomberg Financial Markets shall not have been suspended or
		limited, or minimum prices shall not have been established on securities whose
		trades are reported by such service, or on any Trading Market, nor shall a
		banking moratorium have been declared either by the United States or New Jersey
		State authorities.
	 

	 
		2.3. Conditions to Obligations of the Company to Effect the
		Closing.
	 

	 
		(a) The obligations of the Company to effect
		the Closing and the transactions contemplated by this Agreement shall be
		subject to the satisfaction at or prior to the Closing of each of the following
		conditions, any of which may be waived, in writing, by the Company. At the
		Closing, each Purchaser shall deliver or cause to be delivered to the Company
		the following:
	 

	 
		(i) this Agreement, duly executed by such
		Purchaser;
	 

	 
		(ii) such Purchaser’s Subscription
		Amount, by wire transfer of immediately available funds;
	 

	 
		(iii) the Investor Rights Agreement, duly
		executed by such Purchaser; 
	 

	 
		(iv) the Security Agreement, duly executed
		by such Purchaser; and
	 

	 
		(v) the Subordination Agreement, duly
		executed by Silicon Valley Bank and the Agent.
	 

	 
		(b) All representations and warranties of
		each of the Purchasers contained herein shall remain true and correct as of the
		Closing Date as though such representations and warranties were made on such
		date.
	 

	 
		ARTICLE III
	 

	 
		REPRESENTATIONS AND
		WARRANTIES
	 

	 
		3.1 Representations and Warranties of the
		Company. Except as set forth under
		the corresponding section of the Disclosure Schedules delivered concurrently
		herewith and except as provided in the SEC Documents, the Company hereby makes
		the following representations and warranties as of the date hereof and as of
		the Closing Date to each Purchaser:
	 

	 
		(a) Corporate Organization; Authority; Due
		Authorization.
	 

	 
		(i) The Company (A) is a corporation duly
		organized, validly existing and in good standing under the laws of the
		jurisdiction of its incorporation, (B) has the corporate power 
	 

	 
		 
	 

	 
		7
	 

	 
		 
	 



	 
	 

	 

	 
		and authority to own or lease its properties
		as and in the places where its business is now conducted and to carry on its
		business as now conducted, and (C) is duly qualified as a foreign corporation
		authorized to do business in every jurisdiction where the failure to so
		qualify, individually or in the aggregate, would have a material adverse effect
		on the operations, assets, liabilities, financial condition or business of the
		Company and its Subsidiaries taken as a whole (a “Material Adverse Effect”). Set forth in Schedule 3.1(a)
		is a complete and correct list of all Subsidiaries. Each Subsidiary is duly
		incorporated, validly existing and in good standing under the laws of its
		jurisdiction of incorporation and is qualified to do business as a foreign
		corporation in each jurisdiction in which qualification is required, except
		where failure to so qualify would not have, individually or in the aggregate, a
		Material Adverse Effect.
	 

	 
		(ii)The Company (A) 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 and to incur the
		obligations herein and therein and (B) has been authorized by all necessary
		corporate action to execute, deliver and perform this Agreement and the other
		Transaction Documents to which it is a party and to consummate the transactions
		contemplated hereby and thereby (the “Contemplated Transactions”). This Agreement is and each of the other
		Transaction Documents will be on the Closing Date a valid and binding
		obligation of the Company enforceable against the Company in accordance with
		its terms except as limited by applicable bankruptcy, reorganization,
		insolvency, moratorium or similar laws affecting the enforcement of
		creditors’ rights and the availability of equitable remedies (regardless
		of whether such enforceability is considered in a proceeding at law or
		equity).
	 

	 
		(b) Capitalization.
	 

	 
		(i) As of the date hereof, the authorized
		capital stock of the Company consisted of (i) 50,000,000 shares of Common
		Stock, of which 36,007,425 shares of Common Stock were outstanding and (ii)
		5,000,000 shares of Preferred Stock, $.01 par value, of which no shares were
		outstanding. All outstanding shares of capital stock of the Company were issued
		in compliance with all applicable Federal securities laws, and the issuance of
		such shares was duly authorized by all necessary corporate action on the part
		of the Company. Except as contemplated by this Agreement or as set forth in the
		SEC Documents or in Schedule
		3.1(b), there are (A) no outstanding
		subscriptions, warrants, options, conversion privileges or other rights or
		agreements obligating the Company to purchase or otherwise acquire or issue any
		shares of capital stock of the Company (or shares reserved for such purpose),
		(B) no preemptive rights contained in the Company’s certificate of
		incorporation, as amended, the bylaws of the Company or contracts to which the
		Company is a party or rights of first refusal with respect to the issuance of
		additional shares of capital stock of the Company, including without limitation
		the Conversion Shares and the Warrant Shares, and (C) no commitments or
		understandings (oral or written) of the Company to issue any shares, warrants,
		options or other rights to acquire any equity securities of the Company. To the
		Company’s knowledge, except as set forth in Schedule 3.1(b),
		none of the shares of Common Stock are subject to any stockholders’
		agreement, voting trust agreement or similar arrangement or understanding.
		Except as set forth in Schedule
		3.1(b), the Company has no outstanding
		bonds, debentures, notes or other obligations the holders of which have the
		right to vote (or which are convertible into or exercisable for securities
		having the right to vote) with the stockholders of the Company on any matter.
		
	 

	 
		 
	 

	 
		8
	 

	 
		 
	 



	 
	 

	 

	 
		(ii) With respect to each Subsidiary, except
		as set forth in Schedule
		3.1(b), (i) all the issued and
		outstanding shares of each Subsidiary’s capital stock have been duly
		authorized and validly issued, are fully paid and nonassessable, have been
		issued in compliance with applicable securities laws, were not issued in
		violation of or subject to any preemptive rights or other rights to subscribe
		for or purchase securities, and (ii) there are no outstanding options to
		purchase, or any preemptive rights or other rights to subscribe for or to
		purchase, any securities or obligations convertible into, or any contracts or
		commitments to issue or sell, shares of any Subsidiary’s capital stock or
		any such options, rights, convertible securities or obligations. Except as
		disclosed in the SEC Documents or Schedule 3.1(b),
		the Company beneficially owns 100% of the outstanding equity securities of each
		Subsidiary.
	 

	 
		(c) Issuance of Securities. The Securities are duly authorized and, when issued
		and paid for in accordance with the Transaction Documents, will be duly and
		validly issued, fully paid and non-assessable. The Company has reserved from
		its duly authorized capital stock the maximum number of shares of Common Stock
		issuable upon conversion of the Notes and exercise of the Warrants.
	 

	 
		(d) Private Offering. Neither the Company nor anyone acting on its behalf
		has within the last 12 months issued, sold or offered any security of the
		Company (including, without limitation, any Common Stock or warrants of similar
		tenor to the Warrants) to any Person under circumstances that would cause the
		issuance and sale of the Securities, as contemplated by this Agreement, to be
		subject to the registration requirements of Section 5 of the Securities Act.
		The Company agrees that neither the Company nor anyone acting on its behalf
		will offer the Securities or any part thereof or any similar securities for
		issuance or sale to, or solicit any offer to acquire any of the same from,
		anyone so as to make the issuance and sale of the Securities subject to the
		registration requirements of Section 5 of the Securities Act.
	 

	 
		(e) Brokers and Finders’ Fees. No brokerage or finder’s fees or commissions are
		or will be payable by the Company to any broker, financial advisor or
		consultant, finder, placement agent, investment banker, bank or other Person
		with respect to the transactions contemplated by this Agreement. The Purchasers
		shall have no obligation with respect to any fees or with respect to any claims
		made by or on behalf of other Persons for fees of a type contemplated in this
		Section that may be due in connection with the transactions contemplated by
		this Agreement.
	 

	 
		(f) No Conflict; Required Filings and
		Consents. 
	 

	 
		(i) The execution, delivery and performance
		of this Agreement and the other Transaction Documents by the Company do not,
		and the consummation by the Company of the Contemplated Transactions will not,
		(A) conflict with or violate the certificate of incorporation or the bylaws of
		the Company or its Subsidiaries, (B) conflict with or violate any law, rule,
		regulation, order, judgment or decree applicable to the Company or its
		Subsidiaries or by which any property or asset of the Company or its
		Subsidiaries is bound or affected, or (C) result in any breach of or constitute
		a default (or an event which with notice or lapse of time or both would become
		a default) under, result in the loss of a material benefit under, or give to
		others any right of purchase or sale, or any right of termination, amendment,
		acceleration, increased payments or cancellation of, or result in the creation
		of a Lien on any property or asset of the Company or of any of its Subsidiaries
		pursuant to, any material note, bond, mortgage, indenture, contract, agreement,
		lease, license, permit, franchise or other instrument or obligation to which
		the 
	 

	 
		 
	 

	 
		 
	 

	 
		9
	 

	 
		 
	 



	 
	 

	 

	 
		Company or any of its Subsidiaries is a
		party or by which the Company or of any of its Subsidiaries is bound or
		affected (the “Material
		Agreements”). 
	 

	 
		(ii) The execution and delivery of this
		Agreement and the other Transaction Documents by the Company do not, and the
		performance of this Agreement and the other Transaction Documents and the
		consummation by the Company of the Contemplated Transactions will not, require,
		on the part or in respect of the Company, any consent, approval, authorization
		or permit of, or filing with or notification to, any Governmental Body (as
		hereinafter defined) except for the filing of a Form D with the SEC and
		applicable requirements, if any, of the Exchange Act or any state securities or
		“blue sky” laws (collectively, “Blue Sky Laws”), and any approval required by applicable rules
		of the markets in which the Company’s securities are traded. For purposes
		of this Agreement, “Governmental
		Body” shall mean any: (A) nation,
		state, commonwealth, province, territory, county, municipality, district or
		other jurisdiction of any nature; (B) federal, state, local, municipal, foreign
		or other government; or (C) governmental or quasi-governmental authority of any
		nature (including any governmental division, department, agency, commission,
		instrumentality, official, organization, unit, body or entity and any court or
		other tribunal).
	 

	 
		(g) Compliance.
		Except as set forth in the SEC Documents or in Schedule 3.1(g),
		neither the Company nor any Subsidiary is in conflict with, or in default or
		violation of (A) any law, rule, regulation, order, judgment or decree
		applicable to the Company or such Subsidiary or by which any property or asset
		of the Company or such Subsidiary is bound or affected (“Legal Requirement”), or (B) any Material Agreement, in each case
		except for any such conflicts, defaults or violations that would not,
		individually or in the aggregate, have a Material Adverse Effect. Neither the
		Company nor any Subsidiary has received any written notice or other
		communication from any Governmental Body regarding any actual or possible
		violation of, or failure to comply with, any Legal Requirement, except any such
		violations or failures that would not, individually or in the aggregate, have a
		Material Adverse Effect.
	 

	 
		(h) SEC Documents; Financial Statements.
	 

	 
		(i) The information contained in the
		following documents, did not, as of the date of the applicable document,
		include any untrue statement of a material fact or omit to state any material
		fact required to be stated therein or necessary to make the statements therein,
		in the light of the circumstances in which they were made, not misleading, as
		of their respective filing dates or, if amended, as so amended (the following
		documents, collectively, the “SEC
		Documents”), provided that the
		representation in this sentence shall not apply to any misstatement or omission
		in any SEC Document filed prior to the date of this Agreement which was
		superseded by a subsequent SEC Document filed prior to the date of this
		Agreement: (A) the Company’s Annual Report on Form 10-K for the year ended
		December 31, 2006, and (B) the Company’s Quarterly Report on Form 10-Q for
		the quarter ended March 31, 2007; (C) the Company’s definitive Proxy
		Statement with respect to its 2007 Annual Meeting of Stockholders, filed with
		the Commission on April 13, 2007; and (iv) the Company’s Current Reports
		on Form 8-K filed February 16, 2007, March 1, 2007, March 7, 2007, April 19,
		2007 and April 26, 2007.
	 

	 
		 
	 

	 
		 
	 

	 
		10
	 

	 
		 
	 



	 
	 

	 

	 
		(ii) In addition, as of the date of this
		Agreement, the Disclosure Schedules, when read together with the SEC Documents
		and the information, qualifications and exceptions contained in this Agreement,
		do not include any untrue statement of a material fact.
	 

	 
		(iii) The Company has filed all forms,
		reports and documents required to be filed by it with the SEC for the 12 months
		preceding the date of this Agreement, including without limitation the SEC
		Documents. As of their respective dates, the SEC Documents filed prior to the
		date hereof complied as to form in all material respects with the applicable
		requirements of the Securities Act, the Exchange Act, and the rules and
		regulations thereunder.
	 

	 
		(iv) The Company’s Annual Report on
		Form 10-K for the year ended December 31, 2006, includes consolidated balance
		sheets as of December 31, 2005 and 2006 and consolidated statements of income
		and cash flows for the one year periods then ended (collectively, the
		“Financial
		Statements”).
	 

	 
		(v) The Financial Statements (including the
		related notes and schedules thereto) have been prepared in accordance with
		generally accepted accounting principles in the United States, applied on a
		consistent basis during the periods involved (“GAAP”),
		except as may be otherwise specified in such Financial Statements or the notes
		thereto and except that unaudited financial statements may not contain all
		footnotes required by GAAP, subject to normal year-end audit adjustments. The
		Financial Statements (including the related notes and schedules thereto) fairly
		present in all material respects the consolidated financial position, the
		results of operations, retained earnings or cash flows, as the case may be, of
		the Company for the periods set forth therein (subject, in the case of
		unaudited statements, to normal year-end audit adjustments that would not be
		material in amount or effect), in each case in accordance with GAAP,
		consistently applied during the periods involved, except as may be noted
		therein.
	 

	 
		(i) Litigation.
		Except as set forth in the SEC Documents or in Schedule 3.1(i),
		there are no claims, actions, suits, investigations, inquiries or proceedings
		(each, an “Action”) pending against the Company or any of its
		Subsidiaries or, to the knowledge of the Company, threatened against the
		Company or any of its Subsidiaries, at law or in equity, or before or by any
		court, tribunal, arbitrator, mediator or any federal or state commission,
		board, bureau, agency or instrumentality, that, individually or in the
		aggregate, would reasonably be expected to have a Material Adverse Effect.
		Except as set forth in the SEC Documents or in Schedule 3.1(i),
		neither the Company nor any of its Subsidiaries is a party to or subject to the
		provisions of any order, writ, injunction, judgment or decree of any court or
		government agency or instrumentality that, individually or in the aggregate,
		would reasonably be expected to have a Material Adverse Effect.
	 

	 
		(j) Absence of Certain Changes. Except as specifically contemplated by this Agreement
		or as set forth in Schedule
		3.1(j) or in the SEC Documents, since
		December 31, 2006, there has not been (a) any Material Adverse Effect; (b) any
		dividends or other distribution of assets to stockholders of the Company; (c)
		any acquisition (by merger, consolidation, acquisition of stock and/or assets
		or otherwise) of any Person by the Company; or (d) any transactions, other than
		in the ordinary course of business, consistent in all material respects with
		past practices, with any of its officers, directors or principal stockholders
		or any of their respective Affiliates.
	 

	 
		 
	 

	 
		11
	 

	 
		 
	 



	 
	 

	 

	 
		(k) Intellectual Property.
	 

	 
		(i) The Company and its Subsidiaries own, or
		have the right to use, sell or license all intellectual property reasonably
		required for the conduct of their respective businesses as presently conducted
		(collectively, the “Company
		IP”) except for any failure to own
		or have the right to use, sell or license the Company IP that would not have a
		Material Adverse Effect.
	 

	 
		(ii) The execution, delivery and performance
		of this Agreement and the consummation of the transactions contemplated hereby
		will not constitute a breach of any instrument or agreement governing any
		Company IP, will not cause the forfeiture or termination or give rise to a
		right of forfeiture or termination of any Company IP or impair the right of
		Company and its Subsidiaries to use, sell or license any Company IP.
	 

	 
		(iii) (A) None of the manufacture,
		marketing, license, sale and use of any product currently licensed or sold by
		the Company or any of its Subsidiaries (x) violates any license or agreement
		between the Company or any of its Subsidiaries and any third party, (y) to the
		knowledge of the Company, infringes any patent of any other party; or (z) to
		the knowledge of the Company, infringes any copyright, trademark or trade
		secret of any other party, and (B) there is no pending or, to the knowledge of
		the Company, threatened claim or litigation contesting the validity, ownership
		or right to use, sell, license or dispose of any Company IP.
	 

	 
		(l) No Adverse Actions. Except as set forth in the SEC Documents or in
		Schedule 3.1(l), there is no existing, pending or, to the knowledge of
		the Company, threatened termination, cancellation, limitation, modification or
		change in the business relationship of the Company or any of its Subsidiaries,
		with any supplier, customer or other Person except such as would not reasonably
		be expected, individually or in the aggregate, to have a Material Adverse
		Effect.
	 

	 
		(m) Corporate Documents. The Company’s certificate of incorporation and
		bylaws, each as amended to date, which have been requested and previously
		provided to the Purchasers are true, correct and complete and contain all
		amendments thereto.
	 

	 
		(n) Insurance. The
		Company and its Subsidiaries are insured by insurers of recognized financial
		responsibility against such losses and risks and in such amounts as are prudent
		and customary in the businesses in which the Company and the Subsidiaries are
		engaged. Neither the Company nor any Subsidiary has any reason to believe that
		it will not be able to renew its existing insurance coverage as and when such
		coverage expires or to obtain similar coverage from similar insurers as may be
		necessary to continue its business without a significant increase in
		cost.
	 

	 
		(o) Transactions with Affiliates and
		Employees. Except as set forth in the
		SEC Documents, none of the officers or directors of the Company and, to the
		Company’s knowledge, none of the employees of the Company is presently a
		party to any transaction with the Company or any Subsidiary (other than for
		services as employees, officers and directors), including any contract or other
		arrangement providing for the furnishing of services to or by, proving for
		rental of real or personal property to or from, or otherwise requiring payments
		to or from any officer, director or such employee or , to the Company’s
		knowledge, any entity in which any officer, director or any such employee has a
		substantial interest or is an officer, director, trustee or 
	 

	 
		 
	 

	 
		12
	 

	 
		 
	 



	 
	 

	 

	 
		partner, in each case in excess of $100,000,
		other than (i) for payment of salary or consulting fees for services rendered,
		(ii) reimbursement for expenses incurred on behalf of the Company or the
		Subsidiaries, or (iii) for other employee benefits, including stock option or
		restricted stock agreements under any stock option plan of the Company.
	 

	 
		(p) Sarbanes-Oxley; Internal Accounting Controls
		. The Company is in material compliance
		with all provisions of the Sarbanes-Oxley Act of 2002, which are applicable to
		it as of the Closing Date. The Company and the Subsidiaries maintain a system
		of internal accounting controls sufficient to provide reasonable assurance that
		(i) transactions are executed in accordance with management’s general or
		specific authorizations, (ii) transactions are recorded as necessary to permit
		preparation of financial statements in conformity with GAAP and to maintain
		asset accountability, (iii) access to assets is permitted only in accordance
		with management’s general or specific authorization, and (iv) the recorded
		accountability for assets is compared with the existing assets at reasonable
		intervals and appropriate action is taken with respect to any differences. The
		Company has established disclosure controls and procedures (as defined in
		Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
		disclosure controls and procedures to ensure that information required to be
		disclosed by the Company in the reports it files or submits under the Exchange
		Act is recorded, processed, summarized and reported, within the time periods
		specified in the Commission’s rules and forms. The Company’s
		certifying officers have evaluated the effectiveness of the Company’s
		disclosure controls and procedures as of the end of the period covered by the
		Company’s most recently filed periodic report under the Exchange Act (such
		date, the “ Evaluation Date
		“). The Company presented in its
		most recently filed periodic report under the Exchange Act the conclusions of
		the certifying officers about the effectiveness of the disclosure controls and
		procedures based on their evaluations as of the Evaluation Date. Since the
		Evaluation Date, there have been no changes in the Company’s internal
		control over financial reporting (as such term is defined in the Exchange Act)
		that has materially affected, or is reasonably likely to materially affect, the
		Company’s internal control over financial reporting.
	 

	 
		(q) Application of Takeover Protections . The Company and its Board of Directors have taken all
		necessary action, if any, in order to render inapplicable any control share
		acquisition, business combination, poison pill (including any distribution
		under a rights agreement) or other similar anti-takeover provision under the
		Company’s Certificate of Incorporation (or similar charter documents) or
		the laws of its state of incorporation that is or could become applicable to
		the Purchasers as a result of the Purchasers and the Company fulfilling their
		obligations or exercising their rights under the Transaction Documents,
		including without limitation as a result of the Company’s issuance of the
		Notes and the Warrants and the Purchasers’ ownership thereof. 
	 

	 
		(r) No Other Representations. The Company acknowledges and agrees that no Purchaser
		makes or has made any representations or warranties with respect to the
		transactions contemplated hereby other than those specifically set forth in
		Section 3.2 hereof. 
	 

	 
		(s) Acknowledgement Regarding Purchasers’ Trading
		Activity. Anything in this Agreement or
		elsewhere herein to the contrary notwithstanding, it is understood and
		acknowledged by the Company that none of the Purchasers have been asked to
		agree, nor has any Purchaser agreed, to desist from purchasing or selling, long
		and/or short, securities of the 
	 

	 
		 
	 

	 
		13
	 

	 
		 
	 



	 
	 

	 

	 
		Company, or “derivative”
		securities based on securities issued by the Company or to hold the Notes and
		Warrants for any specified term. The Company further understands and
		acknowledges that (a) one or more Purchasers may engage in hedging activities
		at various times during the period that the Notes and Warrants are outstanding
		and (b) such hedging activities (if any) could reduce the value of the existing
		stockholders’ equity interests in the Company at and after the time that
		the hedging activities are being conducted. The Company acknowledges that such
		aforementioned hedging activities do not constitute a breach of any of the
		Transaction Documents.
	 

	 
		(t) Regulatory Permits. The Company and the Subsidiaries possess all
		certificates, authorizations and permits issued by the appropriate federal,
		state, local or foreign regulatory authorities necessary to conduct their
		respective businesses as described in the SEC Documents, except where the
		failure to possess such permits could not have or reasonably be expected to
		result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has
		received any notice of proceedings relating to the revocation or modification
		of any Material Permit. 
	 

	 
		(u) Title to Assets.
		Except as set forth in Schedule
		3.1(u), the Company and the
		Subsidiaries have good and marketable title in fee simple to all real property
		owned by them that is material to the business of the Company and the
		Subsidiaries and good and marketable title in all personal property owned by
		them that is material to the business of the Company and the Subsidiaries, in
		each case free and clear of all Liens, except for Liens as do not materially
		affect the value of such property and do not materially interfere with the use
		made and proposed to be made of such property by the Company and the
		Subsidiaries and Liens for the payment of federal, state or other taxes, the
		payment of which is neither delinquent nor subject to penalties. Any real
		property and facilities held under lease by the Company and the Subsidiaries
		are held by them under valid, subsisting and enforceable leases with which the
		Company and the Subsidiaries are in compliance.
	 

	 
		(v)
		Disclosure. The Transaction Documents, and the exhibits and
		schedules attached thereto, when taken as a whole, do not contain any untrue
		statement of a material fact or omit to state a material fact necessary to make
		the statements contained therein not misleading in light of the circumstances
		under which they were made.
	 

	 
		3.2 Representations and Warranties of the
		Purchasers. 
	 

	 
		Each Purchaser hereby, for itself and for no
		other Purchaser, represents and warrants as of the date hereof and as of the
		Closing Date to the Company as follows:
	 

	 
		(a) Organization; Authority; Enforceability. Such Purchaser (other than individuals) is an entity
		duly organized, validly existing and in good standing under the laws of the
		jurisdiction of its organization with full power and authority to enter into
		and to consummate the transactions contemplated by the Transaction Documents
		and otherwise to carry out its obligations thereunder. The execution, delivery
		and performance by such Purchaser of the transactions contemplated by this
		Agreement have been duly authorized by all necessary corporate or similar
		action on the part of such Purchaser. Each Transaction Document to which it is
		a party has been duly executed by such Purchaser, and when delivered by such
		Purchaser in accordance with the terms hereof, will constitute the valid and
		legally binding obligation of such 
	 

	 
		 
	 

	 
		14
	 

	 
		 
	 



	 
	 

	 

	 
		Purchaser, enforceable against it in
		accordance with its terms, subject to laws of general application relating to
		bankruptcy, insolvency, reorganization, moratorium or other similar laws
		affecting creditors’ rights generally and rules of law governing specific
		performance, injunctive relief, or other equitable remedies.
	 

	 
		(b) General Solicitation. Such Purchaser is not purchasing the Securities as a
		result of any advertisement, article, notice or other communication regarding
		the Securities published in any newspaper, magazine or similar media or
		broadcast over television or radio or presented at any seminar or any other
		general solicitation or general advertisement.
	 

	 
		(c) No Public Sale or Distribution. Such Purchaser is (i) acquiring the Notes and Warrants
		and (ii) upon conversion of the Notes or exercise of the Warrants will acquire
		the Conversion Shares or Warrant Shares, as applicable, for its own account and
		not with a view towards, or for resale in connection with, the public sale or
		distribution thereof; provided,
		however, that by making the
		representations herein, such Purchaser does not agree to hold any of the
		Securities for any minimum or other specific term and reserves the right to
		dispose of the Securities at any time in accordance with or pursuant to a
		registration statement or an exemption under the Securities Act. Such Purchaser
		is acquiring the Securities hereunder in the ordinary course of its business.
		Such Purchaser does not have any agreement or understanding, directly or
		indirectly, with any Person to distribute any of the Securities.
	 

	 
		(d) Accredited Investor Status. Such Purchaser is an “accredited investor”
		as that term is defined in Rule 501(a) of Regulation D.
	 

	 
		(e) Residency. Such
		Purchaser is a resident of the jurisdiction set forth below such
		Purchaser’s name on Schedule
		1 attached hereto.
	 

	 
		(f) Reliance on Exemptions. Such Purchaser understands that the Notes and Warrants
		are being offered and sold to it in reliance on specific exemptions from the
		registration requirements of United States federal and state securities laws
		and that the Company is relying in part upon the truth and accuracy of, and
		such Purchaser’s compliance with, the representations, warranties,
		agreements, acknowledgments and understandings of such Purchaser set forth
		herein in order to determine the availability of such exemptions and the
		eligibility of such Purchaser to acquire the Securities.
	 

	 
		(g) Information.
		Such Purchaser and its advisors, if any, have been furnished with all publicly
		available materials (or such materials have been made available to such
		Purchaser) relating to the business, finances and operations of the Company and
		such other publicly available materials relating to the offer and sale of the
		Notes and Warrants as have been requested by such Purchaser, including without
		limitation the Company’s Form 10-K for the period ended December 31, 2006
		and Form 10-Q for the period ended March 31, 2007. Each Purchaser acknowledges
		that it has read and understands the risk factors set forth in such Form 10-K
		and Form 10-Q and the Company’s Current Reports on Form 8-K filed February
		16, 2007, March 1, 2007, March 7, 2007, April 19, 2007, April 26, 2007 and May
		23, 2007. Neither such review nor any other due diligence investigations
		conducted by such Purchaser or its advisors, if any, or its representatives
		shall modify, amend or affect such Purchaser’s right to rely on the
		Company’s representations and warranties contained in the Transaction
		Documents. Such 
	 

	 
		 
	 

	 
		15
	 

	 
		 
	 



	 
	 

	 

	 
		Purchaser understands that its investment in
		the Notes and Warrants involves a high degree of risk.
	 

	 
		(h) No Governmental Review. Such Purchaser understands that no United States
		federal or state agency or any other government or governmental agency has
		passed on or made any recommendation or endorsement of the Notes and Warrants
		or the fairness or suitability of the investment in the Notes and Warrants, nor
		have such authorities passed upon or endorsed the merits of the offering of the
		Notes and Warrants.
	 

	 
		(i) Experience of Such Purchaser. Such Purchaser, either alone or together with its
		representatives, has such knowledge, sophistication and experience in business
		and financial matters, including investing in companies engaged in the business
		in which the Company is engaged, so as to be capable of evaluating the merits
		and risks of the prospective investment in the Notes and Warrants, and has so
		evaluated the merits and risks of such investment. Such Purchaser is able to
		bear the economic risk of an investment in the Notes and Warrants and, at the
		present time, is able to afford a complete loss of such investment.
	 

	 
		The Company acknowledges and agrees that
		each Purchaser does not make or has not made any representations or warranties
		with respect to the transactions contemplated hereby other than those
		specifically set forth in this Section 3.2.
	 

	 
		ARTICLE IV
	 

	 
		OTHER AGREEMENTS OF THE
		PARTIES
	 

	 
		4.1 Transfer Restrictions.
	 

	 
		(a) The Securities may only be disposed of
		in compliance with state and federal securities laws. In connection with any
		transfer of Securities other than pursuant to an effective registration
		statement, to the Company, to an Affiliate of a Purchaser (who is an accredited
		investor and executes a customary representation letter) or in connection with
		a pledge as contemplated in Section 4.1(b), the Company may require the
		transferor thereof to provide to the Company an opinion of counsel selected by
		the transferor and reasonably satisfactory to the Company, the form and
		substance of which opinion shall be reasonably satisfactory to the Company, to
		the effect that such transfer does not require registration of such transferred
		Securities under the Securities Act,
		provided, however, that in the case of
		a transfer pursuant to Rule 144, no opinion shall be required if the transferor
		provides the Company with a customary seller’s representation letter, and
		if such sale is not pursuant to subsection (k) of Rule 144, a customary
		broker’s representation letter and a Form 144. Any such transferee that
		agrees in writing to be bound by the terms of this Agreement and the Investor
		Rights Agreement shall have the rights of a Purchaser under this Agreement and
		the Investor Rights Agreement. Except as required by federal securities laws
		and the securities law of any state or other jurisdiction within the United
		States, the Securities may be transferred, in whole or in part, by any of the
		Purchasers at any time. The Company shall reissue certificates evidencing the
		Securities upon surrender of certificates evidencing the Securities being
		transferred in accordance with this Section 4.1(a).
	 

	 
		 
	 

	 
		16
	 

	 
		 
	 



	 
	 

	 

	 
		(b) The Purchasers agree to the imprinting,
		so long as is required by this Section 4.1(b), of one or more legends, as
		applicable, on any of the Securities in substantially the following
		form:
	 

	 
		THESE SECURITIES HAVE NOT BEEN REGISTERED
		WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
		STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
		OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
		EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
		OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
		THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
		APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
		THE TRANSFEROR TO SUCH EFFECT, SUCH COUNSEL AND THE SUBSTANCE OF SUCH OPINION
		SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. UNLESS PROHIBITED BY APPLICABLE
		LAW, RULE OR REGULATION, THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
		BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
		FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES
		ACT.
	 

	 
		and on any Note:
	 

	 
		THIS SECURITY AND THE RIGHTS PROVIDED HEREIN
		ARE SUBJECT IN ALL RESPECTS TO THE TERMS OF THE SUBORDINATION AGREEMENT OF EVEN
		DATE HEREWITH BETWEEN THE AGENT OF THE PAYEE AND SILICON VALLEY BANK.
	 

	 
		The Company acknowledges and agrees that,
		unless prohibited by applicable law, rule or regulation, a Purchaser may from
		time to time pledge pursuant to a bona fide margin agreement with a registered
		broker-dealer or grant a security interest in some or all of the Securities to
		a financial institution that is an “accredited investor” as defined
		in Rule 501(a) under the Securities Act and, if required under the terms of
		such arrangement, such Purchaser may transfer pledged or secured Securities to
		the pledgees or secured parties. Such a pledge or transfer would not be subject
		to approval of the Company and no legal opinion of legal counsel of the
		pledgee, secured party or pledgor shall be required in connection therewith;
		provided, however, that such Purchaser shall provide the Company with such
		documentation as is reasonably requested by the Company to ensure that the
		pledge is pursuant to a bona fide margin agreement with a registered
		broker-dealer or a security interest in some or all of the Securities to a
		financial institution that is an “accredited investor” as defined in
		Rule 501(a) under the Securities Act.
	 

	 
		(c) Certificates evidencing the Conversion
		Shares and Warrant Shares shall not contain any legend (including the legend
		set forth in Section 4.1(b)), (i) following any sale of such Conversion Shares
		or Warrant Shares pursuant to Rule 144, or (ii) if such Conversion Shares or
		Warrant Shares are eligible for sale under Rule 144(k) (and the holder of such
		Conversion Shares or Warrant Shares has submitted a written request for removal
		of the legend indicating that the holder has complied with the applicable
		provisions of Rule 144), or (iii) if 
	 

	 
		 
	 

	 
		17
	 

	 
		 
	 



	 
	 

	 

	 
		such legend is not required under applicable
		requirements of the Securities Act (including judicial interpretations and
		pronouncements issued by the Staff of the Commission) (and the holder of such
		Conversion Shares or Warrant Shares has submitted a written request for removal
		of the legend indicating that the holder has complied with the applicable
		provisions of Rule 144). The Company shall cause its counsel to issue a legal
		opinion to the Company’s transfer agent promptly upon the occurrence of
		any of the events in clauses (i), (ii) or (iii) above to effect the removal of
		the legend hereunder. The Company agrees that at such time as such legend is no
		longer required under this Section 4.1(c), it will, following the delivery by a
		Purchaser to the Company or the Company’s transfer agent of a certificate
		representing Conversion Shares or Warrant Shares, as the case may be, issued
		with a restrictive legend, deliver or cause to be delivered to such Purchaser a
		certificate representing such Securities that is free from all restrictive and
		other legends; provided that the holder of such Conversion Shares or Warrant
		Shares has submitted a written request for removal of the legend indicating
		that the holder has complied with the applicable provisions of Rule 144. The
		Company may not make any notation on its records or give instructions to any
		transfer agent of the Company that enlarge the restrictions on transfer set
		forth in this Section.
	 

	 
		(d) Each Purchaser, severally and not
		jointly, agrees that the removal of the restrictive legend from certificates
		representing Securities as set forth in this Section 4.1 is predicated upon the
		Company’s reliance on, and the Purchaser’s agreement that, and each
		Purchaser hereby agrees that, the Purchaser will not sell any Securities except
		pursuant to either the registration requirements of the Securities Act,
		including any applicable prospectus delivery requirements, or an exemption
		therefrom.
	 

	 
		4.2 Furnishing of Information. 
	 

	 
		As long as any Purchaser owns Securities,
		the Company covenants to timely file (or obtain extensions in respect thereof
		and file within the applicable grace period) all reports required to be filed
		by the Company after the date hereof pursuant to the Exchange Act. As long as
		any Purchaser owns Securities, if the Company is not required to file reports
		pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
		make publicly available in accordance with Rule 144(c), such information as is
		required for the Purchasers to sell the Securities under Rule 144.
	 

	 
		4.3 Integration.
	 

	 
		The Company shall not sell, offer for sale
		or solicit offers to buy or otherwise negotiate in respect of any security (as
		defined in Section 2 of the Securities Act) that would be integrated with the
		offer or sale of the Securities in a manner that would require the registration
		under the Securities Act of the sale of the Securities to the Purchasers or
		that would be integrated with the offer or sale of the Securities for purposes
		of the rules and regulations of any Trading Market. 
	 

	 
		4.4 Publicity. 
	 

	 
		The Company shall, within four Business Days
		following the Closing Date, file a Current Report on Form 8-K, disclosing the
		transactions contemplated hereby and make such other filings and notices
		regarding the Contemplated Transactions in the manner and time required by the
		Commission.
	 

	 
		 
	 

	 
		18
	 

	 
		 
	 



	 
	 

	 

	 
		4.5 Reservation
		of Common Stock.
	 

	 
		As of the date hereof, the Company has
		reserved and the Company shall continue to reserve and keep available at all
		times, free of preemptive rights, a sufficient number of shares of Common Stock
		for the purpose of enabling the Company to issue the maximum number of
		Conversion Shares issuable upon conversion of the Notes and Warrant Shares
		issuable upon exercise of the Warrants.
	 

	 
		4.6 Listing of Common Stock.
	 

	 
		The Company hereby agrees that, from time to
		time, if the Company applies to have the Common Stock traded on any Trading
		Market, it will include in such application the Conversion Shares and the
		Warrant Shares, and will take such other action as is necessary to cause the
		Conversion Shares and Warrant Shares to be listed on such Trading Market as
		promptly as possible.
	 

	 
		4.7 Director Designee. For as long as
		any of the Notes issued pursuant to this Agreement remain outstanding, (a)
		BlueLine Partners, LLC shall have the right, from time to time, to designate
		one individual, in its sole discretion, to serve as a director of the Company
		(the “Purchaser Director
		Designee”), (b) the Company shall
		use its best efforts to cause the Purchaser Director Designee to be nominated
		and elected for service as director of the Company (the “Purchaser Board Seat”) promptly following the Closing and at each
		meeting of the Company’s stockholders held for the purpose of electing
		directors and (c) if at any time, or from time to time, the Purchaser Board
		Seat is or becomes vacant for any reason prior to the next annual meeting of
		stockholders, the Company shall use its best efforts to cause such vacancy to
		be filled with a Purchaser Director Designee. Notwithstanding any other
		provisions of the Transaction Documents, the right of BlueLine Partners, LLC
		set forth in this Section 4.7 shall not be transferable under any
		circumstances, whether by sale or assignment of Notes hereunder or
		otherwise.
	 

	 
		4.8 Right of Participation. Subject to the
		exceptions described below, the Company will not conduct any equity financing
		(including debt with an equity component) (“Future Offerings”) during the period beginning on the Closing Date
		and ending two (2) year after the date of this Agreement unless it shall have
		first delivered to each Purchaser, at least ten (10) business days prior to the
		closing of such Future Offering, written notice describing the proposed Future
		Offering, including the material terms and conditions thereof, and providing
		each such Purchaser an option during the ten (10) day period following delivery
		of such notice to purchase its pro rata share (based on the ratio that the
		aggregate amount of Securities purchased by it hereunder bears to the aggregate
		amount of Securities purchased by all such Purchasers hereunder) of an
		aggregate of thirty percent (30%) of the securities being offered in the Future
		Offering on the same terms as contemplated by such Future Offering (the
		limitations referred to in this sentence and the preceding sentence are
		collectively referred to as the “Participation Right”). Upon receipt of an affirmative response from
		any such Purchaser(s) the Company and such Purchasers shall proceed in good
		faith with the preparation of definitive transaction agreements. In the event
		the material terms and conditions of a proposed Future Offering are materially
		amended after delivery of the notice to such Purchasers concerning the proposed
		Future Offering, the Company shall deliver a new notice to each Purchaser
		describing the amended terms and conditions of the proposed Future Offering and
		each such Purchaser 
	 

	 
		 
	 

	 
		19
	 

	 
		 
	 



	 
	 

	 

	 
		thereafter shall have an option during the
		five (5) day period following delivery of such new notice to purchase its pro
		rata share thirty percent (30%) of the aggregate securities being offered on
		the same terms as contemplated by such proposed Future Offering, as amended.
		The foregoing sentence shall apply to successive material amendments to the
		material terms and conditions of any proposed Future Offering. The
		Participation Right shall not apply to any transaction involving issuances of
		securities as consideration for a merger, consolidation or purchase of assets,
		or in connection with any strategic partnership or joint venture (the primary
		purpose of which is not to raise equity capital), or in connection with the
		disposition or acquisition of a business, product or license by the Company, or
		any bank or lease financing transaction. The Participation Right also shall not
		apply to the issuance of securities upon exercise or conversion of the
		Company’s options, warrants or other convertible securities outstanding as
		of the date hereof or to the grant of additional options or warrants, or the
		issuance of additional securities, under any Company stock option or restricted
		stock plan approved by the stockholders of the Company. Notwithstanding
		anything in this Section 4.8 to the contrary, in the event the Company’s
		Board of Directors decides, in good faith, to enter into a transaction or
		relationship in which the Company issues shares of Common Stock or other
		securities of the Company to a person or any entity which is, itself or through
		its subsidiaries, an operating company in a business synergistic with the
		business of the Company, the Company shall be permitted to do so without any
		Participation Right hereunder.
	 

	 
		4.9 Company Information. Until the earlier of: (i) the second anniversary of
		the Closing Date and (ii) the date that the Notes are no longer outstanding,
		the Company shall provide the following information to the Purchasers who hold
		Notes:
	 

	 
		(a) Prompt delivery of monthly unaudited
		income statements, balance sheets, and sales pipeline updates;
	 

	 
		(b) Prompt notice of the Company undertaking
		any debt obligations including loans pursuant to the Silicon Agreement;
	 

	 
		(c) Notice of any credit defaults under the
		Silicon Agreement, or under any other credit facility, as applicable
		concurrently with the provision of any notice thereof to Silicon Valley Bank or
		the applicable lender;
	 

	 
		(d) Prompt notice, accompanied by copies of
		any new material developments under any existing or material new partnerships
		and distribution relationships of the Company; and
	 

	 
		(e) Prompt delivery of a monthly schedule of
		the Company’s material customer wins and losses.
	 

	 
		4.10 Negative Covenants. Unless approved in writing by those Purchasers holding
		a majority of the principal amount of the Notes then outstanding, the Company
		(a) shall not declare or pay any dividend or distribution with respect to any
		common stock of the Company, (b) shall not create and/or issue any classes of
		preferred stock, and (c) shall not incur any secured indebtedness senior to the
		Notes.
	 

	 
		4.11 Additional
		Listing Application. The Company
		shall, promptly following the Closing Date, file an Additional Listing
		Application with respect to the Conversion Shares and 
	 

	 
		 
	 

	 
		20
	 

	 
		 
	 



	 
	 

	 

	 
		Warrant Shares with the American Stock
		Exchange. The Purchasers agree to provide reasonable cooperation with respect
		to providing any information regarding the Purchasers as is necessary for the
		American Stock Exchange to process and approve such Additional Listing
		Application.
	 

	 
		4.12 Senior Debt.
		Notwithstanding any other provision of the Transaction Documents, the
		Purchasers hereby acknowledge and consent as follows: (i) the Company may
		continue to borrow under an accounts receivable formula based revolving line of
		credit pursuant to the Silicon Agreement; and (ii) the Company may replace the
		Silicon Agreement with another senior debt facility which shall rank senior to
		the Notes, provided that such replacement senior debt facility is an accounts
		receivable formula based revolving line of credit secured solely by accounts
		receivable of the Company.
	 

	 
		ARTICLE V
	 

	 
		INDEMNIFICATION, TERMINATION AND
		DAMAGES
	 

	 
		5.1 Survival
		of Representations. 
	 

	 
		Except as otherwise provided herein, the
		representations and warranties of the Company and the Purchasers contained in
		or made pursuant to this Agreement shall survive the execution and delivery of
		this Agreement and the Closing Date and shall continue in full force and effect
		for a period of two (2) years from the Closing Date. The Company’s and the
		Purchasers’ warranties and representations shall in no way be affected or
		diminished in any way by any investigation of (or failure to investigate) the
		subject matter thereof made by or on behalf of the Company or the
		Purchasers.
	 

	 
		5.2 Indemnification. 
	 

	 
		(a) The Company agrees to indemnify and hold
		harmless the Purchasers, their Affiliates, each of their officers, directors,
		employees and agents and their respective successors and assigns, from and
		against any losses, damages, or expenses which are caused by or arise out of
		(i) any breach or default in the performance by the Company of any covenant or
		agreement made by the Company in any of the Transaction Documents; (ii) any
		breach of warranty or representation made by the Company in any of the
		Transaction Documents; and/or (iii) any and all third party actions, suits,
		proceedings, claims, demands, judgments, costs and expenses (including
		reasonable legal fees and expenses) incident to any of the foregoing.
	 

	 
		(b) The Purchasers, severally and not
		jointly, agree to indemnify and hold harmless the Company, its Affiliates, each
		of their officers, directors, employees and agents and their respective
		successors and assigns, from and against any losses, damages, or expenses which
		are caused by or arise out of (A) any breach or default in the performance by
		the Purchasers of any covenant or agreement made by the Purchasers in any of
		the Transaction Documents; (B) any breach of warranty or representation made by
		the Purchasers in any of the Transaction Documents; and (C) any and all third
		party actions, suits, proceedings, claims, demands, judgments, costs and
		expenses (including reasonable legal fees and expenses) incident to any of the
		foregoing.
	 

	 
		5.3 Indemnity Procedure. 
	 

	 
		 
	 

	 
		21
	 

	 
		 
	 



	 
	 

	 

	 
		A party or parties hereto agreeing to be
		responsible for or to indemnify against any matter pursuant to this Agreement
		is referred to herein as the “Indemnifying Party” and the other party or parties claiming indemnity
		is referred to as the “Indemnified
		Party”. An Indemnified Party under
		this Agreement shall, with respect to claims asserted against such party by any
		third party, give written notice to the Indemnifying Party of any liability
		which might give rise to a claim for indemnity under this Agreement within
		sixty (60) Business Days of the receipt of any written claim from any such
		third party, but not later than twenty (20) days prior to the date any answer
		or responsive pleading is due, and with respect to other matters for which the
		Indemnified Party may seek indemnification, give prompt written notice to the
		Indemnifying Party of any liability which might give rise to a claim for
		indemnity; provided,
		however, that any failure to give such
		notice will not waive any rights of the Indemnified Party except to the extent
		the rights of the Indemnifying Party are materially prejudiced.
	 

	 
		The Indemnifying Party shall have the right,
		at its election, to take over the defense or settlement of such claim by giving
		written notice to the Indemnified Party at least fifteen (15) days prior to the
		time when an answer or other responsive pleading or notice with respect thereto
		is required. If the Indemnifying Party makes such election, it may conduct the
		defense of such claim through counsel of its choosing (subject to the
		Indemnified Party’s approval of such counsel, which approval shall not be
		unreasonably withheld or delayed), shall be solely responsible for the expenses
		of such defense and shall be bound by the results of its defense or settlement
		of the claim. The Indemnifying Party shall not settle any such claim without
		prior notice to and consultation with the Indemnified Party, and no such
		settlement involving any equitable relief or which might have an adverse effect
		on the Indemnified Party may be agreed to without the written consent of the
		Indemnified Party (which consent shall not be unreasonably withheld or
		delayed). So long as the Indemnifying Party is diligently contesting any such
		claim in good faith, the Indemnified Party may pay or settle such claim only at
		its own expense and the Indemnifying Party will not be responsible for the fees
		of separate legal counsel to the Indemnified Party, unless the named parties to
		any proceeding include both parties or representation of both parties by the
		same counsel would be inappropriate in the reasonable opinion of counsel to the
		Indemnified Party, due to conflicts of interest or otherwise. If the
		Indemnifying Party does not make such election, or having made such election
		does not, in the reasonable opinion of the Indemnified Party proceed diligently
		to defend such claim, then the Indemnified Party may (after written notice to
		the Indemnifying Party), at the expense of the Indemnifying Party, elect to
		take over the defense of and proceed to handle such claim in its discretion and
		the Indemnifying Party shall be bound by any defense or settlement that the
		Indemnified Party may make in good faith with respect to such claim. In
		connection therewith, the Indemnifying Party will fully cooperate with the
		Indemnified Party should the Indemnified Party elect to take over the defense
		of any such claim. The parties agree to cooperate in defending such third party
		claims and the Indemnified Party shall provide such cooperation and such access
		to its books, records and properties (subject to the execution of appropriate
		non-disclosure agreements) as the Indemnifying Party shall reasonably request
		with respect to any matter for which indemnification is sought hereunder; and
		the parties hereto agree to cooperate with each other in order to ensure the
		proper and adequate defense thereof.
	 

	 
		With regard to claims of third parties for
		which indemnification is payable hereunder, such indemnification shall be paid
		by the Indemnifying Party upon the earlier to occur of: (i) the entry of a
		judgment against the Indemnified Party and the expiration of any applicable
		appeal period, or if earlier, five (5) days prior to the date that the judgment
		creditor has the right to 
	 

	 
		 
	 

	 
		22
	 

	 
		 
	 



	 
	 

	 

	 
		execute the judgment; (ii) the entry of an
		unappealable judgment or final appellate decision against the Indemnified
		Party; or (iii) a settlement of the claim. Notwithstanding the foregoing, the
		reasonable expenses of counsel to the Indemnified Party shall be reimbursed on
		a current basis by the Indemnifying Party. With regard to other claims for
		which indemnification is payable hereunder, such indemnification shall be paid
		promptly by the Indemnifying Party upon demand by the Indemnified Party.
	 

	 
		ARTICLE VI
	 

	 
		MISCELLANEOUS
	 

	 
		6.1 Fees and Expenses.
	 

	 
		The Company shall be responsible for the
		payment of the Purchasers’ reasonable and documented legal fees and other
		third-party expenses relating to the preparation, negotiation and execution of
		this Agreement and the Transaction Documents and the consummation of the
		transactions contemplated herein up to an aggregate cap of $15,000.
	 

	 
		6.2 Entire Agreement.
	 

	 
		The Transaction Documents, together with the
		exhibits and schedules thereto, contain the entire understanding of the parties
		with respect to the subject matter hereof and supersede all prior agreements
		and understandings, oral or written, with respect to such matters, which the
		parties acknowledge have been merged into such documents, exhibits and
		schedules.
	 

	 
		6.3 Notices.
	 

	 
		Any and all notices or other communications
		or deliveries required or permitted to be provided hereunder shall be in
		writing and shall be deemed given and effective on the earliest of (a) the date
		of transmission, if such notice or communication is delivered via facsimile at
		the facsimile number specified on the signature pages attached hereto prior to
		5:00 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after
		the date of transmission, if such notice or communication is delivered via
		facsimile at the facsimile number on the signature pages attached hereto on a
		day that is not a Trading Day or later than 5:00 p.m. (New York City time) on
		any Trading Day, (c) the Trading Day following the date of mailing, if sent by
		U.S. nationally recognized overnight courier service, or (d) upon actual
		receipt by the party to whom such notice is required to be given. The address
		for such notices and communications shall be as follows:
	 

	 
		If to the Purchasers, at each
		Purchaser’s address set forth under its name on Schedule 1 attached
		hereto, or with respect to the Company, addressed to: 
	 

	 
		AXS-One Inc.
	 

	 
		301 Route 17 North
	 

	 
		Rutherford, New Jersey 07070
	 

	 
		Attention: Chief Financial Officer
	 

	 
		Facsimile No.: (201) 935-5230
	 

	 
		 
	 

	 
		 
	 

	 
		23
	 

	 
		 
	 



	 
	 

	 

	 
		or to such other address or addresses or
		facsimile number or numbers as any such party may most recently have designated
		in writing to the other parties hereto by such notice. Copies of notices to the
		Company shall be sent to:
	 

	 
		Wiggin and Dana LLP
	 

	 
		400 Atlantic Street
	 

	 
		Stamford, Connecticut 06901 
	 

	 
		Attention: Michael Grundei
	 

	 
		Facsimile No.: (203) 363-7676
	 

	 
		Copies of notices to any Purchaser shall be
		sent to the addresses, if any, listed on Schedule 1
		attached hereto.
	 

	 
		6.4 Amendments; Waivers. 
	 

	 
		No provision of this Agreement may be waived
		or amended except in a written instrument signed, in the case of an amendment,
		by the Company and each Purchaser or, in the case of a waiver, by the party
		against whom enforcement of any such waiver is sought. No waiver of any default
		with respect to any provision, condition or requirement of this Agreement shall
		be deemed to be a continuing waiver in the future or a waiver of any subsequent
		default or a waiver of any other provision, condition or requirement hereof,
		nor shall any delay or omission of either party to exercise any right hereunder
		in any manner impair the exercise of any such right.
	 

	 
		6.5 Construction.
	 

	 
		The headings herein are for convenience
		only, do not constitute a part of this Agreement and shall not be deemed to
		limit or affect any of the provisions hereof. The language used in this
		Agreement will be deemed to be the language chosen by the parties to express
		their mutual intent, and no rules of strict construction will be applied
		against any party.
	 

	 
		6.6 Successors and Assigns.
	 

	 
		This Agreement shall be binding upon and
		inure to the benefit of the parties and their successors and permitted assigns.
		The Company may not assign this Agreement or any rights or obligations
		hereunder without the prior written consent of each Purchaser. Any Purchaser
		may assign any or all of its rights under this Agreement to any Person,
		provided such transferee agrees in writing to be bound, with respect to the
		transferred Securities, by the provisions hereof that apply to the Purchasers.
		
	 

	 
		6.7 No Third-Party Beneficiaries.
	 

	 
		This Agreement is intended for the benefit
		of the parties hereto and their respective successors and permitted assigns and
		is not for the benefit of, nor may any provision hereof be enforced by, any
		other Person, except as otherwise set forth in Article V. 
	 

	 
		 
	 

	 
		24
	 

	 
		 
	 



	 
	 

	 

	 
		6.8 Governing Law.
	 

	 
		All questions concerning the construction,
		validity, enforcement and interpretation of the Transaction Documents shall be
		governed by and construed and enforced in accordance with the internal laws of
		the State of New York, without regard to the principles of conflicts of law
		thereof. 
	 

	 
		6.9 Jurisdiction; Venue; Service of
		Process.
	 

	 
		This Agreement shall be subject to the
		exclusive jurisdiction of the Federal District Court, Southern District of New
		York and if such court does not have proper jurisdiction, the State Courts of
		New York County, New York. The parties to this Agreement agree that any breach
		of any term or condition of this Agreement shall be deemed to be a breach
		occurring in the State of New York by virtue of a failure to perform an act
		required to be performed in the State of New York and irrevocably and expressly
		agree to submit to the jurisdiction of the Federal District Court, Southern
		District of New York and if such court does not have proper jurisdiction, the
		State Courts of New York County, New York for the purpose of resolving any
		disputes among the parties relating to this Agreement or the transactions
		contemplated hereby. The parties irrevocably waive, to the fullest extent
		permitted by law, any objection which they may now or hereafter have to the
		laying of venue of any suit, action or proceeding arising out of or relating to
		this Agreement, or any judgment entered by any court in respect hereof brought
		in New York County, New York, and further irrevocably waive any claim that any
		suit, action or proceeding brought in Federal District Court, Southern District
		of New York and if such court does not have proper jurisdiction, the State
		Courts of New York County, New York has been brought in an inconvenient forum.
		Each of the parties hereto 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 in this Section 6.9 shall affect or limit any right to serve process in
		any other manner permitted by law.
	 

	 
		6.10 Execution.
	 

	 
		This Agreement may be executed in two or
		more counterparts, all of which when taken together shall be considered one and
		the same agreement and shall become effective when counterparts have been
		signed by each party and delivered to the other party, it being understood that
		both parties need not sign the same counterpart. In the event that any
		signature is delivered by facsimile transmission, such signature shall create a
		valid and binding obligation of the party executing (or on whose behalf such
		signature is executed) with the same force and effect as if such facsimile
		signature page were an original thereof.
	 

	 
		6.11 Severability.
	 

	 
		If any provision of this Agreement is held
		to be invalid or unenforceable in any respect, the validity and enforceability
		of the remaining terms and provisions of this Agreement shall not in any way be
		affected or impaired thereby and the parties will attempt to agree upon a valid
		and enforceable provision that is a reasonable substitute therefor, and upon so
		agreeing, shall incorporate such substitute provision in this Agreement.
	 

	 
		 
	 

	 
		25
	 

	 
		 
	 



	 
	 

	 

	 
		6.12 Replacement of Securities.
	 

	 
		If any certificate or instrument evidencing
		any of the Securities is mutilated, lost, stolen or destroyed, the Company
		shall issue or cause to be issued in exchange and substitution for and upon
		cancellation thereof, or in lieu of and substitution therefor, a new
		certificate or instrument, but only upon receipt of evidence reasonably
		satisfactory to the Company of such loss, theft or destruction and customary
		and reasonable indemnity, if requested by the Company.
	 

	 
		6.13 Remedies.
	 

	 
		In addition to being entitled to exercise
		all rights provided herein or granted by law, including recovery of damages,
		each of the Purchasers and the Company will be entitled to specific performance
		under the Transaction Documents. The parties agree that monetary damages may
		not be adequate compensation for any loss incurred by reason of any breach of
		obligations described in the foregoing sentence and hereby agrees to waive in
		any action for specific performance of any such obligation the defense that a
		remedy at law would be adequate.
	 

	 
		6.14 Payment Set Aside.
	 

	 
		To the extent that the Company makes a
		payment or payments to any Purchaser pursuant to any Transaction Document or a
		Purchaser enforces or exercises its rights thereunder, and such payment or
		payments or the proceeds of such enforcement or exercise or any part thereof
		are subsequently invalidated, declared to be fraudulent or preferential, set
		aside, recovered from, disgorged by or are required to be refunded, repaid or
		otherwise restored to the Company, a trustee, receiver or any other person
		under any law (including, without limitation, any bankruptcy law, state or
		federal law, common law or equitable cause of action), then to the extent of
		any such restoration the obligation or part thereof originally intended to be
		satisfied shall, to the extent permissible under applicable law, be revived and
		continued in full force and effect as if such payment had not been made or such
		enforcement or setoff had not occurred.
	 

	 
		6.15 Independent Nature of Purchasers’ Obligations and
		Rights. 
	 

	 
		The obligations of each Purchaser under any
		Transaction Document are several and not joint with the obligations of any
		other Purchaser, and no Purchaser shall be responsible in any way for the
		performance of the obligations of any other Purchaser under any Transaction
		Document. Nothing contained herein or in any Transaction Document, and no
		action taken by any Purchaser pursuant thereto, shall be deemed to constitute
		the Purchasers as a partnership, an association, a joint venture or any other
		kind of entity, or create a presumption that the Purchasers are in any way
		acting in concert or as a group with respect to such obligations or the
		transactions contemplated by the Transaction Document. Except to the extent
		otherwise specifically provided in the Transaction Documents, each Purchaser
		shall be entitled to independently protect and enforce its rights, including
		without limitation, the rights arising out of this Agreement or out of the
		other Transaction Documents, and it shall not be necessary for any other
		Purchaser to be joined as an additional party in any proceeding for such
		purpose. Each Purchaser has been represented by its own separate legal counsel
		in their review and negotiation of the Transaction Documents. The Company has
		elected to provide all Purchasers with the same terms and Transaction Documents
		for the convenience of the Company and not because it was required or requested
		to do so by the Purchasers.
	 

	 
		 
	 

	 
		26
	 

	 
		 
	 



	 
	 

	 

	 
		6.16 Waiver of Trial by Jury. 
	 

	 
		THE PARTIES HERETO IRREVOCABLY WAIVE TRIAL
		BY JURY IN ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE
		TRANSACTIONS CONTEMPLATED HEREBY.
	 

	 
		6.17 Further Assurances. 
	 

	 
		Each party agrees to cooperate fully with
		the other parties and to execute such further instruments, documents and
		agreements and to give such further written assurances as may be reasonably
		requested by any other party to better evidence and reflect the transactions
		described herein and contemplated hereby and to carry into effect the intents
		and purposes of this Agreement, and further agrees to take promptly, or cause
		to be taken, all actions, and to do promptly, or cause to be done, all things
		necessary, proper or advisable under applicable law to consummate and make
		effective the transactions contemplated hereby, to obtain all necessary
		waivers, consents and approvals, to effect all necessary registrations and
		filings, and to remove any injunctions or other impediments or delays, legal or
		otherwise, in order to consummate and make effective the transactions
		contemplated by this Agreement for the purpose of securing to the parties
		hereto the benefits contemplated by this Agreement.
	 

	 
		6.18 Like Treatment.
	 

	 
		Neither the Company nor any of its
		Affiliates shall, directly or indirectly, pay or cause to be paid any
		consideration (immediate or contingent), whether by way of interest, fee,
		payment for redemption, conversion or exercise of the Securities, or otherwise,
		to any Purchaser or holder of Securities, for or as an inducement to, or in
		connection with the solicitation of, any consent, waiver or amendment to any
		terms or provisions of this Agreement or the other Transaction Documents,
		unless such consideration is offered to all Purchasers or holders of Securities
		bound by such consent, waiver or amendment. The Company shall not, directly or
		indirectly, redeem any Securities unless such offer of redemption is made pro
		rata to all Purchasers or holders of Securities, as the case may be, on
		identical terms.
	 

	 
		[Signature pages follow.]
	 

	 
		 
	 

	 
		 
	 

	 
		27
	 

	 
		 
	 



	 
	 

	 

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

	 
		 
	 

	 
			
				
				   
				

			 	
				
				   
				

			 	
				
				  COMPANY:
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  
 AXS-ONE INC.
				

			 
	
				
				

			 	
				
				   
				

			 	
				
				  By: 
				

			 	
				
				  
 /s/ William P. Lyons
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Name: 
				

			 	
				
				  William P. Lyons
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Title:
				

			 	
				
				  CEO
				

			 

 

	 
		 
	 

	 
		 
	 

	 
		28
	 

	 
		 
	 



	 
	 

	 

	 
		 
	 

	 
			
				
				   
				

			 	
				
				   
				

			 	
				
				  PURCHASERS:
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  
 Print Exact Name:
				

			 	
				
				   
				

			 
	
				
				

			 	
				
				   
				

			 	
				
				  
 By: 
				

			 	
				
				  /s/
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Name:
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Title:
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Address:
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Telephone:
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Facsimile:
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Email:
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  SSN/EIN:
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Amount of Investment:$
				

			 	
				
				   
				

			 
									

 

	 
		[Omnibus AXS-One Inc. Convertible Note and
		Warrant Purchase Agreement Signature Page]
	 

	 
		 
	 

	 
		 
	 

	 
		29
	 

	 
		 
	 



	 
	 

	 

	 
		Schedule 1
	 

	 
		to Convertible Note and Warrant Purchase
		Agreement
	 

	 
		Purchasers, Principal Amount of Notes and
		Warrants
	 

	 
		 
	 

	 
			
				
				  Name, Address and Fax Number of
				  Purchaser
				

			 	
				
				   
				

			 	
				
				  Aggregate Principal Amount of
				  Notes Purchased (consisting of an equal amount of Series A Notes and Series B
				  Notes)
				

			 	
				
				   
				

			 	
				
				  Common Stock Underlying
				  Warrants
				

			 	
				
				   
				

			 	
				
				  Purchase Price
				

			 
	
				
				  BlueLine Capital Partners,
				  LP
 4115 Blackhawk Plaza Circle,
				  Suite 100
 Danville, CA 94596

				  Attn: Scott Shuda

				  (925) 988-0287 (fax)
				

			 	
				
				   
				

			 	
				
				  $2,500,000
				

			 	
				
				   
				

			 	
				
				  1,000,000
				

			 	
				
				   
				

			 	
				
				  $2,500,000
				

			 
	
				
				  BlueLine Capital Partners II,
				  LP
 4115 Blackhawk Plaza Circle,
				  Suite 100
 Danville, CA 94596

				  Attn: Scott Shuda

				  (925) 988-0287 (fax)
				

			 	
				
				   
				

			 	
				
				  $500,000
				

			 	
				
				   
				

			 	
				
				  200,000
				

			 	
				
				   
				

			 	
				
				  $500,000
				

			 
	
				
				  Jurika Family Trust U/A
				  3/17/1989
 c/o Jurika, Mills &
				  Keifer LLC
 2101 Webster Street, Suite
				  1550
 Oakland, CA 94612

				  Attn: William Jurika

				  (510) 625-0171 (fax)
				

			 	
				
				   
				

			 	
				
				  $2,000,000
				

			 	
				
				   
				

			 	
				
				  800,000
				

			 	
				
				   
				

			 	
				
				  $2,000,000
				

			 
	
				
				  Totals:
				

			 	
				
				   
				

			 	
				
				  $5,000,000
				

			 	
				
				   
				

			 	
				
				  2,000,000
				

			 	
				
				   
				

			 	
				
				  $5,000,000