Document:

EX-10.5

Exhibit 10.5

THIS SECURITY AGREEMENT AMENDMENT AND THE RIGHTS PROVIDED HEREIN ARE SUBJECT IN ALL RESPECTS TO THE
TERMS OF A SECOND AMENDED AND RESTATED SUBORDINATION AGREEMENT OF EVEN DATE HEREWITH BETWEEN THE
AGENT OF THE SECURED PARTIES AND SAND HILL FINANCE, LLC.

THIRD SECURITY AGREEMENT AMENDMENT

     This THIRD SECURITY AGREEMENT AMENDMENT (the “Amendment”) is made as of October 30, 2008
between BlueLine Capital Partners, LP, a Delaware limited partnership with an office located at
4115 Blackhawk Plaza Circle, Suite 100, Danville, CA 94596, as agent (hereinafter, in such
capacity, the “Agent”) for itself and the other lenders listed on the signature pages hereto
(hereinafter, collectively, the “Secured Parties”), the Secured Parties and AXS-One Inc., a
Delaware corporation with its principal executive offices located at 301 Route 17 North,
Rutherford, NJ 07070, Attention: President (the “Debtor”).

     WHEREAS, on May 29, 2007, the Debtor issued in favor of certain of the Secured Parties (the
“May Secured Parties”), promissory notes (collectively the “May 2007 Notes”), in the aggregate
principal amount of Five Million Dollars ($5,000,000) and such May 2007 Notes were issued pursuant
to the terms of a Convertible Note and Warrant Purchase Agreement dated as of May 29, 2007 between
the Debtor and the May Secured Parties;

     WHEREAS, on November 16, 2007, the Debtor issued in favor of certain of the Secured Parties
(the “November Secured Parties”), promissory notes (collectively, the “November 2007 Notes”), in
the aggregate principal amount of Three Million Seven Hundred and Fifty Thousand Dollars
($3,750,000) and such November 2007 Notes were issued pursuant to the terms of a Convertible Note
and Warrant Purchase Agreement (the “November Purchase Agreement”) dated as of November 13, 2007,
between the Debtor and the November Secured Parties (such transaction, the “November Financing”);

     WHEREAS, on July 24, 2008, the Debtor issued in favor of certain of the Secured Parties (the
“July 2008 Secured Parties”), promissory notes (collectively, the “July 2008 Notes”), in the
aggregate principal amount of Two Million One Hundred Thousand Dollars ($2,100,000) and such July
2008 Notes were issued pursuant to the terms of a Convertible Note and Warrant Purchase Agreement
(the “July 2008 Purchase Agreement”) dated as of July 24, 2008, between the Debtor and the July
2008 Secured Parties (such transaction, the “July 2008 Financing”);

     WHEREAS, in connection with the issuance of the May 2007 Notes, the Debtor entered into that
certain Security Agreement dated as of May 29, 2007, between the Debtor, the Agent and the Secured
Parties described therein, which agreement was amended (i) in connection with the issuance of the
November 2007 Notes pursuant to a Security Agreement Amendment dated November 16, 2007 between the
Company, the Agent and certain of the Secured Parties (such
amendment, the “First Amendment” and (ii) in connection with the issuance of the July 2008 Notes
pursuant to a Second Security Agreement Amendment dated July 24, 2008 between the

 

 

Company, the Agent and certain of the Secured Parties (such amendment, the “Second Amendment”
(such security agreement as amended pursuant to the First Amendment and the Second Amendment, the
“Security Agreement”);

     WHEREAS, on the date hereof, the Debtor has issued in favor of certain of the Secured Parties
(the “October 2008 Secured Parties”), promissory notes (collectively, the “October 2008 Notes”),
in the aggregate principal amount of One Million and One Hundred Thousand Dollars ($1,100,000) and
the October 2008 Notes have been issued pursuant to the terms of a Convertible Note and Warrant
Purchase Agreement (the “October 2008 Purchase Agreement”) as of October 30, 2008, between the
Debtor and the October 2008 Secured Parties (such transaction, the “October 2008 Financing”);

     WHEREAS, it is a condition precedent to the October 2008 Secured Parties’ making any loans
under the October 2008 Purchase Agreement and the October 2008 Notes or otherwise extending credit
to the Debtor that the Debtor execute and deliver this Amendment; and

     WHEREAS, the Debtor, the Agent and each of the Secured Parties desires to amend the Security
Agreement in order to secure the Debtor’s obligations pursuant to the October 2008 Notes;

     NOW, THEREFORE, in consideration of the premises and to induce the October 2008 Secured
Parties to extend the loans to the Debtor pursuant to the October 2008 Notes, the Debtor and the
Secured Parties hereby agree as follows:

1. Capitalized Terms. Capitalized terms used and not defined herein shall have the
respective meanings ascribed to such terms in the Security Agreement.

2. Amendment to the Security Agreement.

     (a) Section 1(c) of the Security Agreement is hereby amended by inserting in the place of
clause (viii) of the defined term “Permitted Encumbrances” the following: “or (viii) the security
interests of Sand Hill Finance, LLC as set forth in the Second Amended and Restated Subordination
Agreement dated as of October 30, 2008 between Sand Hill Finance, LLC and the Agent for the Secured
Parties.”

     (b) Section 1(c) of the Security Agreement is hereby amended by deleting the following defined
terms and replacing them with amended definitions set forth below:

     “Note” and “Notes” means the May 2007 Notes, the November 2007 Notes,
the July 2008 Notes and/or the October 2008 Notes. This definition shall supersede the
definition of such terms set forth in the recitals to this Agreement.

     “Purchase Agreement” means the May Purchase Agreement, the November Purchase
Agreement, the July Purchase Agreement, and/or the October 2008 Purchase Agreement as
applicable. This definition shall supersede the definition of such term in the recitals to
this Agreement.

2

 

     “Secured Parties” shall mean (i) the holders of the May 2007 Notes that
executed this Agreement, (ii) the holders of the November 2007 Notes that are made party to
this Agreement pursuant to the Security Agreement Amendment dated as of November 16, 2007
between the Company, the Agent and the other parties set forth therein (iii) the holders of
the July 2008 Notes that are made party to the Security Agreement pursuant to the Second
Security Agreement Amendment dated as of July 24, 2008, between the Debtor, the Agent and
the other parties set forth therein and (iv) the holders of the October 2008 Notes that are
made party to the Security Agreement pursuant to the Third Security Agreement Amendment
dated as of October 30, 2008, between the Debtor, the Agent and the other parties set forth
therein.

     “Warrants” shall mean the warrants to purchase Common Stock of the debtor
issued pursuant to the May Purchase Agreement, the November Purchase Agreement, the July
Purchase Agreement or the October 2008 Purchase Agreement, as applicable.

     (c) Section 1(c) of the Security Agreement is hereby amended by inserting the following
defined terms in appropriate alphabetical order therein:

     “October 2008 Notes” means the Series E 6% Secured Convertible Promissory Notes
of the Debtor in the aggregate principal amount of One Million One Hundred Thousand Dollars
($1,100,000) issued pursuant to the October 2008 Purchase Agreement.

     “October 2008 Purchase Agreement” means the Convertible Note and Warrant
Purchase Agreement dated as of October 30, 2008 among the Debtor and certain of the Secured
Parties.

3. Joinder. The October 2008 Secured Parties executing this Amendment are hereby joined to
and made party to the Security Agreement as amended pursuant to the First Amendment, the Second
Amendment and hereby as “Secured Parties” thereunder and agree to be bound by all of the terms
thereof. The Debtor, the Agent, the May Secured Parties, the November Secured Parties and the July
Secured Parties hereby consent to such joinder.

4. Consent to October 2008 Financing. The Secured Parties hereby consent to the October
2008 Financing and, in connection therewith, the Debtor’s execution, delivery and performance of
the October 2008 Purchase Agreement, the sale of the October 2008 Notes and the consummation of the
other transactions and execution and performance of the other agreements and documents contemplated
by the October 2008 Purchase Agreement.

5. Consent to pari passu Rank. The Secured Parties hereby acknowledge and agree that the
security interests granted in connection with the October 2008 Notes will rank pari passu in
priority of payment and in all other respects with the security interests granted in connection
with the May 2007 Notes, November 2007 Notes and July 2008 Notes, and the Secured Parties hereby
consent to such pari passu ranking for all purposes under the Security Agreement, the May 2007
Notes, the November 2007 Notes, July 2008 Notes and the related transaction documents.

3

 

6. Full Force and Effect of the Security Agreement. Except as specifically amended
pursuant to the First Amendment, the Second Amendment and hereby, the Security Agreement shall
remain of full force and effect and is hereby ratified and affirmed in all respects.

7. Governing Law, etc. This Amendment shall be deemed to be a contract made under the laws
of the State of New York and shall be construed in accordance with such laws without reference to
conflict of laws.

8. Counterparts; Facsimile Execution. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Executed signature pages delivered by facsimile or other means of
electronic image transmission shall have the same force and effect as an original thereof.

[Signature pages follow.]

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IN WITNESS WHEREOF, the parties hereto have caused this Third Security Agreement Amendment to be
duly executed and delivered as of the date first above written.

	 	 	 	 	 
	 	AXS-ONE INC.

 	 
	 	By:  	/s/ William P. Lyons
 	 
	 	 	Name:  	William P. Lyons 	 
	 	 	Title:  	CEO 	 
	 
	 	BLUELINE CAPITAL PARTNERS, LP, as Agent

 	 
	 	By:  	/s/ Timothy P. Bacci
 	 
	 	 	Name:  	Timothy P. Bacci 	 
	 	 	Title:  	Managing Partner 	 

5

 

	 	 	 	 	 

OMNIBUS SIGNATURE PAGE TO

AXS-ONE, INC.

THIRD SECURITY AGREEMENT AMENDMENT

The undersigned, as a Secured Party, hereby executes and delivers the Third Security Agreement
Amendment to which this signature page is attached, which, together with all counterparts of the
Third Security Agreement Amendment and signature pages of the other parties named in said Third
Security Agreement Amendment, shall constitute one and the same document in accordance with the
terms of the Third Security Agreement Amendment.

	 	 	 	 	 
	 	Print Name:	BlueLine Capital Partners II, LP

 	 
	 	By:  	/s/ Timothy P. Bacci
 	 
	 	 	Name:  	Timothy P. Bacci 	 
	 	 	Title:  	Managing Partner 	 

6

 

	 	 	 	 	 

OMNIBUS SIGNATURE PAGE TO

AXS-ONE, INC.

THIRD SECURITY AGREEMENT AMENDMENT

The undersigned, as a Secured Party, hereby executes and delivers the Third Security Agreement
Amendment to which this signature page is attached, which, together with all counterparts of the
Third Security Agreement Amendment and signature pages of the other parties named in said Third
Security Agreement Amendment, shall constitute one and the same document in accordance with the
terms of the Third Security Agreement Amendment.

	 	 	 	 	 
	 	Print Name:	BlueLine Capital Partners III, LP

 	 
	 	By:  	/s/ Timothy P. Bacci
 	 
	 	 	Name:  	Timothy P. Bacci 	 
	 	 	Title:  	Managing Partner 	 

7

 

	 	 	 	 	 

OMNIBUS SIGNATURE PAGE TO

AXS-ONE, INC.

THIRD SECURITY AGREEMENT AMENDMENT

The undersigned, as a Secured Party, hereby executes and delivers the Third Security Agreement
Amendment to which this signature page is attached, which, together with all counterparts of the
Third Security Agreement Amendment and signature pages of the other parties named in said Third
Security Agreement Amendment, shall constitute one and the same document in accordance with the
terms of the Third Security Agreement Amendment.

	 	 	 	 	 
	 	Print Name:	Jurika Family Trust U/A 1989

 	 
	 	By:  	/s/ William K. Jurika
 	 
	 	 	Name:  	William K. Jurika 	 
	 	 	Title:  	Trustee 	 

8

 

	 	 	 	 	 

OMNIBUS SIGNATURE PAGE TO

AXS-ONE, INC.

THIRD SECURITY AGREEMENT AMENDMENT

The undersigned, as a Secured Party, hereby executes and delivers the Third Security Agreement
Amendment to which this signature page is attached, which, together with all counterparts of the
Third Security Agreement Amendment and signature pages of the other parties named in said Third
Security Agreement Amendment, shall constitute one and the same document in accordance with the
terms of the Third Security Agreement Amendment.

	 	 	 	 	 
	 	Print Name:	Aston Assets, S.A.

 	 
	 	By:  	/s/ Alejandro Gonzalez
 	 
	 	 	Name:  	Alejandro Gonzalez 	 
	 	 	Title:  	Legal Representative (Power of attorney) 	 

9

 

	 	 	 	 	 

OMNIBUS SIGNATURE PAGE TO

AXS-ONE, INC.

THIRD SECURITY AGREEMENT AMENDMENT

The undersigned, as a Secured Party, hereby executes and delivers the Third Security Agreement
Amendment to which this signature page is attached, which, together with all counterparts of the
Third Security Agreement Amendment and signature pages of the other parties named in said Third
Security Agreement Amendment, shall constitute one and the same document in accordance with the
terms of the Third Security Agreement Amendment.

	 	 	 	 	 
	 	Print Name:	Daniel H. Burch

 	 
	 	By:  	/s/ Daniel H. Burch
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

10

 

	 	 	 	 	 

OMNIBUS SIGNATURE PAGE TO

AXS-ONE, INC.

THIRD SECURITY AGREEMENT AMENDMENT

The undersigned, as a Secured Party, hereby executes and delivers the Third Security Agreement
Amendment to which this signature page is attached, which, together with all counterparts of the
Third Security Agreement Amendment and signature pages of the other parties named in said Third
Security Agreement Amendment, shall constitute one and the same document in accordance with the
terms of the Third Security Agreement Amendment.

	 	 	 	 	 
	 	Print Name:	Harold D. Copperman

 	 
	 	By:  	/s/ Harold D. Copperman
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

11

 

	 	 	 	 	 

OMNIBUS SIGNATURE PAGE TO

AXS-ONE, INC.

THIRD SECURITY AGREEMENT AMENDMENT

The undersigned, as a Secured Party, hereby executes and delivers the Third Security Agreement
Amendment to which this signature page is attached, which, together with all counterparts of the
Third Security Agreement Amendment and signature pages of the other parties named in said Third
Security Agreement Amendment, shall constitute one and the same document in accordance with the
terms of the Third Security Agreement Amendment.

	 	 	 	 	 
	 	Print Name:	Robert J. Migliorino

 	 
	 	By:  	/s/ Robert J. Migliorino
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

12

 

	 	 	 	 	 

OMNIBUS SIGNATURE PAGE TO

AXS-ONE, INC.

THIRD SECURITY AGREEMENT AMENDMENT

The undersigned, as a Secured Party, hereby executes and delivers the Third Security Agreement
Amendment to which this signature page is attached, which, together with all counterparts of the
Third Security Agreement Amendment and signature pages of the other parties named in said Third
Security Agreement Amendment, shall constitute one and the same document in accordance with the
terms of the Third Security Agreement Amendment.

	 	 	 	 	 	 
	 	Print Name:	Primafides (Suisse) SA & Earl Trust AG
as Co-Trustees of the Sirius Trust

 
	 	By:  	/s/ N. Mifsud  /s/ M. Garcia
 	/s/ L. Spencer  /s/ P. Palmiero 
	 	 	Name:  	N. Mifsud / M. Garcia             	L. Spencer/P. Palmiero  
	 	 	Title:  	Primafides (Suisse) SA
Directors              	Earl Trust AG
 

13

 

OMNIBUS SIGNATURE PAGE TO

AXS-ONE, INC.

THIRD SECURITY AGREEMENT AMENDMENT

The undersigned, as a Secured Party, hereby executes and delivers the Third Security Agreement
Amendment to which this signature page is attached, which, together with all counterparts of the
Third Security Agreement Amendment and signature pages of the other parties named in said Third
Security Agreement Amendment, shall constitute one and the same document in accordance with the
terms of the Third Security Agreement Amendment.

	 	 	 	 	 
	 	Print Name:	Philip L. Rugani

 	 
	 	By:  	/s/ Philip L. Rugani
 	 
	 	 	Name:  	Philip L. Rugani 	 
	 	 	Title:  	Executive VP, Field Operations 	 

14

 

	 	 	 	 	 

OMNIBUS SIGNATURE PAGE TO

AXS-ONE, INC.

THIRD SECURITY AGREEMENT AMENDMENT

The undersigned, as a Secured Party, hereby executes and delivers the Third Security Agreement
Amendment to which this signature page is attached, which, together with all counterparts of the
Third Security Agreement Amendment and signature pages of the other parties named in said Third
Security Agreement Amendment, shall constitute one and the same document in accordance with the
terms of the Third Security Agreement Amendment.

	 	 	 	 	 
	 	Print Name:	William P. Lyons

 	 
	 	By:  	/s/ William P. Lyons
 	 
	 	 	Name:  	William P. Lyons 	 
	 	 	Title:  	Chief Executive Officer 	 
	 

15EX-10.6

Exhibit 10.6

SECOND AMENDED AND RESTATED SUBORDINATION AGREEMENT

     This Second Amended and Restated Subordination Agreement is made as of October 30, 2008 by and
between BlueLine Capital Partners, LP, a Delaware limited partnership, as agent (“Agent”) for the
secured parties under the Security Agreement (as defined below), and Sand Hill Finance, LLC
(“SHF”).

Recitals

     Pursuant to a Security Agreement dated as of May 29, 2007, as amended on November 16, 2007,
July 24, 2008 and October 30, 2008, (“Security Agreement”), between AXS-One Inc. (“Borrower”),
Agent and the other secured parties set forth therein (Agent and such other secured parties
together, the “Creditors”), Borrower granted a security interest in certain of its assets to Agent
for the benefit of the Secured Parties. To induce SHF to purchase accounts and extend credit to
Borrower, from time to time, or to grant such renewals or extension of any such credit or purchase,
Agent, on behalf of the Creditors, is willing to subordinate: (i) all of Borrower’s indebtedness
and obligations to the Creditors, whether presently existing or arising in the future (the
“Subordinated Debt”) to all of Borrower’s indebtedness and obligations to SHF; and (ii) all of
Creditor’s security interests, if any, in the Borrower’s property, to all of SHF’s security
interests in the Borrower’s property.

     NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

     1. Creditors subordinate any security interest or lien that the Creditors may have in any
property of Borrower. Notwithstanding the respective dates of attachment or perfection of the
security interest of the Creditors and the security interest of SHF, the security interest of SHF
in the Collateral, as defined in the Financing Agreement between Borrower and SHF, dated as of May
22, 2008, as amended from time to time (the “Financing Agreement”), shall at all times be prior to
the security interest of the Creditors. Capitalized terms not otherwise defined herein shall have
the same meaning as in the Financing Agreement.

     2. All Subordinated Debt is subordinated in right of payment to all obligations of Borrower to
SHF now existing or hereafter arising, together with all costs of collecting such obligations
(including attorneys’ fees), including, without limitation, all interest accruing after the
commencement by or against Borrower of any Bankruptcy, reorganization or similar proceeding, and
all obligations under the Financing Agreement (the “Senior Debt”).

     3. Creditors will not demand or receive from Borrower (and Borrower will not pay to the
Creditors) all or any part of the Subordinated Debt, by way of payment, prepayment, setoff, lawsuit
or otherwise, nor will the Creditors exercise any remedy with respect to the Collateral, nor will
the Creditors commence, or cause to commence, prosecute or participate in any administrative, legal
or equitable action against Borrower, for so long as any portion of the Senior Debt remains
outstanding. Notwithstanding the foregoing, the Creditors shall be entitled to receive each
regularly scheduled payment of interest under any promissory note issued by Borrower to Creditor
evidencing the Subordinated Debt, provided that no Event of Default (as defined in the Financing
Agreement) has occurred under the Financing Agreement that is continuing or would exist immediately
after giving effect to such payment. Creditors shall promptly deliver to SHF in the form received
(except for endorsement or assignment by the Creditors where required by SHF) for application to
the Senior Debt any payment, distribution, security or proceeds received by the Creditors with
respect to the Subordinated Debt other than in accordance with this Agreement.

     4. This Agreement shall remain effective for so long as SHF has any obligation to make credit
extensions to Borrower or Borrower owes any amounts to SHF under the Financing Agreement or
otherwise. If, at any time after payment in full of the Senior Debt any payments of the
Senior Debt must be disgorged by SHF for any reason (including, without limitation, the Bankruptcy
of Borrower), this

 

 

Agreement and the relative rights and priorities set forth herein shall be
reinstated as to all such disgorged payments as though such payments had not been made and the
Creditors shall immediately pay over to SHF all payments received with respect to the Subordinated
Debt to the extent that such payments would have been prohibited hereunder. At any time and from
time to time, without notice to the Creditors, SHF may take such actions with respect to the Senior
Debt as SHF, in its sole discretion, may deem appropriate, including, without limitation,
terminating advances to Borrower, increasing the principal amount, extending the time of payment,
increasing applicable interest rates, renewing, compromising or otherwise amending the terms of any
documents affecting the Senior Debt and any collateral securing the Senior Debt, and enforcing or
failing to enforce any rights against Borrower or any other person. No such action or inaction
shall impair or otherwise affect SHF’s rights hereunder.

     5. Notwithstanding any provision herein to the contrary, nothing contained in this Agreement
shall apply to or restrict any portion of the Subordinated Debt from being converted into
Borrower’s equity securities in accordance with its existing terms.

     6. This Agreement shall bind any successors or assignees of the Creditors and shall benefit
any successors or assigns of SHF. This Agreement is solely for the benefit of the Creditors and
SHF and not for the benefit of Borrower or any other party. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and all of which together shall
constitute one instrument. This Agreement represents the entire agreement with respect to the
subject matter hereof, and supersedes all prior negotiations, agreements and commitments. The
Creditors are not relying on any representations by SHF or Borrower in entering into this
Agreement, and the Creditors have kept and will continue to keep fully apprised of the financial
and other condition of Borrower. This Agreement may be amended only by written instrument signed
by the Agent and SHF.

     7. This Agreement shall be governed by and construed in accordance with the laws of the State
of California, without giving effect to conflicts of laws principles. The Creditors and SHF submit
to the jurisdiction of the state and federal courts located in Santa Clara County, California. THE
CREDITORS AND SHF WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN. If the
jury waiver set forth in this Section is not enforceable, then any dispute, controversy or claim
arising out of or relating to this Agreement or any of the transactions contemplated herein shall
be settled by final and binding arbitration held in San Jose, California in accordance with the
then applicable Commercial Arbitration Rules of the American Arbitration Association. Judgment
upon any award resulting from arbitration may be entered into and enforced by any state of federal
court having jurisdiction thereof. In the event of any legal action to enforce the rights of a
party under this Agreement, the party prevailing in such action shall be entitled, in addition to
such other relief as may be granted, all reasonable costs and expenses, including reasonable
attorneys’ fees, incurred in such action.

[Signature page follows.]

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

	 	 	 	 	 
	 	“Agent on behalf of Creditors”

BLUELINE CAPITAL PARTNERS, LP,

as Agent

 	 
	 	By:  	/s/ Timothy P. Bacci
 	 
	 	 	Title: Managing Partner 	 
	 	 	 	 

	 	 	 	 	 
	 	“SHF”

SAND HILL FINANCE, LLC

 	 
	 	By:  	                        /s/ Mark Cameron
 	 
	 	 	Title: Partner 	 
	 	 	 	 

     The undersigned approves of the terms of this Agreement.

	 	 	 	 	 
	 	“Borrower”

AXS-ONE INC.

 	 
	 	By:  	                        /s/ William P. Lyons
 	 
	 	 	Title: CEO 	 
	 	 	 	 
	 

3

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