Document:

ex10-5.htm

    Exhibit
10.5

     

    THIS
SECURITY AGREEMENT AND THE RIGHTS PROVIDED HEREIN ARE SUBJECT IN ALL RESPECTS TO
THE TERMS OF A THIRD AMENDED AND RESTATED SUBORDINATION AGREEMENT OF EVEN DATE
HEREWITH AMONG THE AGENT OF THE SECURED PARTIES, THE AGENT OF THE HOLDERS OF THE
SERIES A 6% SECURED CONVERTIBLE PROMISSORY NOTES, THE SERIES B 6% SECURED
CONVERTIBLE PROMISSORY NOTES, THE SERIES C 6% SECURED CONVERTIBLE PROMISSORY
NOTES, THE SERIES D 6% SECURED CONVERTIBLE PROMISSORY NOTES AND THE SERIES E 6%
SECURED CONVERTIBLE PROMISSORY NOTES AND SAND HILL FINANCE, LLC.

    

    SECURITY
AGREEMENT

    

    This
SECURITY AGREEMENT is
made as of June 26, 2009 among 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 page hereto (hereinafter,
collectively, the “Secured
Parties”), and AXS-One Inc., a Delaware corporation with its chief
executive office located at 301 Route 17 North, Rutherford, NJ  07070
(the “Debtor”).

    

    W
I T N E S S E T H:

    

    WHEREAS, on the date hereof,
the Debtor has issued in favor of each of the Secured Parties, Series 2009 5%
Secured Convertible Promissory Notes (each a “Note” and collectively the
“Notes”), in the
aggregate principal amount of up to Two Hundred and Fifty Thousand Dollars
($250,000); such Notes have been issued pursuant to the terms of a Standby
Convertible Note Purchase Agreement (the “Purchase Agreement”) of even
date herewith among the Debtor and the Secured Parties; and

    

    WHEREAS, it is a condition
precedent to the Secured Parties’ making any loans under the Purchase Agreement
and the Notes that the Debtor execute and deliver to the Secured Parties this
Security Agreement;

    

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

    

    1.           Defined
Terms.

    

    (a)           Unless
otherwise defined herein, (i) terms which are defined in the Notes and used
herein shall have the meanings ascribed to such terms in the Notes, and (ii)
terms which are defined in the Purchase Agreement and used herein shall have the
meanings ascribed to such terms in the Purchase Agreement.

    

    (b)           The
following terms which are defined in Article 9 are used herein as so
defined:  Accessions, Accounts, Chattel Paper, Commercial Tort Claims,
Deposit Accounts, Documents, Equipment, General Intangibles, Goods, Instruments,
Inventory, Investment Property, Letters of Credit, Letter-of-Credit Rights,
Payment Intangibles, Proceeds, Promissory Notes, Software and Supporting
Obligations.

    

    (c)           The
following terms shall have the following meanings:

    

    “Article
9” means Article 9 of the Code as in effect from time to
time.

    

    “Code”
means the Uniform Commercial Code as from time to time in effect in the State of
New York, including, specifically, Article 9.

    

    
      	
               
      

            	
              “Collateral”
      shall have the meaning assigned to it in Section 2(a) of this Security
      Agreement.

            

    

    

    “Contracts”
means the separate contracts between the Debtor and third parties (including
without limitation its customers), as the same may from time to time be amended,
supplemented or otherwise modified, including, without limitation, (a) all
rights of the Debtor to receive moneys due and to become due to it thereunder or
in connection therewith, (b) all rights of the Debtor to damages arising out of,
or for, breach or default in respect thereof and (c) all rights of the Debtor to
perform and to exercise all remedies thereunder; but excluding any contracts,
the assignment or hypothecation of which, for collateral purposes, would result
in a default or require, or cause, a forfeiture or permit a revocation of
material rights under such contract.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    
 

    “Copyrights”
means (a) all copyrights of the United States or any other country, (b) all
copyright registrations filed in the United States or in any other country and
(c) all Proceeds thereof.

    

    
      	
               
      

            	
              “Copyright
      License” means any Contract providing for the grant by Debtor of
      any right to use any Copyright.

            

    

    

    
      	
               
      

            	
              “Encumbrance”
      or “Encumbrances”
      means any security interest, mortgage, pledge, lien, claim, charge,
      encumbrance, title retention agreement, lessor’s interest under a
      financing lease or any analogous arrangements in any of properties or
      assets of Debtor, intended as, or having the effect of,
      security.

            

    

    

    
      	
               
      

            	
              “Event
      of Default” shall have the meaning assigned to it in each
      Note.

            

    

    

    
      	
               
      

            	
              “Governmental
      Authority” means any federal, state, local or foreign court,
      commission or tribunal, or governmental, administrative or regulatory
      agency, department, authority, instrumentality or other
    body.

            

    

    

    
      	
               
      

            	
              “Material
      Adverse Effect” means a material adverse effect on the condition
      (financial or otherwise), assets, liabilities, business, results of
      operations or prospects of the Debtor and its subsidiaries, taken as a
      whole.

            

    

    

    
      	
               
      

            	
              “Obligations”
      means all principal, interest, fees, charges, collateral protection
      expenses, enforcement costs and other sums (in each case whether
      pre-or-post petition) due or to become due and payable by Debtor to any of
      the Secured Parties under the Notes, this Security Agreement or the
      Purchase Agreement.

            

    

    

    
      	
               
      

            	
              “Patents”
      means (a) all patents of the United States and all reissues and extensions
      thereof, (b) all applications for patents of the United States and all
      divisions, continuations and continuations-in-part thereof or any other
      country and (c) all Proceeds
thereof.

            

    

    

    
      	
               
      

            	
              “Patent
      License” means any Contract providing for the grant to Debtor of
      any right to manufacture, use or sell any invention covered by a
      Patent.

            

    

    

    
      	
               
      

            	
              “Permitted
      Encumbrances” means any of the following Encumbrances that exist or
      that the Debtor may create or incur or suffer to be created or incurred or
      to exist:  (a) liens to secure taxes, assessments and other
      government charges in respect of obligations not overdue or liens on
      properties to secure claims for labor, material or supplies in respect of
      obligations not overdue; (b)  deposits or pledges made in
      connection with, or to secure payment of, workmen’s compensation,
      unemployment insurance, old age pensions or other social security
      obligations; (c)  liens of carriers, warehousemen, mechanics and
      materialmen, and other like liens on properties in existence less than 180
      days from the date of creation thereof in respect of obligations not
      overdue; (d) encumbrances on real estate consisting of easements,
      rights of way, zoning restrictions, restrictions on the use of real
      property and defects and irregularities in the title thereto, landlord’s
      or lessor’s liens under leases to which the Debtor is a party, and other
      minor liens or encumbrances none of which in the opinion of the Debtor
      interferes materially with the use of the property affected in the
      ordinary conduct of business of the Debtor, which defects do not
      individually or in the aggregate have a Material Adverse Effect;
      (e)  purchase money security interests in or purchase money
      mortgages on real or personal property to secure purchase money
      indebtedness, incurred in connection with the acquisition of such
      property, which security interests or mortgages cover only the real or
      personal property so acquired; (f) security interests in the sale and
      lease back of real and personal property, the aggregate value of which
      does not exceed $500,000 during the term of the Notes; (g) the security
      interests of Sand Hill Finance, LLC (“SHF”) as set forth in
      that certain Financing Agreement dated as of May 22, 2008 between Borrower
      and SHF, as amended from time to time; or (h) the security interests of
      the holders of the Prior Notes (such note holders, the “PIPE Creditors”) as set
      forth in that certain Security Agreement dated as of May 29, 2007 among
      the Company and the PIPE Creditors, as amended from time to
      time.

            

    

    

    
      	
               
      

            	
              “Person”
      means an individual, partnership, corporation, limited liability company,
      business trust, joint stock company, trust, unincorporated association,
      joint venture or other entity of whatever nature, whether public or
      private.

            

    

    

    
      	
               
      

            	
              “Required
      Secured Parties” shall have the meaning assigned to it in Section
      12 of this Security Agreement.

            

    

    

    
      	
               
      

            	
              “Requirement
      of Law” means any requirement of law, rule, regulation or guideline
      of any Governmental Authority.

            

    

    

    
      	
               
      

            	
              “Security
      Agreement” means this Security Agreement, as amended, supplemented,
      restated or otherwise modified from time to
  time.

            

    

    

    
      	
               
      

            	
              “Software
      License” means any agreement, written or oral, providing for the
      grant to Debtor of any right to use any
  Software.

            

    

    

    “Source Code”
means all source code and all updates, releases and/or new versions of the
Software.

     

    
      	
               
      

            	
              “Trademarks”
      means (a) all trademarks, trade names, corporate names, company names,
      business names, fictitious business names, trade styles, service marks,
      logos and other source or business identifiers and the goodwill associated
      therewith, now existing or hereafter adopted or acquired, all
      registrations and recordings thereof, and all applications in connection
      therewith, whether registered in the United States Patent and Trademark
      Office or in any similar office or agency of the United States, any State
      thereof or any other country or any political subdivision thereof or
      otherwise, (b) all renewals thereof and (c) all Proceeds thereof,
      including the goodwill of the business connected with the use of and
      symbolized by the Trademarks.

            

    

    

    
      	
               
      

            	
              “Trademark
      License” means any Contract providing for the grant to Debtor of
      any right to use any Trademark.

            

    

    
       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    
 

    2.           Grant of
Security Interest.

    

    (a)           As
collateral security for the prompt and complete payment and performance when due
of the Obligations, the Debtor hereby grants to the Agent, for the benefit of
each of the Secured Parties, a security interest in all properties, assets and
rights of the Debtor now owned or at any time hereafter acquired by the Debtor
or in which the Debtor now has or at any time in the future may acquire any
right, title or interest, wherever located or situated and however defined or
classified under Article 9, including, without limitation, all of the property
described in clause (b) below (collectively, the “Collateral”).

    

    (b)           Without
limitation of the foregoing, the Collateral includes all of Debtor’s right,
title and interest in the following at all times:

    

    
      
        	
                (i)

              	
                all
      Accounts;

              
	 
      	 
      
	
                (ii)

              	
                all
      Chattel Paper;

              
	 
      	 
      
	
                (iii)

              	
                all
      Commercial Tort Claims;

              
	 
      	 
      
	
                (iv)

              	
                all
      Contracts;

              
	 
      	 
      
	
                (v)

              	
                all
      Copyrights;

              
	 
      	 
      
	
                (vi)

              	
                all
      Copyright Licenses;

              
	 
      	 
      
	
                (vii)

              	
                all
      Deposit Accounts;

              
	 
      	 
      
	
                (viii)

              	
                all
      Documents;

              
	 
      	 
      
	
                (ix)

              	
                all
      Equipment;

              
	 
      	 
      
	
                (x)

              	
                all
      General Intangibles;

              
	 
      	 
      
	
                (xi)

              	
                all
      Goods;

              
	 
      	 
      
	
                (xii)

              	
                all
      Instruments;

              
	 
      	 
      
	
                (xiii)

              	
                all
      Inventory;

              
	 
      	 
      
	
                (xiv)

              	
                all
      Investment Property;

              
	 
      	 
      
	
                (xv)

              	
                all
      Letter-of-Credit Rights;

              
	 
      	 
      
	
                (xvi)

              	
                all
      Letters of Credit;

              
	 
      	 
      
	
                (xvii)

              	
                all
      Patents;

              
	 
      	 
      
	
                (xviii)

              	
                all
      Patent Licenses;

              
	 
      	 
      
	
                (xix)

              	
                all
      Payment Intangibles;

              
	 
      	 
      
	
                (xx)

              	
                all
      Promissory Notes;

              
	 
      	 
      
	
                (xxi)

              	
                all
      Software (including, without limitation, any Source Code thereto, all
      Software Licenses and any Patents or Copyrights associated
      therewith);

              
	 
      	 
      
	
                (xxii)

              	
                all
      Supporting Obligations;

              
	 
      	 
      
	
                (xxiii)

              	
                all
      Trademarks;

              
	 
      	 
      
	
                (xxiv)

              	
                all
      Trademark Licenses;

              
	 
      	 
      
	
                (xxv)

              	
                all
      Proceeds, all Accessions and additions thereto and all substitutions and
      replacements therefor and products of any and all of the
      foregoing.

              

      

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
 

    3.           Rights of
Agent; Limitations on Agent’s Obligations.

    

    
      	
              (a)

            	
              Debtor Remains Liable
      under Accounts and Contracts.  Anything herein to the
      contrary notwithstanding, the Debtor shall remain liable under each of the
      Accounts and Contracts to observe and perform all the conditions and
      obligations to be observed and performed by it thereunder, all in
      accordance with the terms of any agreement giving rise to each such
      Account and in accordance with and pursuant to the terms and provisions of
      each such Contract.  The Agent shall not shall have any
      obligation or liability under any Account (or any agreement giving rise
      thereto) or under any Contract by reason of or arising out of this
      Security Agreement or the receipt by the Agent of any payment relating to
      such Account or Contract pursuant hereto, nor shall the Agent be obligated
      in any manner to perform any of the obligations of the Debtor under or
      pursuant to any Account (or any agreement giving rise thereto) or under or
      pursuant to any Contract to make any payment, to make any inquiry as to
      the nature or the sufficiency of any payment received by it or as to the
      sufficiency of any performance by any party under any Account (or any
      agreement giving rise thereto) or under any Contract, to present or file
      any claim, to take any action to enforce any performance or to collect the
      payment of any amounts which may have been assigned to it or to which it
      may be entitled at any time or
times.

            

    

    

    
      	
              (b)

            	
              Notice to Account
      Debtors and Contracting Parties.  At any time after the
      occurrence of an Event of Default, upon the request of the Agent acting
      upon the written instruction of the Required Secured Parties, the Debtor
      shall notify account debtors on the Accounts and parties to the Contracts
      that the Accounts and the Contracts have been assigned to the Agent for
      the benefit of the Secured Parties, and that payments in respect thereof
      shall be made directly to the Agent.  Upon the occurrence of an
      Event of Default, the Agent, may in its own name or in the name of others
      communicate with account debtors on the Accounts and parties to the
      Contracts to verify with them to the Agent’s reasonable satisfaction the
      existence, amount and terms of any Accounts or Contracts and to give
      notice to them of the Agent’s lien against any Accounts or
      Contracts.

            

    

    

               4.           Representations
and Warranties.  The Debtor hereby
represents and warrants to the Secured Parties that (a) it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, (b) it has the corporate power and authority to own or hold under
lease the Collateral, to transact the business it transacts and proposes to
transact, to execute and deliver this Security Agreement and to perform the
provisions hereof, (c) this Security Agreement has been duly authorized by all
necessary corporate action on the part of the Debtor and constitutes a legal,
valid and binding obligation of the Debtor enforceable against the Debtor in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), (d) the
execution, delivery and performance by the Debtor of this Security Agreement
will not (i) contravene, result in any breach of or constitute a default under,
or result in the creation of any lien (other than those provided for in this
Security Agreement) in respect of any property of the Debtor under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
the Debtor’s certificate of incorporation or bylaws or any other material
agreement or instrument to which the Debtor is a party or by which the Debtor or
any of its properties may be bound or affected; (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree or ruling of any court, arbitrator or Governmental Authority applicable
to the Debtor or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Debtor, (e) except
for the Encumbrances granted pursuant to this Security Agreement and Permitted
Encumbrances, the Debtor owns each item of the Collateral free and clear of any
and all Encumbrances or claims of others and (f) except in connection with
Permitted Encumbrances, no security agreement, financing statement or other
public notice with respect to all or any part of the Collateral is on file or of
record in any public office, except such as may have been filed in favor of the
Secured Parties.

    

    5.           Covenants.  The Debtor
covenants and agrees with the Secured Parties that, from and after the date of
this Security Agreement until the Obligations are paid in full:

    

    (a)           Further Documentation;
Pledge of Instruments and Chattel Paper.  Upon the written
request of the Secured Parties, and at the sole expense of the Debtor, the
Debtor shall promptly and duly execute and deliver such further instruments and
documents and take such further action as the Secured Parties may reasonably
request for the purpose of obtaining or preserving the full benefits of this
Security Agreement and of the rights and powers herein granted, including,
without limitation, the filing of any financing or continuation statements under
the Uniform Commercial Code in effect in any jurisdiction with respect to the
Encumbrances created hereby.  The Debtor also hereby authorizes the
Secured Parties to file any such financing or continuation
statement.  A carbon, photographic or other reproduction of this
Security Agreement shall be sufficient as a financing statement for filing in
any jurisdiction.  If any amount payable under or in connection with
any of the Collateral shall be or become evidenced by any Instrument or Chattel
Paper, such Instrument or Chattel Paper shall be delivered to the Secured
Parties, duly endorsed in a manner satisfactory to the Secured Parties to be
held as Collateral pursuant to this Security Agreement.

    

    
      	
              (b)

            	
              Indemnification.  Following
      the occurrence of any Event of Default, in any suit, proceeding or action
      brought by any Secured Party under any Account or Contract for any sum
      owing thereunder, or to enforce any provisions of any Account or Contract,
      the Debtor shall save, indemnify and keep the Secured Parties harmless
      from and against all expense, loss or damage suffered by reason of any
      defense, setoff, counterclaim, recoupment or reduction or liability
      whatsoever of the account debtor or obligor thereunder, arising out of a
      breach by the Debtor of any obligation thereunder or arising out of any
      other agreement, indebtedness or liability at any time owing to or in
      favor of such account debtor or obligor or its successors from the
      Debtor.

            

    

    

    
      	
              (c)

            	
              Maintenance of
      Records.  The Debtor shall keep and maintain at its own
      cost and expense satisfactory and complete records of the Collateral,
      including, without limitation, a record of all payments received and all
      credits granted with respect to the Accounts.  The Debtor shall
      mark its books and records pertaining to the Collateral to evidence this
      Security Agreement and the security interests granted
      hereby.  The Secured Parties shall have a security interest in
      all of the Debtor’s books and records pertaining to the Collateral, and
      the Debtor shall make any such books and records available to the Secured
      Parties or to their representatives during normal business hours for their
      review at the request of the Secured Parties upon reasonable prior
      notice.

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
 

    
      	
              (d)

            	
              Right of
      Inspection.  The Secured Parties shall at all times but
      no more than once every six (6) months and upon reasonable prior notice
      have full and free access during normal business hours to all the books,
      correspondence and records of the Debtor, and the Secured Parties or their
      respective representatives may examine the same, take extracts therefrom
      and make photocopies thereof, and the Debtor agrees to render to the
      Secured Parties, at the Debtor’s cost and expense, such clerical and other
      assistance as may be reasonably requested with regard thereto; provided,
      however, that during the occurrence of an Event of Default, the Secured
      Parties and their respective representatives may conduct such examinations
      at any time.  The Secured Parties and their representatives
      shall at any reasonable time, but no more than once every six (6) months,
      and upon reasonable prior notice also have the right to enter into and
      upon any premises where any of the Inventory or Equipment is located for
      the purpose of inspecting the same, observing its use or otherwise
      protecting its interests-therein; provided, however, that during the
      occurrence of an Event of Default, the Secured Parties and their
      respective representatives may enter any such premises at any
      time.

            

    

    

    
      	
              (e)

            	
              Compliance with
      Laws.  The Debtor shall comply in all material respects
      with all Requirements of Law applicable to the Collateral or any part
      thereof or to the operation of the Debtor’s business; provided, however,
      that the Debtor may contest any Requirement of Law in any reasonable
      manner which shall not, in the opinion of the Secured Parties, adversely
      affect the Secured Parties’ rights or the priority of its Encumbrances on
      the Collateral.

            

    

    

    
      	
              (f)

            	
              Compliance with Terms
      of Contracts.  The Debtor shall perform and comply in all
      material respects with all its obligations under the Contracts and all its
      other contractual obligations relating to the Collateral except where such
      nonperformance and noncompliance could not reasonably be expected to have
      a Material Adverse Effect.

            

    

    

    
      	
              (g)

            	
              Payment of
      Obligations.  The Debtor shall pay promptly when due all
      taxes, assessments and governmental charges or levies imposed upon the
      Collateral or in respect of its income or profits therefrom, as well as
      all claims of any kind (including, without limitation, claims for labor,
      materials and supplies) against or with respect to the Collateral, except
      that no such charge need be paid if (i) the validity thereof is being
      contested in good faith by appropriate proceedings, (ii) such proceedings
      do not involve any material danger of the sale, forfeiture or loss of any
      of the Collateral or any interest therein and (iii) such charge is
      adequately reserved against on the Debtor’s books in accordance with
      generally accepted accounting
principles.

            

    

    

    
      	
              (h)

            	
              Limitation on
      Encumbrances on Collateral.  The Debtor shall not create,
      incur or permit to exist, shall defend the Collateral against and shall
      take such other action as is necessary to remove any Encumbrance or claim
      on or to the Collateral, other than the Encumbrances created hereby or
      Permitted Encumbrances, and shall defend the right, title and interest of
      the Secured Parties in and to any of the Collateral against other claims
      and demands of all Persons
whomsoever.

            

    

    

    
      	
              (i)

            	
              Limitations on
      Dispositions of Collateral.  The Debtor shall not sell,
      transfer, lease or otherwise dispose of any of the Collateral, or attempt,
      offer or contract to do so except for (i) sales of Inventory in the
      ordinary course of its business, (ii) licenses of Software in the ordinary
      course of its business and (iii) so long as no Event of Default has
      occurred, the disposition in the ordinary course of business of property
      not material to the conduct of its
business.

            

    

    

    
      	
              (j)

            	
              Limitations on
      Modifications, Waivers, Extensions of Contracts and Agreements Giving Rise
      to Accounts.  The Debtor shall not (i) amend, modify,
      terminate or waive any provision of any Contract or any agreement giving
      rise to an Account in any manner which could reasonably be expected to
      materially adversely affect the value of all Contracts and Accounts as
      Collateral when examined in the aggregate or (ii) fail to exercise
      promptly and diligently each and every material right which it may have
      under each Contract and each agreement giving rise to an Account where
      such failure could reasonably be expected to have a Material Adverse
      Effect on the value of all Contracts and Accounts when examined in the
      aggregate.

            

    

    

    
      	
              (k)

            	
              Maintenance of
      Equipment.  The Debtor shall maintain each item of
      Equipment in good operating condition, ordinary wear and tear and
      immaterial impairments of value and damage by the elements excepted, and
      shall provide all maintenance, service and repairs necessary for such
      purpose except where the failure to maintain such Equipment could not
      reasonably be expected to have a Material Adverse
  Effect.

            

    

    

    
      	
              (l)

            	
              Further Identification
      of Collateral.  The Debtor shall furnish to the Agent
      from time to time upon request, but no more than once per year, statements
      and schedules further identifying and describing the Collateral and such
      other reports in connection with the Collateral as the Agent may
      reasonably request, all in reasonable
detail.

            

    

    

    
      	
              (m)

            	
              Notices.  The
      Debtor shall advise the Secured Parties promptly, in reasonable detail,
      (i) of any Encumbrance (other than Encumbrances created hereby or
      Permitted Encumbrances) on, or claim asserted against, any of the
      Collateral, (ii) of any notice sent by a Secured Party of the occurrence
      of an Event of Default under such Secured Party’s Note and (iii) of the
      occurrence of any other event which could reasonably be expected to have a
      Material Adverse Effect on the aggregate value of the Collateral or on the
      Encumbrances created hereunder.

            

    

    

    
      	
              (o)

            	
              Changes in Locations,
      Name.  The Debtor shall provide Secured Parties with at
      least thirty (30) days prior written notice in the event of either (i) a
      change the location of its chief executive office/chief place of business
      or jurisdiction of incorporation or removal of its books and records from
      such location, or (ii) a change in its name, identity or corporate
      structure to such an extent that any financing statement filed by the
      Secured Parties in connection with this Security Agreement would become
      seriously misleading.

            

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
 

    (p)           Patents, Copyrights,
Software, Trademarks and General Intangibles.

    

    (i)           Whenever
Debtor shall file an application for the registration of any Patent, Software or
Trademark with the United States Patent and Trademark Office or any Copyright or
Software with the United States Copyright Office or any similar office or agency
in any other country or any political subdivision thereof, Debtor shall report
such filing to the Secured Parties within five (5) business days after the last
day of the fiscal quarter in which such filing occurs.

    

    (ii)           The
Debtor shall execute and deliver any and all agreements, instruments, documents
and papers as the Secured Parties may reasonably request to evidence the Secured
Parties’ security interest in any Patent, Copyright, Software, General
Intangible or Trademark and the goodwill of Debtor relating thereto or
represented thereby, and Debtor hereby constitutes the Agent as its
attorney-in-fact to execute and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed; such
power being coupled with an interest is irrevocable until the Obligations are
paid in full.

    

    (iii)           The
Debtor shall take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and Trademark
Office, or any similar office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of any registered
Patents, Copyrights, Software, General Intangibles or Trademarks, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.

    

    (iv)           In
the event that any material Patent, Copyright, Software, General Intangible or
Trademark included in the Collateral is infringed, misappropriated or diluted by
a third party, Debtor shall promptly notify the Agent after it learns thereof
and shall, unless Debtor shall reasonably determine that such Patent, Copyright,
Software, General Intangible or Trademark is of negligible economic value to
Debtor, promptly sue for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution, or take such other actions as Debtor
shall reasonably deem appropriate under the circumstances to protect such
Patent, Copyright, Software, General Intangible or Trademark.

    

    (q)           Insurance.  Debtor,
at its expense, shall keep the Collateral insured against loss or damage by
fire, theft, explosion, sprinklers and all other hazards and risks, and in such
amounts as are reasonable given the nature of Debtor’s business and the type and
use of Collateral.  Debtor shall also maintain insurance relating to
Debtor’s business, ownership and use of the Collateral in amounts and of a type
that are customary to businesses similar to Debtor’s.  All such
policies of insurance shall be in such form, with such companies and in such
amounts as are reasonably satisfactory to the Agent.  All such
policies of property insurance shall contain a lender’s loss payable
endorsement, in a form satisfactory to the Agent, showing the Agent as an
additional loss payee thereof, and all liability insurance policies shall show
the Agent as an additional insured and shall specify that the insurer must give
at least twenty (20) days notice to the Agent before canceling its policy for
any reason.  Upon the Agent’s request, Debtor shall deliver to the
Agent certified copies of such policies of insurance and evidence of the
payments of all premiums therefor.  All proceeds payable under any
such policy shall, at the option of the Agent, be payable to the Agent to be
applied on account of the Obligations in such order as the Agent shall
elect.

    

    (r)           Commercial Tort
Claims.  The Debtor shall promptly notify the Agent in writing
upon incurring or otherwise obtaining a Commercial Tort Claim against any third
party, and upon request of the Secured Parties, promptly enter into an amendment
to this Security Agreement and do such other acts or things deemed appropriate
by the Secured Parties to give the Secured Parties a security interest in any
such Commercial Tort Claim.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
 

    6.           Agent’s
Appointment as Attorney-in-Fact.

    

    (a)           Powers.  During
the existence of an Event of Default, the Debtor hereby irrevocably constitutes
and appoints the Agent with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Debtor and in the name of Debtor or in its own name, from time to time
in the Agent’s discretion upon instruction from the Required Secured Parties,
for the purpose of carrying out the terms of this Security Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Security Agreement, and, without limiting the generality of the foregoing,
Debtor hereby gives the Agent the power and right, on behalf of Debtor, without
notice to or assent by Debtor, to do the following:  to pay or
discharge taxes and Encumbrances (other than Permitted Encumbrances) levied or
placed on the Collateral (upon written instruction of the Required Secured
Parties); to effect any repairs or any insurance called for by the terms of this
Security Agreement and to pay all or any part of the premiums therefor and the
costs thereof (upon written instruction of the Required Secured Parties); and
during the existence of an Event of Default and only upon written instruction of
the Required Secured Parties, (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Secured Party or as the Secured Party
shall direct; (B) to ask or demand for, collect, receive payment of and receipt
for, any and all moneys, claims and other amounts due or to become due at any
time in respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (D) to commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any thereof and to enforce
any other right in respect of any Collateral; (E) to defend any suit, action or
proceeding brought against Debtor with respect to any Collateral; (F) to settle,
compromise or adjust any suit, action or proceeding described in clause (E)
above and, in connection therewith, to give such discharges or releases as the
Agent may deem appropriate; (G) to assign any Patent, Copyright, Software,
General Intangible or Trademark (along with the goodwill of the business to
which any such Trademark pertains), throughout the world for such term or terms,
on such conditions, and in such manner, as the Agent shall determine; and (H)
generally, to sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
Agent were the absolute owner thereof for all purposes, and to do, at the
Agent’s option and Debtor’s expense, at any time, or from time to time, all acts
and things which the Agent, with the consent and instruction of the Required
Secured Parties, deems necessary to protect, preserve or realize upon the
Collateral and the Agent’s Encumbrances thereon and to effect the intent of this
Security Agreement, all as fully and effectively as Debtor might
do.  In addition, the Debtor hereby irrevocably constitutes and
appoints the Agent with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Debtor and in the name of Debtor or in its own name, from time to time
in the Agent’s discretion, for the purpose of perfecting the Agent’s lien
against the Collateral, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish such purpose.  The Debtor hereby ratifies all that said
attorneys shall lawfully do or cause to be done by virtue hereof. The powers of
attorney in this subsection are powers coupled with an interest and shall be
irrevocable.

    

    (b)           Other
Powers.  The Debtor also authorizes the Agent, at any time and
from time to time, to execute, in connection with the sale provided for in
Section 9 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.

    

    (c)           No Duty on Agent’s
Part.  The powers conferred on the Agent hereunder are solely
to protect Agent’s interests in the Collateral and shall not impose any duty
upon the Agent to exercise any such powers.  The Agent shall be
accountable only for amounts that it or the Secured Parties actually receive as
a result of the exercise of such powers, and none of them nor any of their
officers, directors or employees shall be responsible to Debtor for any act or
failure to act hereunder, except for its own gross negligence or willful
misconduct.

    

    7.           Performance
by Agent of Debtor’s Obligations.  If Debtor fails
to perform or comply with any of its agreements contained herein and the Agent,
upon written instruction of the Required Secured Parties, shall itself perform
or comply, or otherwise cause performance or compliance, with such agreement,
the reasonable expenses of the Agent incurred in connection with such
performance or compliance, together with interest thereon at a rate per annum
equal to 15%, shall be payable by Debtor to the Agent on demand and shall
constitute Obligations secured hereby.

    

    8.           Proceeds.  In addition to
the rights of the Agent specified in Section 3 with respect to payments of
Accounts, it is agreed that during the existence of an Event of Default (a) all
Proceeds received by the Debtor consisting of cash, checks and other near-cash
items shall be held by the Debtor in trust for the Secured Parties, segregated
from other funds of the Debtor, and shall, forthwith upon receipt by the Debtor,
be turned over to the Agent in the exact form received by the Debtor (duly
endorsed by the Debtor to the Agent), and (b) any and all such Proceeds received
by the Agent (whether from the Debtor or otherwise) may, in the sole discretion
of the Agent upon written instruction of the Required Secured Parties, be held
by the Agent as collateral security for, and/or then or at any time thereafter
may be applied by the Agent, pro ratably against, the Obligations or in such
order as the Required Secured Parties may elect.  Any balance of such
Proceeds remaining after the Obligations shall have been paid in full shall be
paid over to the Debtor or to whomsoever may be lawfully entitled to receive the
same.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    
 

    9.           Remedies.  Upon the
occurrence and during the continuance of an Event of Default, the Agent, at the
written direction of the Required Secured Parties, may exercise, in addition to
all other rights and remedies granted to it in this Security Agreement and in
any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the
Code.  Without limiting the generality of the foregoing, the Agent at
written direction of the Required Secured Parties, during the existence of an
Event of Default and without further demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon Debtor or any other Person (all
and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker’s board or office of the Agent or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit
risk.  Each purchaser at any such sale shall hold the Collateral sold
absolutely free from any claim or right on the part of the Debtor, and Debtor
hereby waives (to the extent permitted by law) all rights of redemption, stay or
appraisal that it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.  Each of the
Secured Parties shall have the right upon any such public sale or sales and, to
the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in Debtor, which right or equity is hereby waived or released, and in
connection herewith to credit bid the Obligations with the proceeds that would
otherwise be payable to such Secured Party.  The  Agent
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by law, Debtor hereby waives any claims
against Agent arising because the price at which any Collateral may have been
sold at a private sale was less than the price that might have been obtained at
a public sale.  The Debtor further agrees, at the Agent’s request upon
instruction from the Required Secured Parties, to assemble the Collateral and
make it available to the Agent at places, which the Agent shall reasonably
select, whether at Debtor’s premises or elsewhere.  The Agent shall
apply the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Agent
hereunder, including, without limitation, reasonable attorneys’ fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Required Secured Parties may elect, and only after such application
and after the payment by Agent of any other amount required by any provision of
law, including, without limitation, any provision of the Code, need the Agent
account for the surplus, if any, to Debtor.  To the extent permitted
by applicable law, Debtor waives all claims, damages and demands it may acquire
against the Agent or any Secured Party arising out of the exercise by Agent of
any of its rights hereunder.  If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least ten (10) days before such sale or
other disposition.  The Debtor shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay the obligations and the fees and disbursements of any
attorneys employed by Agent to collect such deficiency.  Debtor hereby
agrees that any sale or other disposition of the Collateral conducted in
conformity with reasonable commercial practices of banks, insurance companies or
other financial institutions in the city and state where Agent is located in
disposing of property similar to the Collateral shall be deemed to be
commercially reasonable.

    

    10.           Limitation
on Duties Regarding Preservation of Collateral.  The Agent’s sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Article 9 or otherwise, shall be to deal
with it in the same manner as any Secured Party deals with similar property for
its own account.  Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of Debtor or otherwise.

    

    11.           Powers
Coupled with an Interest.  All
authorizations and agencies herein contained with respect to the Collateral are
irrevocable and powers coupled with an interest.

    
       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

       

    

    12.           Agent.  Each Secured
Party hereby designates and appoints the Agent to serve in accordance with the
terms and conditions of this Security Agreement, and the Agent hereby agrees to
act as such, upon the terms and conditions provided in this Security
Agreement.  The Agent may execute any of its duties under this
Security Agreement by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties.  The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent or other
document or conversation believed by it to be genuine and
correct.  The Agent shall be fully justified in failing or refusing to
take any action unless it first receives such advice or concurrence from the
Required Secured Parties.  The Agent shall be under no obligation to
take any action to protect, preserve or enforce any rights or interests in the
Collateral or to take any action toward the execution or enforcement of the
rights and remedies hereunder, whether on its own motion or on the request of
any other Person, which in the opinion of the Agent may involve loss, liability
or expense to it, unless the Debtor and/or one or more Secured Parties shall
offer and furnish security or indemnity, reasonably satisfactory to the Agent,
against loss, liability and expense to the Agent.  As used herein,
“Required Secured
Parties” means, as of any date, the Secured Parties holding at least a
majority of the outstanding principal amount of the Notes on such
date.  The Agent shall in all cases be fully protected in acting or
refraining from acting in accordance with a request or consent of the Required
Secured Parties and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Secured Parties.  The Agent
shall not be deemed to have knowledge or notice of the occurrence of any Event
of Default except with respect to payment default required to be paid to the
Agent in its individual capacity, unless the Agent shall have received written
notice from a Secured Party or the Debtor describing such
default.  The Agent shall use its best efforts to notify all Secured
Parties and the Debtor of any such notice.  The Agent shall take such
action with respect to such default as may be reasonably and lawfully requested
by the Required Secured Parties in accordance with the terms of this Security
Agreement subject to the requirements set forth above for indemnification and
further subject to its right to resign under Section 13 below.  In
addition to any other indemnification provided for hereunder or otherwise in
favor of the Agent, each of the Secured Parties shall indemnify upon demand the
Agent and its agents, pro rata, from and against any and all actions, causes of
actions, suits, losses, liabilities, damages and expenses, including reasonable
attorney’s fees, other than those resulting from the Agent or its agents gross
negligence or willful misconduct.  The Agent shall not be required to
advance, expend or risk its own funds or otherwise incur personal liability in
the performance of its duties or in the exercise of any rights or remedies
hereunder.  All funds expended by the Agent hereunder (including,
without limitation, funds expended for reasonable attorney’s fees) shall be
promptly reimbursed by the Debtor and/or the Secured Parties upon demand from
the Agent (together with interest thereon at a rate per annum equal to 8% from
ten days following the date of demand).  Nothing shall limit or
restrict the right of the Agent in its individual capacity to be a holder of
Notes and to exercise its rights thereunder, including, without limitation, its
right to vote as a Secured Party as part of the Required Secured
Parties.  The Agent shall not be liable or responsible in any way for
any diminution in the value of the Collateral or any act or default of any
warehouseman, carrier, forwarding agency or other Person whomsoever, but the
same shall be at the sole risk of the Debtor and/or the Secured
Parties.  Unless instructed in writing by the Required Secured Parties
and indemnified by the Secured Parties, the Agent shall not be responsible for
effecting any filings with the United States Patent and Trademark Office or the
United States Copyright Office with respect to any of the
Collateral.  The Agent makes no representation or warranty as to the
validity, sufficiency or enforceability hereof or of the Collateral or as to the
value, title, condition or adequacy of insurance on, or otherwise with respect
to, the Collateral.  The Agent shall not be accountable to anyone for
the use or application of the proceeds of the Notes.  The Agent makes
no representation or warranty as to the attachment, perfection or priority of
the security interests and liens contemplated hereby.

     

    13.           Resignation
of Agent.   The Agent
may resign at any time by giving twenty (20) days prior written notice thereof
to the Secured Parties and the Debtor.  Upon any such resignation, the
Required Secured Parties shall have the right to appoint a successor
Agent.  Unless an Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the
Debtor.  If no successor Agent shall have been so appointed by the
Required Secured Parties and shall have accepted such appointment within fifteen
(15) days after the retiring Agent’s giving of notice of resignation, then the
retiring Agent may, on behalf of the Secured Parties, appoint a successor
Agent.  If no such successor can be found or appointed, a successor
Agent may be appointed, upon application of the retiring Agent or any Secured
Party, by any court of competent jurisdiction.  Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder.

    

    14.           Severability.  Any provision of
this Security Agreement that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.  All covenants and other agreements contained in this
Security Agreement by or on behalf of any of the parties hereto bind and inure
to the benefit of their respective successors and assigns whether so expressed
or not.

    

    15.           Paragraph
Headings.  The paragraph
headings used in this Security Agreement are for convenience of reference only
and are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.  This Security Agreement may be executed in
any number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument.  Each counterpart may
consist of a number of copies hereof, each signed by less than all, but together
signed by all, of the parties hereto.

    

    16.           No
Waiver; Cumulative Remedies.  The Agent shall not, by any
act (except by a written instrument), delay, indulgence, omission or otherwise,
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any default or in any breach of any of the terms and conditions
hereof.  No failure to exercise, nor any delay in exercising, on the
part of the Agent, of any right, power or privilege hereunder shall operate as a
waiver thereof.  No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  A waiver by the
Agent or any Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy that the Agent would
otherwise have on any future occasion.  The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.  THIS SECURITY AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW
PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

    

    17.           Notices.  Notices hereunder
shall be given to the Debtor, the Agent and each Secured Party in the manner set
forth in the Purchase Agreement of even date herewith between the Debtor and
each of the Secured Parties and at the addresses set forth therein.

     

    18.           Termination.  Upon the
repayment in full of all Obligations, this Security Agreement shall terminate,
the Secured Parties shall deliver any release of the Encumbrances created under
this Security Agreement that Debtor may reasonably request (at the cost of the
Debtor) and the Secured Parties shall return to the Debtor all Collateral then
in its possession, custody or control, and this Security Agreement shall
terminate without further action by the parties hereto and be of no further
force and effect.

     

    
 

    [Signature pages
follow.]

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
 

    IN WITNESS WHEREOF, the
parties hereto have caused this Security Agreement 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:  BlueLine
      Partners, LLC,

            

    

    
      	
               
      

            	
                                  its
      General Partner

            

    

    

    By:  /s/ Scott A.
Shuda                                                                           

    Name:  Scott
A. Shuda

    
      	
               
      

            	
              Title:  Managing
      Director

            

    

    

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    OMNIBUS
SIGNATURE PAGE TO

    AXS-ONE,
INC.

    SECURITY
AGREEMENT

    

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

     

    Print
Name:     BlueLine Capital Partners
III, LP

    

    By:                   BlueLine
Partners II, LP,

    Its General Partner

    

    By:                   /s/ Scott A.
Shuda                                                       

    Name:              Scott A.
Shuda                                                       

    Title:                Managing
Director                                                       

    

    

    

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    OMNIBUS
SIGNATURE PAGE TO

    AXS-ONE,
INC.

    SECURITY
AGREEMENT

    

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

     

    

    Print
Name:     Harold D.
Copperman

    

    

    By:                   /s/ Harold D.
Copperman                                                       

    Name:              Harold D.
Copperman                                                       

    Title:                   

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    OMNIBUS
SIGNATURE PAGE TO

    AXS-ONE,
INC.

    SECURITY
AGREEMENT

    

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

     

    Print
Name:    Jurika Family Trust U/A
1989

    

    

    By:                   /s/ William K.
Jurika                                                       

    Name:              William K.
Jurika                                                       

    Title:                Trustee                                                       

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

    OMNIBUS
SIGNATURE PAGE TO

    AXS-ONE,
INC.

    SECURITY
AGREEMENT

    

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

     

    

    
      	
               
      

            	
              Print
      Name:

            	
              Primafides
      (Suisse) S.A. as Trustees of Sirius
Trust

            

    

    

    By:                   /s/ N.
Mijsud      /s/ P. DeSalis

    Name:              Primafides (Suisse) S.A. as
Trustees of Sirius Trust

    Title:                Directors                                                       

    

    

    

    
      
         

      

      
        14ex10-6.htm

Exhibit
10.6

     

    FOURTH
AMENDMENT TO

    SERIES A
6% SECURED CONVERTIBLE PROMISSORY NOTE

    

    This Fourth Amendment, dated June 26,
2009, (this “Amendment”) amends
certain provisions of the Series A 6% Secured Convertible Promissory Note in the
original principal amount of $[_______], issued by AXS-One Inc., a Delaware
corporation (the “Company”) (No.
PN-2007-A-[_]), due May 29, 2009 and dated as of May 29, 2007 (as amended
pursuant to the Prior Amendments (as defined below) and the Omnibus Agreement
(as defined below), the “Note”), and is by and
between the Company and [_______________] (the “Holder”).  Terms
not otherwise defined herein which are defined in the Note shall have the same
respective meanings herein as therein.

    

    WHEREAS, the Note was previously
amended pursuant to an Amendment to Series A 6% Secured Convertible Promissory
Note due May 29, 2009, dated November 16, 2007, a Second Amendment to Series A
6% Secured Convertible Promissory Note due May 29, 2009, dated July 24, 2008,
and a Third Amendment to Series A 6% Secured Convertible Note due May 29, 2009,
dated October 30, 2008, in each case, by and between the Company and the Holder
(together, the “Prior
Amendments”);

    

    WHEREAS, the Note was previously
further amended pursuant to the Omnibus Amendment (the “Omnibus Agreement”)
made and entered into as of May 29, 2009 among the Company, the Holder and each
of the other investors a party thereto;

    

    WHEREAS,
on the date hereof, the Company issued in favor of certain purchasers (the
“Purchasers”)
promissory notes, in the aggregate principal amount of up to Two Hundred Fifty
Thousand Dollars ($250,000) (collectively the “June 2009 Notes”),
and such June 2009 Notes were issued pursuant to the terms of a Standby
Convertible Purchase Agreement dated as of the date hereof, among the Company
and such Purchasers; and

    

    WHEREAS,
the Company and the Holder have agreed to modify certain terms and conditions of
the Note as specifically set forth in this Amendment.

    

    NOW,
THEREFORE, in consideration of the mutual agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

    

    1.           Amendments to the
Note.

    

    (a)           The
first paragraph of the header of the Note is hereby amended in its entirety to
read as follows:

    

    “THIS
NOTE AND THE RIGHTS PROVIDED HEREIN ARE SUBJECT IN ALL RESPECTS TO THE TERMS OF
THE THIRD AMENDED AND RESTATED SUBORDINATION AGREEMENT OF EVEN DATE HEREWITH
AMONG THE AGENT OF THE PAYEE, THE AGENT OF THE HOLDERS OF THE SERIES 2009 5%
SECURED CONVERTIBLE PROMISSORY NOTES, THE AGENT OF THE HOLDERS OF THE SERIES A
6% SECURED CONVERTIBLE PROMISSORY NOTES, THE SERIES B 6% SECURED CONVERTIBLE
PROMISSORY NOTES, THE SERIES C 6% SECURED CONVERTIBLE PROMISSORY NOTES (THE
“NOVEMBER 2007 NOTES”), THE SERIES D 6% SECURED CONVERTIBLE PROMISSORY NOTES
(THE “JULY 2008 NOTES”) AND THE SERIES E 6% SECURED CONVERTIBLE PROMISSORY NOTES
(THE “OCTOBER 2008 NOTES”) AND SAND HILL FINANCE, LLC.”

    

    (b)           The
reference to “July 31, 2009” in Section 1(a) of the Note is hereby amended and
replaced with “June 30, 2010”.

    

    (c)           The
following Section 6(h) is added to Section 6 of the Note following Section 6(g)
thereof:

    

    “(h)           The
occurrence of any Event of Default under the June 2009 Notes (as Event of
Default is defined in such June 2009 Notes). “June 2009 Notes”
shall mean those Series 2009 5% Secured Convertible Promissory Notes issued and
sold by the Company pursuant to that certain Standby Convertible Note Purchase
Agreement by and among the Company and those purchasers as listed therein, dated
on or around June 26, 2009.”

    

    (d)           Section
12 of the Note is hereby deleted in its entirety and replaced with the
following:

    

    “12.           Amendments.  This
Note may not be waived, modified or amended in any manner except in writing
executed by the Company and the Majority Noteholders (as defined below) which
writing shall be binding upon the Payee regardless of whether the Payee is among
the holders actually executing such writing; provided that any such waiver,
modification or amendment that would have a materially disproportionate adverse
effect on the Payee’s rights hereunder compared to the holders of the other
Promissory Notes, the November 2007 Notes, the July 2008 Notes and the October
2008 Notes shall require execution by the Payee.  “Majority Noteholders”
shall mean the holders of a majority-in-interest of principal amount of all
then-outstanding Promissory Notes, the November 2007 Notes, the July 2008 Notes
and the October 2008 Notes.”

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
 

    (e)           The
second paragraph of Section 19 of the Note is hereby amended in its entirety to
read as follows:

    

    “THIS
NOTE AND THE RIGHTS PROVIDED HEREIN ARE SUBJECT IN ALL RESPECTS TO THE TERMS OF
THE THIRD AMENDED AND RESTATED SUBORDINATION AGREEMENT OF EVEN DATE HEREWITH
AMONG THE AGENT OF THE PAYEE, THE AGENT OF THE HOLDERS OF THE SERIES 2009 5%
SECURED CONVERTIBLE PROMISSORY NOTES, THE AGENT OF THE HOLDERS OF THE SERIES A
6% SECURED CONVERTIBLE PROMISSORY NOTES, THE SERIES B 6% SECURED CONVERTIBLE
PROMISSORY NOTES, THE SERIES C 6% SECURED CONVERTIBLE PROMISSORY NOTES (THE
“NOVEMBER 2007 NOTES”), THE SERIES D 6% SECURED CONVERTIBLE PROMISSORY NOTES
(THE “JULY 2008 NOTES”) AND THE SERIES E 6% SECURED CONVERTIBLE PROMISSORY NOTES
(THE “OCTOBER 2008 NOTES”) AND SAND HILL FINANCE, LLC.”

    

    2.           Acknowledgment and
Waiver.  Notwithstanding the provisions of Section 4 of the
Note, the Holder hereby acknowledges that the June 2009 Notes issued pursuant to
the Standby Convertible Note Purchase Agreement shall be senior to the
indebtedness evidenced by the Note, and the Holder hereby waives any rights or
claims that such issuance constitutes or gives rise to an Event of Default or
that the Company is otherwise in violation of the Note or any related agreements
as a result of such issuance.

    

    3.           Ratification,
Etc.  Except as expressly amended hereby, all terms and
conditions of the Note, as amended, are hereby ratified and confirmed in all
respects and shall continue in full force and effect.  The obligations
under the Note shall be deemed to be continuously outstanding and shall not be
deemed to have been repaid and readvanced or refinanced hereunder or
hereby.  The Note, the Prior Amendments, the Omnibus Agreement and
this Amendment shall be read and construed as a single agreement.  All
references to the Note shall hereafter refer to such Note, as amended pursuant
to the Prior Amendments, the Omnibus Agreement and hereby.

    

    4.           No
Novation.  THE COMPANY AND THE HOLDER HAVE ENTERED INTO THIS
AMENDMENT SOLELY TO AMEND CERTAIN OF THE TERMS OF THE NOTE.  THEY DO
NOT INTEND THIS AMENDMENT NOR THE TRANSACTIONS CONTEMPLATED HEREBY TO BE, AND
THIS AMENDMENT AND THE TRANSACTION CONTEMPLATED HEREBY SHALL NOT BE CONSTRUED TO
BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING UNDER OR IN CONNECTION WITH THE
NOTE.

    

    5.           No
Waiver.  Except as expressly set forth herein, nothing
contained herein shall constitute a waiver of, impair or otherwise affect, any
obligation of the Company under any Note or any rights of any Holder consequent
thereon.

    

    6.           Counterparts; Facsimile
Execution.  This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.  In the event that any
signature is delivered by facsimile or other means of electronic image
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 signature page were an original
thereof.

    

    7.           Governing
Law.  This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York (without reference to
conflict of laws).

    

    

    [Signature page
follows.]

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

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

    

    Company:

    

    
      	
               
      

            	
              AXS-ONE
      INC.

            

    

     

    
      	
               
      

            	
              By:

            	___________________________

    

    Name:

    Title:

     

    

    

    
      	
               
      

            	
              Holder:

            

    

    

    
      	
               
      

            	
              Print
      Exact
Name:  ____________________

            

    

    

    

    
      	
               
      

            	
              By:  ___________________________

            

    

    Name:

    Title:

    

    

    

     

    

    

    

    

    

    

    

    

    [Signature Page to Fourth Amendment
to

    Series A 6% Secured Convertible
Promissory Note]

    

    
      
        
        

      

      
        3

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