Document:

INVESTOR RIGHTS AGREEMENT
	 

	 
		This Investor Rights Agreement (this
		“Agreement”) is made and entered into as of May 29, 2007 among
		AXS-One Inc., a Delaware corporation (the “Company”), and each of the
		purchasers executing this Agreement and listed on Schedule 1
		attached hereto (collectively, the “Purchasers”). 
	 

	 
		This Agreement is being entered into
		pursuant to the Convertible Note and Warrant Purchase Agreement, dated as of
		the date hereof, by and among the Company and the Purchasers (the
		“Purchase Agreement”).
	 

	 
		The Company and the Purchasers hereby agree
		as follows: 
	 

	 
		1. Definitions.
	 

	 
		Capitalized terms used and not otherwise
		defined herein shall have the meanings given such terms in the Purchase
		Agreement. As used in this Agreement, the following terms shall have the
		following meanings: 
	 

	 
		“Advice”
		shall have the meaning set forth in Section 3(m).
	 

	 
		“Affiliate”
		means, with respect to any Person, any other Person that directly or indirectly
		controls or is controlled by or under common control with such Person. For the
		purposes of this definition, “control,” when used with respect to any
		Person, means the possession, direct or indirect, of the power to direct or
		cause the direction of the management and policies of such Person, whether
		through the ownership of voting securities, by contract or otherwise; and the
		terms of “affiliated,” “controlling” and
		“controlled” have meanings correlative to the foregoing.
	 

	 
		“AMEX” shall
		mean the American Stock Exchange.
	 

	 
		“Blackout Period” shall have the meaning set forth in Section
		3(n).
	 

	 
		“Board”
		shall have the meaning set forth in Section 3(n). 
	 

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

	 
		“Commission”
		means the Securities and Exchange Commission. 
	 

	 
		“Common Stock” means the Company’s Common Stock, par value
		$0.01 per share.
	 

	 
		“Conversion Shares” means the shares of Common Stock issuable upon
		conversion of the Notes purchased by the Purchasers pursuant to the Purchase
		Agreement.
	 

	 
		“Effectiveness Period” shall have the meaning set forth in Section
		2.
	 

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

	 
		 
	 

	 
		 
	 

	 
		

	 

	 
		 
	 

	 
	 

	 

	 
		“Filing Date” means July 13, 2007.
	 

	 
		“Holder” or
		“Holders” means the holder or holders, as the case may be,
		from time to time of Registrable Securities, including without limitation the
		Purchasers and their assignees. 
	 

	 
		“Indemnified Party” shall have the meaning set forth in Section
		5(c).
	 

	 
		“Indemnifying Party” shall have the meaning set forth in Section
		5(c).
	 

	 
		“Losses”
		shall have the meaning set forth in Section 5(a). 
	 

	 
		“Notes”
		means the Secured Convertible Promissory Notes issued to the Purchasers
		pursuant to the Purchase Agreement.
	 

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

	 
		“Proceeding”
		means an action, claim, suit, investigation or proceeding (including, without
		limitation, an investigation or partial proceeding, such as a deposition),
		whether commenced or threatened. 
	 

	 
		“Prospectus”
		means the prospectus included in any Registration Statement (including, without
		limitation, a prospectus that includes any information previously omitted from
		a prospectus filed as part of an effective registration statement in reliance
		upon Rule 430A promulgated under the Securities Act), as amended or
		supplemented by any prospectus supplement, with respect to the terms of the
		offering of any portion of the Registrable Securities covered by such
		Registration Statement, and all other amendments and supplements to the
		Prospectus, including post-effective amendments, and all material incorporated
		by reference in such Prospectus.
	 

	 
		“Registrable Securities” means (a) the Conversion Shares and the Warrant
		Shares (without regard to any limitations on beneficial ownership contained in
		the Note or the Warrants) or other securities issued or issuable to each
		Purchaser or its transferee or designee (i) upon conversion of the Notes and/or
		upon exercise of the Warrants, or (ii) upon any dividend or distribution with
		respect to, any exchange for or any replacement of such Notes, Conversion
		Shares, Warrants or Warrant Shares or (iii) upon any conversion, exercise or
		exchange of any securities issued in connection with any such distribution,
		exchange or replacement; (b) securities issued or issuable upon any stock
		split, stock dividend, recapitalization or similar event with respect to the
		foregoing; and (c) any other security issued as a dividend or other
		distribution with respect to, in exchange for, in replacement or redemption of,
		or in reduction of the liquidation value of, any of the securities referred to
		in the preceding clauses; provided, however, that such securities shall cease
		to be Registrable Securities when such securities have been sold to or through
		a broker or dealer or underwriter in a public distribution or a public
		securities transaction or when such securities may be sold without any
		restriction pursuant to Rule 144(k) as determined by the counsel to the Company
		pursuant to a written opinion letter, addressed to the Company’s transfer
		agent 
	 

	 
		 
	 

	 
		 
	 

	 
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		to such effect as described in Section 2 of
		this Agreement.
	 

	 
		“Registration Statement” means the registration statements and any
		additional registration statements contemplated by Section 2, including (in
		each case) the Prospectus, amendments and supplements to such registration
		statement or Prospectus, including pre- and post-effective amendments, all
		exhibits thereto, and all material incorporated by reference in such
		registration statement.
	 

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

	 
		 “Rule 415”
		means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
		such Rule may be amended from time to time, or any similar rule or regulation
		hereafter adopted by the Commission having substantially the same effect as
		such Rule.
	 

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

	 
		“Warrants”
		means the Common Stock purchase warrants issued pursuant to the Purchase
		Agreement.
	 

	 
		“Warrant Shares” means the shares of Common Stock issuable upon
		the exercise of the Warrants issued or to be issued to the Purchasers or their
		assignees or designees in connection with the offering consummated under the
		Purchase Agreement. 
	 

	 
		2. Registration. As
		soon as possible following the Closing Date (but not later than the Filing
		Date), the Company shall prepare and file with the Commission a
		“shelf” Registration Statement covering all Registrable Securities
		for a secondary or resale offering to be made on a continuous basis pursuant to
		Rule 415. The Registration Statement shall be on Form S-3 (or if such form is
		not available to the Company on another form appropriate for such registration
		in accordance herewith). The Company shall use its reasonable best efforts to
		cause the Registration Statement to be declared effective under the Securities
		Act not later than ninety (90) days after the Closing Date (including filing
		with the Commission a request for acceleration of effectiveness in accordance
		with Rule 461 promulgated under the Securities Act within five (5) Business
		Days of the date that the Company is notified (orally or in writing, whichever
		is earlier) by the Commission that a Registration Statement will not be
		“reviewed,” or not be subject to further review) and to keep such
		Registration Statement continuously effective under the Securities Act until
		such date as is the earlier of (x) the date when all Registrable Securities
		covered by such Registration Statement have been sold or (y) with respect to
		such Holder, such time as all Registrable Securities held by such Holder may be
		sold without any restriction pursuant to Rule 144(k) as determined by the
		counsel to the Company pursuant to a written opinion letter, addressed to the
		Company’s transfer agent to such effect (the “Effectiveness
		Period”). For purposes of the obligations of the Company under this
		Agreement, no Registration Statement shall be considered “effective”
		with respect to any Registrable Securities unless such Registration Statement
		lists 
	 

	 
		 
	 

	 
		 
	 

	 
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		the Holders of such Registrable Securities
		as “Selling Stockholders” and includes such other information as is
		required to be disclosed with respect to such Holders to permit them to sell
		their Registrable Securities pursuant to such Registration Statement, unless
		any such Holder is not included as a “Selling Stockholder” pursuant
		to Section 3(m). Such Registration Statement also shall cover, to the extent
		allowable under the Securities Act and the Rules promulgated thereunder
		(including Securities Act Rule 416), such indeterminate number of additional
		shares of Common Stock resulting from stock splits, stock dividends or similar
		transactions with respect to the Registrable Securities.
	 

	 
		3. Registration Procedures.
	 

	 
		In connection with the Company’s
		registration obligations hereunder, the Company shall:
	 

	 
		(a) Prepare and file with the Commission on
		or prior to the Filing Date, a Registration Statement on Form S-3 (or if such
		form is not available to the Company on another form appropriate for such
		registration in accordance herewith) (which shall include a Plan of
		Distribution substantially in the form of Exhibit A
		attached hereto), and cause the Registration Statement to become effective and
		remain effective as provided herein; provided, however, that not less than
		three (3) Business Days prior to the filing of the Registration Statement or
		any related Prospectus or any amendment or supplement thereto, the Company
		shall (i) furnish to the Holders or their counsel, copies of all such documents
		proposed to be filed, which documents (other than those incorporated by
		reference) will be subject to the review of the Holders or their counsel, and
		(ii) at the request of any Holder cause its officers and directors, counsel and
		independent certified public accountants to respond to such inquiries as shall
		be necessary, in the reasonable opinion of counsel to such Holders, to conduct
		a reasonable investigation within the meaning of the Securities Act. The
		Company shall not file the Registration Statement or any such Prospectus or any
		amendments or supplements thereto to which the Holders of a majority of the
		Registrable Securities or their counsel shall reasonably object within three
		(3) Business Days after their receipt thereof. In the event of any such
		objection, the Holders shall provide the Company with any requested revisions
		to such prospectus or supplement within two (2) Business Days of such
		objection.
	 

	 
		(b) (i) Prepare and file with the Commission
		such amendments, including post-effective amendments, to the Registration
		Statement as may be necessary to keep the Registration Statement continuously
		effective as to the applicable Registrable Securities for the Effectiveness
		Period and to the extent any Registrable Securities are not included in such
		Registration Statement for reasons other than the failure of the Holder to
		comply with Section 3(m) hereof, shall prepare and file with the Commission
		such amendments to the Registration Statement or such additional Registration
		Statements in order to register for resale under the Securities Act all
		Registrable Securities; (ii) cause the related Prospectus to be amended or
		supplemented by any required Prospectus supplement, and as so supplemented or
		amended to be filed pursuant to Rule 424 (or any similar provisions then in
		force) promulgated under the Securities Act; (iii) respond as promptly as
		reasonably practicable to any comments received from the Commission with
		respect to the Registration Statement or any amendment thereto and as promptly
		as reasonably practicable provide the 
	 

	 
		 
	 

	 
		 
	 

	 
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		Holders true and complete copies of all
		correspondence from and to the Commission relating to the Registration
		Statement, but not, without the prior written consent of the Holders, any
		comments that would result in the disclosure to the Holders of material and
		non-public information concerning the Company; and (iv) comply in all material
		respects with the provisions of the Securities Act and the Exchange Act with
		respect to the disposition of all Registrable Securities covered by the
		Registration Statement during the applicable period in accordance with the
		intended methods of disposition by the Holders thereof set forth in the
		Registration Statement as so amended or in such Prospectus as so
		supplemented.
	 

	 
		(c) Notify Holders of Registrable Securities
		to be sold as promptly as reasonably practicable (A) when a Prospectus or any
		Prospectus supplement or post-effective amendment to the Registration Statement
		is proposed to be filed; (B) when the Commission notifies the Company whether
		there will be a “review” of such Registration Statement and whenever
		the Commission comments in writing on such Registration Statement; and (C) with
		respect to the Registration Statement or any post-effective amendment, when the
		same has become effective, and after the effectiveness thereof: (i) of any
		request by the Commission or any other Federal or state governmental authority
		for amendments or supplements to the Registration Statement or Prospectus or
		for additional information; (ii) of the issuance by the Commission of any stop
		order suspending the effectiveness of the Registration Statement covering any
		or all of the Registrable Securities or the initiation of any Proceedings for
		that purpose; (iii) of the receipt by the Company of any notification with
		respect to the suspension of the qualification or exemption from qualification
		of any of the Registrable Securities for sale in any jurisdiction, or the
		initiation or threatening of any Proceeding for such purpose; and (iv) if the
		financial statements included in the Registration Statement become ineligible
		for inclusion therein or of the occurrence of any event that makes any
		statement made in the Registration Statement or Prospectus or any document
		incorporated or deemed to be incorporated therein by reference untrue in any
		material respect or that requires any revisions to the Registration Statement,
		Prospectus or other documents so that, in the case of the Registration
		Statement or the Prospectus, as the case may be, it will not contain any untrue
		statement of a material fact or omit to state any material fact required to be
		stated therein or necessary to make the statements therein, in the light of the
		circumstances under which they were made, not misleading. Without limitation to
		any remedies to which the Holders may be entitled under this Agreement, if any
		of the events described in Section 3(c)(C)(i), 3(c)(C)(ii), 3(c)(C)(iii) or
		3(c)(C)(iv) occur, the Company shall use its reasonable best efforts to respond
		to and correct the event.
	 

	 
		(d) Use its reasonable best efforts to avoid
		the issuance of, or, if issued, use reasonable best efforts to obtain the
		withdrawal of, (i) any order suspending the effectiveness of the Registration
		Statement or (ii) any suspension of the qualification (or exemption from
		qualification) of any of the Registrable Securities for sale in any
		jurisdiction, at the earliest practicable time. 
	 

	 
		(e) If requested by any Holder of
		Registrable Securities, (i) promptly incorporate in a Prospectus supplement or
		post-effective amendment to the Registration Statement such information as the
		Company reasonably agrees should be included therein and (ii) make all required
		filings of such Prospectus supplement or such post-effective amendment as soon
		as reasonably practicable after the Company has received notification of the
		matters to be 
	 

	 
		 
	 

	 
		 
	 

	 
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		incorporated in such Prospectus supplement
		or post-effective amendment.
	 

	 
		(f) Furnish to each Holder, without charge,
		at least one conformed copy of each Registration Statement and each amendment
		thereto, including financial statements and schedules, and all exhibits to the
		extent requested by such Person (including those previously furnished or
		incorporated by reference) promptly after the filing of such documents with the
		Commission.
	 

	 
		(g) Promptly deliver to each Holder, without
		charge, as many copies of the Prospectus or Prospectuses (including each form
		of prospectus) and each amendment or supplement thereto as such Persons may
		reasonably request; and the Company hereby consents to the use of such
		Prospectus and each amendment or supplement thereto by each of the selling
		Holders in connection with the offering and sale of the Registrable Securities
		covered by such Prospectus and any amendment or supplement thereto. 
	 

	 
		(h) Prior to any public offering of
		Registrable Securities, use its reasonable best efforts to register or qualify
		or cooperate with the selling Holders in connection with the registration or
		qualification (or exemption from such registration or qualification) of such
		Registrable Securities for offer and sale under the securities or Blue Sky laws
		of such jurisdictions within the United States as any Holder requests in
		writing, to keep each such registration or qualification (or exemption
		therefrom) effective during the Effectiveness Period and to do any and all
		other acts or things necessary or advisable to enable the disposition in such
		jurisdictions of the Registrable Securities covered by a Registration
		Statement; provided, however, that the Company shall not be required to qualify
		generally to do business in any jurisdiction where it is not then so qualified
		or to take any action that would subject it to general service of process in
		any jurisdiction where it is not then so subject or subject the Company to any
		material tax in any such jurisdiction where it is not then so subject.
	 

	 
		(i) Cooperate with the Holders to facilitate
		the timely preparation and delivery of certificates representing Registrable
		Securities to be sold pursuant to a Registration Statement, which certificates
		shall be free, to the extent permitted by applicable law and the Purchase
		Agreement, of all restrictive legends, and to enable such Registrable
		Securities to be in such denominations and registered in such names as any
		Holder may request at least two (2) Business Days prior to any sale of
		Registrable Securities.
	 

	 
		(j) Following the occurrence of any event
		contemplated by Section 3(c)(C)(iv), as promptly as possible, prepare a
		supplement or amendment, including a post-effective amendment, to the
		Registration Statement or a supplement to the related Prospectus or any
		document incorporated or deemed to be incorporated therein by reference, and
		file any other required document so that, as thereafter delivered, neither the
		Registration Statement nor such Prospectus will contain an untrue statement of
		a material fact or omit to state a material fact required to be stated therein
		or necessary to make the statements therein, in the light of the circumstances
		under which they were made, not misleading.
	 

	 
		(k) Cause all Registrable Securities
		relating to such Registration Statement to be listed on any United States
		securities exchange, quotation system, market or over-the-
	 

	 
		 
	 

	 
		 
	 

	 
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		counter bulletin board on which similar
		securities issued by the Company are then listed.
	 

	 
		(l) Comply in all material respects with all
		applicable rules and regulations of the Commission with respect to the
		Registration Statement.
	 

	 
		(m) Request each selling Holder to furnish
		to the Company information regarding such Holder and the distribution of such
		Registrable Securities as is required by law or the Commission to be disclosed
		in the Registration Statement, and the Company may exclude from such
		registration the Registrable Securities of any such Holder who fails to furnish
		such information within a reasonable time prior to the filing of each
		Registration Statement, supplemented Prospectus and/or amended Registration
		Statement.
	 

	 
		If the Registration Statement refers to any
		Holder by name or otherwise as the holder of any securities of the Company,
		then such Holder shall have the right to require (if such reference to such
		Holder by name or otherwise is not required by the Securities Act or any
		similar federal statute then in force) the deletion of the reference to such
		Holder in any amendment or supplement to the Registration Statement filed or
		prepared subsequent to the time that such reference ceases to be
		required.
	 

	 
		Each Holder agrees by its acquisition of
		such Registrable Securities that, upon receipt of a notice from the Company of
		the occurrence of any event of the kind described in Section 3(c)(C)(i),
		3(c)(C)(ii), 3(c)(C)(iii), 3(c)(C)(iv), or 3(n), such Holder will forthwith
		discontinue disposition of such Registrable Securities under the Registration
		Statement until such Holder’s receipt of the copies of the supplemented
		Prospectus and/or amended Registration Statement contemplated by Section 3(j),
		or until it is advised in writing (the “Advice”) by the Company that
		the use of the applicable Prospectus may be resumed, and, in either case, has
		received copies of any additional or supplemental filings that are incorporated
		or deemed to be incorporated by reference in such Prospectus or Registration
		Statement.
	 

	 
		(n) If (i) there is material non-public
		information regarding the Company which the Company’s Board of Directors
		(the “Board”) reasonably determines not to be in the Company’s
		best interest to disclose and which the Company is not otherwise required to
		disclose, or (ii) there is a significant business opportunity (including, but
		not limited to, the acquisition or disposition of assets (other than in the
		ordinary course of business) or any merger, consolidation, tender offer or
		other similar transaction) available to the Company which the Board reasonably
		determines not to be in the Company’s best interest to disclose and which
		the Company would be required to disclose under the Registration Statement,
		then the Company may (i) postpone or suspend filing or effectiveness of a
		registration statement or (ii) notify the Holders that the Registration
		Statement may not be used in connection with any sales of the Company’s
		securities, in each case, for a period not to exceed 30 consecutive days,
		provided that the Company may not postpone or suspend its obligation under this
		Section 3(n) for more than 60 days in the aggregate during any 12 month period
		(each, a “Blackout Period”).
	 

	 
		 
	 

	 
		 
	 

	 
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		4. Registration Expenses.
	 

	 
		All fees and expenses incident to the
		performance of or compliance with this Agreement by the Company shall be borne
		by the Company whether or not the Registration Statement is filed or becomes
		effective and whether or not any Registrable Securities are sold pursuant to
		the Registration Statement. The fees and expenses referred to in the foregoing
		sentence shall include, without limitation, (i) all registration and filing
		fees (including, without limitation, fees and expenses (A) with respect to
		filings required to be made with AMEX and each other securities exchange,
		quotation system, market or over-the-counter bulletin board on which
		Registrable Securities are required hereunder to be listed, (B) with respect to
		filings required to be made with the Commission, and (C) in compliance with
		state securities or Blue Sky laws), (ii) printing expenses (including, without
		limitation, expenses of printing certificates for Registrable Securities and of
		printing or photocopying prospectuses), (iii) messenger, telephone and delivery
		expenses, (iv) Securities Act liability insurance, if the Company so desires
		such insurance, and (v) fees and expenses of all other Persons retained by the
		Company in connection with the consummation of the transactions contemplated by
		this Agreement, including, without limitation, the Company’s independent
		public accountants (including, in the case of an underwritten offering, the
		expenses of any comfort letters or costs associated with the delivery by
		independent public accountants of a comfort letter or comfort letters) and
		legal counsel. In addition, the Company shall be responsible for all of its
		internal expenses incurred in connection with the consummation of the
		transactions contemplated by this Agreement (including, without limitation, all
		salaries and expenses of its officers and employees performing legal or
		accounting duties), the expense of any annual audit, the fees and expenses
		incurred in connection with the listing of the Registrable Securities on any
		securities exchange as required hereunder. The Company shall reimburse the
		Holders for the reasonable fees and disbursements of one firm or counsel
		designated by the Holders of at least a majority of the Registrable Securities
		to act as counsel for the Holders in connection with the Registration Statement
		or any piggyback registration under Section 7(d); provided, that the
		Company’s reimbursement obligation for such reasonable fees and
		disbursements shall not exceed $5,000. Notwithstanding the foregoing or
		anything in this Agreement to the contrary, each Holder shall pay all
		underwriting discounts and commissions with respect to any Registrable
		Securities sold by it.
	 

	 
		5. Indemnification.
	 

	 
		(a) Indemnification by the Company.
		The Company shall, notwithstanding any termination of this Agreement, indemnify
		and hold harmless each Holder, the officers, directors, agents, brokers
		(including brokers who offer and sell Registrable Securities as principal as a
		result of a pledge or any failure to perform under a margin call of Common
		Stock), investment advisors and employees of each of them, each Person who
		controls any such Holder (within the meaning of Section 15 of the Securities
		Act or Section 20 of the Exchange Act) and the officers, directors, agents and
		employees of each such controlling Person, to the fullest extent permitted by
		applicable law, from and against any and all losses, claims, damages,
		liabilities, costs (including, without limitation, costs of preparation and
		reasonable attorneys’ fees) and expenses (collectively,
		“Losses”), as incurred, arising out of or relating to any untrue or
		alleged untrue statement of a material fact contained or incorporated by
		reference in the Registration Statement, any Prospectus or any form of 
	 

	 
		 
	 

	 
		 
	 

	 
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		prospectus or in any amendment or supplement
		thereto or in any preliminary prospectus, or arising out of or relating to any
		omission or alleged omission of a material fact required to be stated therein
		or necessary to make the statements therein (in the case of any Prospectus or
		form of prospectus or amendment or supplement thereto, in the light of the
		circumstances under which they were made) not misleading, except to the extent,
		but only to the extent, that (i) such untrue statements or omissions are based
		solely upon information regarding such Holder furnished in writing to the
		Company by such Holder expressly for use therein, which information was
		reasonably relied on by the Company for use therein or to the extent that such
		information relates to (x) such Holder and was reviewed and expressly approved
		in writing by such Holder expressly for use in the Registration Statement, such
		Prospectus or such form of prospectus or in any amendment or supplement thereto
		or (y) such Holder’s proposed method of distribution of Registrable
		Securities as set forth in Exhibit A (or as such Holder otherwise
		informs the Company in writing); or (ii) in the case of an occurrence of an
		event of the type described in Section 3(c)(C)(ii), 3(c)(C)(iii), 3(c)(C)(iv)
		or 3(n), the use by a Holder of an outdated or defective Prospectus after the
		delivery to the Holder of written notice from the Company that the Prospectus
		is outdated or defective and prior to the receipt by such Holder of the Advice
		contemplated in Section 3(m); provided, however, that the indemnity agreement
		contained in this Section 5(a) shall not apply to amounts paid in settlement of
		any Losses if such settlement is effected without the prior written consent of
		the Company, which consent shall not be unreasonably withheld. Such indemnity
		shall remain in full force and effect regardless of any investigation made by
		or on behalf of an Indemnified Party (as defined in Section 5(c) to this
		Agreement) and shall survive the transfer of the Registrable Securities by the
		Holders.
	 

	 
		(b) Indemnification by Holders. Each
		Holder shall, severally and not jointly, indemnify and hold harmless the
		Company, its directors, officers, agents and employees, each Person who
		controls the Company (within the meaning of Section 15 of the Securities Act
		and Section 20 of the Exchange Act), and the directors, officers, agents and
		employees of such controlling Persons, to the fullest extent permitted by
		applicable law, from and against all Losses, as incurred, arising solely out of
		or based solely upon any untrue statement of a material fact contained in the
		Registration Statement, any Prospectus, or any form of prospectus, or in any
		amendment or supplement thereto, or arising solely out of or based solely upon
		any omission of a material fact required to be stated therein or necessary to
		make the statements therein (in the case of any Prospectus or form of
		prospectus or supplement thereto, in the light of the circumstances under which
		they were made) not misleading, to the extent, but only to the extent, that (i)
		such untrue statement or omission is contained in or omitted from any
		information so furnished in writing by such Holder to the Company specifically
		for inclusion in the Registration Statement or such Prospectus and that such
		information was reasonably relied upon by the Company for use in the
		Registration Statement, such Prospectus, or in any amendment or supplement
		thereto, or to the extent that such information relates to (x) such Holder and
		was reviewed and expressly approved in writing by such Holder expressly for use
		in the Registration Statement, such Prospectus, or such form of prospectus or
		in any amendment or supplement thereto or (y) such Holder’s proposed
		method of distribution of Registrable Securities as set forth in Exhibit A (or
		as such Holder otherwise informs the Company in writing), (ii) in the case of
		an occurrence of an event of the type described in Section 3(c)(C)(ii),
		3(c)(C)(iii), 3(c)(C)(iv) or 3(n), the use by a Holder of an outdated or
		defective Prospectus after the delivery to the Holder of written 
	 

	 
		 
	 

	 
		 
	 

	 
		9
	 

	 
		 
	 

	 
	 

	 

	 
		notice from the Company that the Prospectus
		is outdated or defective and prior to the receipt by such Holder of the Advice
		contemplated in Section 3(m) or (iii) such Holder’s failure to comply with
		the Prospectus delivery requirements of the Securities Act through no fault of
		the Company; provided, however, that the indemnity agreement contained in this
		Section 5(b) shall not apply to amounts paid in settlement of any Losses if
		such settlement is effected without the prior written consent of the Holder,
		which consent shall not be unreasonably withheld. Notwithstanding anything to
		the contrary contained herein, the Holder shall be liable under this Section
		5(b) for only that amount as does not exceed the net proceeds to such Holder as
		a result of the sale of Registrable Securities pursuant to such Registration
		Statement. 
	 

	 
		(c) Conduct of Indemnification
		Proceedings. If any Proceeding shall be brought or asserted against any
		Person entitled to indemnity hereunder (an “Indemnified Party”), such
		Indemnified Party promptly shall notify the Person from whom indemnity is
		sought (the “Indemnifying Party”) in writing, and the Indemnifying
		Party shall have the right to assume the defense thereof, including the
		employment of counsel reasonably satisfactory to the Indemnified Party and the
		payment of all reasonable fees and expenses incurred in connection with defense
		thereof; provided, that the failure of any Indemnified Party to give such
		notice shall not relieve the Indemnifying Party of its obligations or
		liabilities pursuant to this Agreement, except (and only) to the extent that it
		shall be finally determined by a court of competent jurisdiction (which
		determination is not subject to appeal or further review) that such failure
		shall have proximately and materially adversely prejudiced the Indemnifying
		Party. 
	 

	 
		An Indemnified Party shall have the right to
		employ separate counsel in any such Proceeding and to participate in the
		defense thereof, but the fees and expenses of such counsel shall be at the
		expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party
		has agreed in writing to pay such fees and expenses; or (2) the Indemnifying
		Party shall have failed promptly to assume the defense of such Proceeding and
		to employ counsel reasonably satisfactory to such Indemnified Party in any such
		Proceeding; or (3) the named parties to any such Proceeding (including any
		impleaded parties) include both such Indemnified Party and the Indemnifying
		Party, and such Indemnified Party shall have been advised in writing by counsel
		that a conflict of interest is likely to exist if the same counsel were to
		represent such Indemnified Party and the Indemnifying Party (in which case, if
		such Indemnified Party notifies the Indemnifying Party in writing that it
		elects to employ separate counsel at the expense of the Indemnifying Party, the
		Indemnifying Party shall not have the right to assume the defense thereof and
		such counsel shall be at the reasonable expense of the Indemnifying Party). The
		Indemnifying Party shall not be liable for any settlement of any such
		Proceeding effected without its written consent, which consent shall not be
		unreasonably withheld. No Indemnifying Party shall, without the prior written
		consent of the Indemnified Party, effect any settlement of any pending
		Proceeding in respect of which any Indemnified Party is a party, unless such
		settlement includes an unconditional release of such Indemnified Party from all
		liability on claims that are the subject matter of such Proceeding and does not
		impose any monetary or other obligation or restriction on the Indemnified
		Party. 
	 

	 
		All reasonable fees and expenses of the
		Indemnified Party (including reasonable fees 
	 

	 
		 
	 

	 
		 
	 

	 
		10
	 

	 
		 
	 

	 
	 

	 

	 
		and expenses to the extent incurred in
		connection with investigating or preparing to defend such Proceeding in a
		manner not inconsistent with this Section) shall be paid to the Indemnified
		Party, as incurred, within ten (10) Business Days of written notice thereof to
		the Indemnifying Party, which notice shall be delivered no more frequently than
		on a monthly basis (regardless of whether it is ultimately determined that an
		Indemnified Party is not entitled to indemnification hereunder; provided, that
		the Indemnifying Party may require such Indemnified Party to undertake to
		reimburse all such fees and expenses to the extent it is finally judicially
		determined that such Indemnified Party is not entitled to indemnification
		hereunder).
	 

	 
		(d) Contribution. If a claim for
		indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
		Party because of a failure or refusal of a governmental authority to enforce
		such indemnification in accordance with its terms (by reason of public policy
		or otherwise), then each Indemnifying Party, in lieu of indemnifying such
		Indemnified Party, shall contribute to the amount paid or payable by such
		Indemnified Party as a result of such Losses, in such proportion as is
		appropriate to reflect the relative fault of the Indemnifying Party and
		Indemnified Party in connection with the actions, statements or omissions that
		resulted in such Losses as well as any other relevant equitable considerations.
		The relative fault of such Indemnifying Party and Indemnified Party shall be
		determined by reference to, among other things, whether any action in question,
		including any untrue or alleged untrue statement of a material fact or omission
		or alleged omission of a material fact, has been taken or made by, or relates
		to information supplied by, such Indemnifying Party or Indemnified Party, and
		the parties’ relative intent, knowledge, access to information and
		opportunity to correct or prevent such action, statement or omission. The
		amount paid or payable by a party as a result of any Losses shall be deemed to
		include, subject to the limitations set forth in Section 5(c), any reasonable
		attorneys’ or other reasonable fees or expenses incurred by such party in
		connection with any Proceeding to the extent such party would have been
		indemnified for such fees or expenses if the indemnification provided for in
		this Section was available to such party in accordance with its terms.
		Notwithstanding anything to the contrary contained herein, the Holder shall be
		required to contribute under this Section 5(d) for only that amount as does not
		exceed the net proceeds to such Holder as a result of the sale of Registrable
		Securities pursuant to such Registration Statement. 
	 

	 
		The parties hereto agree that it would not
		be just and equitable if contribution pursuant to this Section 5(d) were
		determined by pro rata allocation or by any other method of allocation that
		does not take into account the equitable considerations referred to in the
		immediately preceding paragraph. No Person guilty of fraudulent
		misrepresentation (within the meaning of Section 11(f) of the Securities Act)
		shall be entitled to contribution from any Person who was not guilty of such
		fraudulent misrepresentation. 
	 

	 
		The indemnity and contribution agreements
		contained in this Section are in addition to any liability that the
		Indemnifying Parties may have to the Indemnified Parties. The indemnity and
		contribution agreements herein are in addition to and not in diminution or
		limitation of any indemnification provisions under the Purchase
		Agreement.
	 

	 
		 
	 

	 
		 
	 

	 
		11
	 

	 
		 
	 

	 
	 

	 

	 
		6. Rule 144.
	 

	 
		As long as any Holder owns Notes, Conversion
		Shares, Warrants or Warrant Shares, the Company covenants to timely file (or
		obtain extensions in respect thereof and file within the applicable grace
		period) all reports required to be filed by the Company after the date hereof
		pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as any Holder
		owns Notes, Conversion Shares, Warrants or Warrant Shares, if the Company is
		not required to file reports pursuant to Section 13(a) or 15(d) of the Exchange
		Act, it will prepare and furnish to the Holders and make publicly available in
		accordance with Rule 144(c) promulgated under the Securities Act annual and
		quarterly financial statements, together with a discussion and analysis of such
		financial statements in form and substance substantially similar to those that
		would otherwise be required to be included in reports required by Section 13(a)
		or 15(d) of the Exchange Act, as well as any other information required
		thereby, in the time period that such filings would have been required to have
		been made under the Exchange Act. The Company further covenants that it will
		take such further action as any Holder may reasonably request, all to the
		extent required from time to time to enable such Person to sell Notes,
		Conversion Shares, Warrants and Warrant Shares without registration under the
		Securities Act within the limitation of the exemptions provided by Rule 144
		promulgated under the Securities Act, including compliance with the provisions
		of the Purchase Agreement relating to the transfer of the Notes, Conversion
		Shares, Warrants and Warrant Shares. Upon the request of any Holder, the
		Company shall deliver to such Holder a written certification of a duly
		authorized officer as to whether it has complied with such requirements.
	 

	 
		7. Miscellaneous.
	 

	 
		(a) Remedies. In the event of a
		breach by the Company or by a Holder, of any of their obligations under this
		Agreement, each Holder or the Company, as the case may be, in addition to being
		entitled to exercise all rights granted by law and under this Agreement,
		including recovery of damages, will be entitled to specific performance of its
		rights under this Agreement. The Company and each Holder agree that monetary
		damages would not provide adequate compensation for any losses incurred by
		reason of a breach by it of any of the provisions of this Agreement and hereby
		further agrees that, in the event of any action for specific performance in
		respect of such breach, it shall waive the defense that a remedy at law would
		be adequate.
	 

	 
		(b) No Inconsistent Agreements.
		Except as otherwise disclosed in the Purchase Agreement, neither the Company
		nor any of its subsidiaries is a party to an agreement currently in effect, nor
		shall the Company or any of its subsidiaries, on or after the date of this
		Agreement, enter into any agreement with respect to its securities that is
		inconsistent with the rights granted to the Holders in this Agreement or
		otherwise conflicts with the provisions hereof.
	 

	 
		(c) Notice of Effectiveness. Within
		two (2) Business Days after the Registration Statement which includes the
		Registrable Securities is ordered effective by the Commission, the Company
		shall deliver, and shall cause legal counsel for the Company to deliver, to the
		transfer agent for such Registrable Securities (with copies to the Holders
		whose Registrable Securities are included in such Registration Statement)
		confirmation that the Registration Statement has been declared effective by the
		Commission.
	 

	 
		 
	 

	 
		 
	 

	 
		12
	 

	 
		 
	 

	 
	 

	 

	 
		(d) Piggy-Back Registrations. If at
		any time when there is not an effective Registration Statement covering all of
		the Registrable Securities, the Company shall determine to prepare and file
		with the Commission a registration statement relating to an offering for its
		own account or the account of others under the Securities Act of any of its
		equity securities, other than on Form S-4 or Form S-8 (each as promulgated
		under the Securities Act) or their then equivalents relating to equity
		securities to be issued solely in connection with any acquisition of any entity
		or business or equity securities issuable in connection with stock option or
		other employee benefit plans, the Company shall send to each Holder of
		Registrable Securities written notice of such determination and, if within
		seven (7) Business Days after receipt of such notice, any such Holder shall so
		request in writing (which request shall specify the Registrable Securities
		intended to be disposed of by the Holder), the Company will cause the
		registration under the Securities Act of all Registrable Securities which the
		Company has been so requested to register by the Holder, to the extent required
		to permit the disposition of the Registrable Securities so to be registered,
		provided that if at any time after giving written notice of its intention to
		register any securities and prior to the effective date of the registration
		statement filed in connection with such registration, the Company shall
		determine for any reason not to register or to delay registration of such
		securities, the Company may, at its election, give written notice of such
		determination to such Holder and, thereupon, (i) in the case of a determination
		not to register, shall be relieved of its obligation to register any
		Registrable Securities in connection with such registration (but not from its
		obligation to pay expenses in accordance with Section 4 hereof), and (ii) in
		the case of a determination to delay registering, shall be permitted to delay
		registering any Registrable Securities being registered pursuant to this
		Section 7(d) for the same period as the delay in registering such other
		securities. The Company shall include in such registration statement all or any
		part of such Registrable Securities such Holder requests to be registered. In
		the case of an underwritten public offering, if the managing underwriter(s) or
		underwriter(s) should reasonably object to the inclusion of the Registrable
		Securities in such registration statement, then if the Company after
		consultation with the managing underwriter should reasonably determine that the
		inclusion of such Registrable Securities, would materially adversely affect the
		offering contemplated in such registration statement, and based on such
		determination recommends inclusion in such registration statement of fewer or
		none of the Registrable Securities of the Holders, then (x) the number of
		Registrable Securities of the Holders included in such registration statement
		shall be reduced pro-rata among such Holders (based upon the number of
		Registrable Securities requested to be included in the registration), if the
		Company after consultation with the underwriter(s) recommends the inclusion of
		fewer Registrable Securities, or (y) none of the Registrable Securities of the
		Holders shall be included in such registration statement, if the Company after
		consultation with the underwriter(s) recommends the inclusion of none of such
		Registrable Securities; provided, however, that if securities are being offered
		for the account of other persons or entities as well as the Company, such
		reduction shall not represent a greater fraction of the number of Registrable
		Securities intended to be offered by the Holders than the fraction of similar
		reductions imposed on such other persons or entities (other than the
		Company).
	 

	 
		(e) Consent to Jurisdiction. Each of
		the Company and the Holders (i) hereby irrevocably submits to the exclusive
		jurisdiction of the state and federal courts located in New York City, New York
		for the purposes of any suit, action or proceeding arising out of 
	 

	 
		 
	 

	 
		 
	 

	 
		13
	 

	 
		 
	 

	 
	 

	 

	 
		or relating to this Agreement and (ii)
		hereby waives, and agrees not to assert in any such suit, action or proceeding,
		any claim that it is not personally subject to the jurisdiction of such court,
		that the suit, action or proceeding is brought in an inconvenient forum or that
		the venue of the suit, action or proceeding is improper. Each of the Company
		and the Holders consents to process being served in any such suit, action or
		proceeding by mailing a copy thereof to such party at the address in effect for
		notices to it under this Agreement and agrees that such service shall
		constitute good and sufficient service of process and notice thereof. Nothing
		in this Section 7(e) shall affect or limit any right to serve process in any
		other manner permitted by law. 
	 

	 
		(f) Amendments and Waivers. The
		provisions of this Agreement, including the provisions of this sentence, may
		not be amended, modified or supplemented, and waivers or consents to departures
		from the provisions hereof may not be given, unless the same shall be in
		writing and signed by the Company and the Holders of at least a majority of the
		Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
		depart from the provisions hereof with respect to a matter that relates
		exclusively to the rights of Holders and that does not directly or indirectly
		affect the rights of other Holders may be given by Holders of the Registrable
		Securities to which such waiver or consent relates; provided, however, that the
		provisions of this sentence may not be amended, modified, or supplemented
		except in accordance with the provisions of the immediately preceding
		sentence.
	 

	 
		(g) Notices. Any and all notices or
		other communications or deliveries required or permitted to be provided
		hereunder shall be in writing and shall be deemed given and effective on the
		earlier of (i) the date of transmission, if such notice or communication is
		delivered via facsimile at the facsimile telephone number specified for notice
		prior to 5:00 p.m., New York City time, on a Business Day, (ii) the next
		Business Day after the date of transmission, if such notice or communication is
		delivered via facsimile at the facsimile number specified in this Section on a
		day that is not a Business Day or later than 5:00 p.m., New York City time, on
		any date and earlier than 11:59 p.m., New York City time, on such date, (iii)
		the Business Day following the date of mailing, if sent by nationally
		recognized overnight courier service such as Federal Express or (iv) actual
		receipt by the party to whom such notice is required to be given. The addresses
		for such communications shall be with respect to each Holder at its address set
		forth under its name on Schedule 1 attached hereto, or with respect to the
		Company, addressed to: 
	 

	 
		AXS-One Inc.
	 

	 
		301 Route 17 North
	 

	 
		Rutherford, New Jersey 07070
	 

	 
		Attention: Chief Financial Officer
	 

	 
		Facsimile No.: (201) 935-5230
	 

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

	 
		Wiggin and Dana LLP
	 

	 
		400 Atlantic Street 
	 

	 
		 
	 

	 
		 
	 

	 
		14
	 

	 
		 
	 

	 
	 

	 

	 
		Stamford, Connecticut 06901
	 

	 
		Attention: Michael Grundei 
	 

	 
		Facsimile No.: (203) 363-7676
	 

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

	 
		(h) Successors and Assigns. This
		Agreement shall be binding upon and inure to the benefit of the parties and
		their successors and permitted assigns and shall inure to the benefit of each
		Holder and its successors and assigns; provided, that the Company may not
		assign this Agreement or any of its rights or obligations hereunder without the
		prior written consent of each Holder; and provided, further, that each Holder
		may assign its rights hereunder in the manner and to the Persons as permitted
		under the Purchase Agreement.
	 

	 
		(i) Assignment of Registration
		Rights. The rights of each Holder hereunder, including the right to have
		the Company register for resale Registrable Securities in accordance with the
		terms of this Agreement, shall be automatically assignable by each Holder to
		any transferee of such Holder of all or a portion of the Notes, the Warrants or
		the Registrable Securities if: (i) the Holder agrees in writing with the
		transferee or assignee to assign such rights, and a copy of such agreement is
		furnished to the Company within a reasonable time after such assignment, (ii)
		the Company is, within a reasonable time after such transfer or assignment,
		furnished with written notice of (a) the name and address of such transferee or
		assignee, and (b) the securities with respect to which such registration rights
		are being transferred or assigned, (iii) following such transfer or assignment
		the further disposition of such securities by the transferee or assignees is
		restricted under the Securities Act and applicable state securities laws, (iv)
		at or before the time the Company receives the written notice contemplated by
		clause (ii) of this Section 7(i), the transferee or assignee agrees in writing
		with the Company to be bound by all of the provisions of this Agreement, and
		(v) such transfer shall have been made in accordance with the applicable
		requirements of the Purchase Agreement. The rights to assignment shall apply to
		the Holders (and to subsequent) successors and assigns.
	 

	 
		The Company may require, as a condition of
		allowing such assignment in connection with a transfer of Notes, Warrants or
		Registrable Securities (i) that the Holder or transferee of all or a portion of
		the Notes, the Warrants or the Registrable Securities as the case may be,
		furnish to the Company a written opinion of counsel that is reasonably
		acceptable to the Company to the effect that such transfer may be made without
		registration under the Securities Act, (ii) that the Holder or transferee
		execute and deliver to the Company an investment letter in form and substance
		acceptable to the Company and (iii) that the transferee be an “accredited
		investor” as defined in Rule 501(a) promulgated under the Securities
		Act.
	 

	 
		(j) Counterparts; Facsimile. This
		Agreement may be executed in any number of counterparts, each of which when so
		executed shall be deemed to be an original and, all of which taken together
		shall constitute one and the same Agreement. In the event that any signature is
		delivered by electronic means or facsimile transmission, such signature shall
		create a valid binding obligation of the party executing (or on whose behalf
		such signature is 
	 

	 
		 
	 

	 
		 
	 

	 
		15
	 

	 
		 
	 

	 
	 

	 

	 
		executed) the same with the same force and
		effect as if such facsimile signature were the original thereof.
	 

	 
		(k) Governing Law. This Agreement
		shall be governed by and construed in accordance with the laws of the State of
		New York, without regard to principles of conflicts of law thereof.
	 

	 
		(l) Cumulative Remedies. The remedies
		provided herein are cumulative and not exclusive of any remedies provided by
		law.
	 

	 
		(m) Severability. If any term,
		provision, covenant or restriction of this Agreement is held by a court of
		competent jurisdiction to be invalid, illegal, void or unenforceable in any
		respect, the remainder of the terms, provisions, covenants and restrictions set
		forth herein shall remain in full force and effect and shall in no way be
		affected, impaired or invalidated, and the parties hereto shall use their
		reasonable efforts to find and employ an alternative means to achieve the same
		or substantially the same result as that contemplated by such term, provision,
		covenant or restriction. It is hereby stipulated and declared to be the
		intention of the parties that they would have executed the remaining terms,
		provisions, covenants and restrictions without including any of such that may
		be hereafter declared invalid, illegal, void or unenforceable.
	 

	 
		(n) Headings. The headings herein are
		for convenience only, do not constitute a part of this Agreement and shall not
		be deemed to limit or affect any of the provisions hereof.
	 

	 
		(o) Registrable Securities Held by the
		Company and its Affiliates. Whenever the consent or approval of Holders of
		a specified percentage of Registrable Securities is required hereunder,
		Registrable Securities held by the Company or its Affiliates (other than any
		Holder or transferees or successors or assigns thereof if such Holder is deemed
		to be an Affiliate solely by reason of its holdings of such Registrable
		Securities) shall not be counted in determining whether such consent or
		approval was given by the Holders of such required percentage.
	 

	 
		(p) Obligations of Purchasers. The
		Company acknowledges that the obligations of each Purchaser under this
		Agreement are several and not joint with the obligations of any other
		Purchaser, and no Purchaser shall be responsible in any way for the performance
		of the obligations of any other Purchaser under this Agreement. The decision of
		each Purchaser to enter into to this Agreement has been made by such Purchaser
		independently of any other Purchaser. The Company further acknowledges that
		nothing contained in this Agreement, and no action taken by any Purchaser
		pursuant hereto, shall be deemed to constitute the Purchasers as a partnership,
		an association, a joint venture or any other kind of entity, or create a
		presumption that the Purchasers are in any way acting in concert or as a group
		with respect to such obligations or the transactions contemplated hereby. Each
		Purchaser shall be entitled to independently protect and enforce its rights,
		including without limitation, the rights arising out of this Agreement, and it
		shall not be necessary for any other Purchaser to be joined as an additional
		party in any proceeding for such purpose.
	 

	 
		 
	 

	 
		 
	 

	 
		16
	 

	 
		 
	 

	 
	 

	 

	 
		Each Purchaser has been represented by its
		own separate legal counsel in their review and negotiation of this Agreement
		and with respect to the transactions contemplated hereby. The Company
		acknowledges that such procedure with respect to this Agreement in no way
		creates a presumption that the Purchasers are in any way acting in concert or
		as a group with respect to this Agreement or the transactions contemplated
		hereby or thereby.
	 

	 
		[signature page follows]
	 

	 
		 
	 

	 
		 
	 

	 
		17
	 

	 
		 
	 

	 
	 

	 

	 
		IN WITNESS WHEREOF, the parties hereto have
		caused this Investor Rights Agreement to be duly executed by their respective
		authorized persons as of the date first indicated above.
	 

	 
		 
	 

	 
			
				
				  COMPANY:
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  AXS-ONE INC.
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  By:
				

			 	
				
				  /s/ William P. Lyons
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  Name: William P. Lyons
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  Title: CEO
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
					

 

	 
		 
	 

	 
		 
	 

	 
		18
	 

	 
		 
	 

	 
	 

	 

	 
		 
	 

	 
			
				
				  PURCHASERS:
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  Print Exact Name:
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  By:
				

			 	
				
				  /s/
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  Name:
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  Title:
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
							

 

	 
		[Omnibus AXS-One Inc. Investor Rights
		Agreement Signature Page]
	 

	 
		 
	 

	 
		 
	 

	 
		19
	 

	 
		 
	 

	 
	 

	 

	 
		SCHEDULE 1
	 

	 
		PURCHASERS
	 

	 
		 
	 

	 
			
				
				  Name and Address
				

			 	
				
				   
				

			 	
				
				  Copy of Notice to:
				

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

				  Attn: Scott Shuda

				  (925) 988-0287 (fax)
				

			 	
				
				   
				

			 	
				
				  DLA Piper US LLP

				  2000 University Avenue

				  East Palo Alto, California 94402

				  Attn: Craig M. Tighe, Esq.

				  (650) 833-2001 (fax)
				

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

				  Attn: Scott Shuda

				  (925) 988-0287 (fax)
				

			 	
				
				   
				

			 	
				
				  DLA Piper US LLP

				  2000 University Avenue

				  East Palo Alto, California 94402

				  Attn: Craig M. Tighe, Esq.

				  (650) 833-2001 (fax)
				

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

				  Attn: William Jurika

				  (510) 625-0171 (fax)
				

			 	
				
				   
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
		 
	 

	 
		 
	 

	 
	 

	 

	 
		EXHIBIT A
	 

	 
		PLAN OF DISTRIBUTION
	 

	 
		We are registering the shares of common
		stock on behalf of the selling security holders. Sales of shares may be made by
		selling security holders, including their respective donees, transferees,
		pledgees or other successors-in-interest directly to purchasers or to or
		through underwriters, broker-dealers or through agents. Sales may be made from
		time to time on the ________________, any other exchange or market upon which
		our shares may trade in the future, in the over-the-counter market or
		otherwise, at market prices prevailing at the time of sale, at prices related
		to market prices, or at negotiated or fixed prices. The shares may be sold by
		one or more of, or a combination of, the following:
	 

	 
			
				
				  •
				

			 	
				
				  a block trade in which the
				  broker-dealer so engaged will attempt to sell the shares as agent but may
				  position and resell a portion of the block as principal to facilitate the
				  transaction (including crosses in which the same broker acts as agent for both
				  sides of the transaction);
				

			 

 

	 
			
				
				  •
				

			 	
				
				  purchases by a broker-dealer as
				  principal and resale by such broker-dealer, including resales for its account,
				  pursuant to this prospectus;
				

			 

 

	 
			
				
				  •
				

			 	
				
				  ordinary brokerage transactions and
				  transactions in which the broker solicits purchases;
				

			 

 

	 
			
				
				  •
				

			 	
				
				  through options, swaps or
				  derivatives;
				

			 

 

	 
			
				
				  •
				

			 	
				
				  in privately negotiated
				  transactions;
				

			 

 

	 
			
				
				  •
				

			 	
				
				  in making short sales or in
				  transactions to cover short sales; and 
				

			 

 

	 
			
				
				  •
				

			 	
				
				  put or call option transactions
				  relating to the shares. 
				

			 

 

	 
		The selling security holders may effect
		these transactions by selling shares directly to purchasers or to or through
		broker-dealers, which may act as agents or principals. These broker-dealers may
		receive compensation in the form of discounts, concessions or commissions from
		the selling security holders and/or the purchasers of shares for whom such
		broker-dealers may act as agents or to whom they sell as principals, or both
		(which compensation as to a particular broker-dealer might be in excess of
		customary commissions). The selling security holders have advised us that they
		have not entered into any agreements, understandings or arrangements with any
		underwriters or broker-dealers regarding the sale of their securities.
	 

	 
		The selling security holders may enter into
		hedging transactions with broker-dealers or other financial institutions. In
		connection with those transactions, the broker-dealers or other financial
		institutions may engage in short sales of the shares or of securities
		convertible into or exchangeable for the shares in the course of hedging
		positions they assume with the selling security holders. The selling security
		holders may also enter into options or other 
	 

	 
		 
	 

	 
		 
	 

	 
		21
	 

	 
		 
	 

	 
	 

	 

	 
		transactions with broker-dealers or other
		financial institutions which require the delivery of shares offered by this
		prospectus to those broker-dealers or other financial institutions. The
		broker-dealer or other financial institution may then resell the shares
		pursuant to this prospectus (as amended or supplemented, if required by
		applicable law, to reflect those transactions).
	 

	 
		The selling security holders and any
		broker-dealers that act in connection with the sale of shares may be deemed to
		be “underwriters” within the meaning of Section 2(11) of the
		Securities Act of 1933, and any commissions received by broker-dealers or any
		profit on the resale of the shares sold by them while acting as principals may
		be deemed to be underwriting discounts or commissions under the Securities Act.
		The selling security holders may agree to indemnify any agent, dealer or
		broker-dealer that participates in transactions involving sales of the shares
		against liabilities, including liabilities arising under the Securities Act. We
		have agreed to indemnify each of the selling security holders and each selling
		security holder has agreed, severally and not jointly, to indemnify us against
		some liabilities in connection with the offering of the shares, including
		liabilities arising under the Securities Act. 
	 

	 
		The selling security holders will be subject
		to the prospectus delivery requirements of the Securities Act. We have informed
		the selling security holders that the anti-manipulative provisions of
		Regulation M promulgated under the Securities Exchange Act of 1934 may apply to
		their sales in the market. 
	 

	 
		Selling security holders also may resell all
		or a portion of the shares in open market transactions in reliance upon Rule
		144 under the Securities Act, provided they meet the criteria and conform to
		the requirements of Rule 144. 
	 

	 
		Upon being notified by a selling security
		holder that a material arrangement has been entered into with a broker-dealer
		for the sale of shares through a block trade, special offering, exchange
		distribution or secondary distribution or a purchase by a broker or dealer, we
		will file a supplement to this prospectus, if required pursuant to Rule 424(b)
		under the Securities Act, disclosing:
	 

	 
			
				
				  •
				

			 	
				
				  the name of each such selling
				  security holder and of the participating broker-dealer(s);
				

			 

 

	 
			
				
				  •
				

			 	
				
				  the number of shares
				  involved;
				

			 

 

	 
			
				
				  •
				

			 	
				
				  the initial price at which the
				  shares were sold;
				

			 

 

	 
			
				
				  •
				

			 	
				
				  the commissions paid or discounts or
				  concessions allowed to the broker-dealer(s), where applicable;
				

			 

 

	 
			
				
				  •
				

			 	
				
				  that such broker-dealer(s) did not
				  conduct any investigation to verify the information set out or incorporated by
				  reference in this prospectus; and
				

			 

 

	 
			
				
				  •
				

			 	
				
				  other facts material to the
				  transactions.
				

			 

 

	 
		 
	 

	 
		 
	 

	 
		22
	 

	 
		 
	 

	 
	 

	 

	 
		In addition, if required under applicable
		law or the rules or regulations of the Commission, we will file a supplement to
		this prospectus when a selling security holder notifies us that a donee or
		pledgee intends to sell more than 500 shares of common stock.
	 

	 
		We are paying all expenses and fees
		customarily paid by the issuer in connection with the registration of the
		shares. The selling security holders will bear all brokerage or underwriting
		discounts or commissions paid to broker-dealers in connection with the sale of
		the shares.
	 

	 
		 
	 

	 
		 
	 

	 
		23THIS NOTE AND THE RIGHTS PROVIDED HEREIN
		ARE SUBJECT IN ALL RESPECTS TO THE TERMS OF THE SUBORDINATION AGREEMENT OF EVEN
		DATE HEREWITH BETWEEN THE AGENT OF THE PAYEE AND SILICON VALLEY
		BANK.
	 

	 
		THIS NOTE HAS NOT BEEN REGISTERED UNDER
		THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
		STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
		UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE
		SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT
		REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
		PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
	 

	 
		AXS-ONE INC.
	 

	 
		SERIES A 6% SECURED CONVERTIBLE
		PROMISSORY NOTE
	 

	 
		 
	 

	 
			
				
				  U.S. $____________
				

			 	
				
				  Rutherford, NJ
				

			 
	
				
				  No.: PN-2007-A-__
				

			 	
				
				  May 29, 2007
				

			 

 

	 
		FOR VALUE RECEIVED, the undersigned, AXS-ONE INC., a Delaware corporation
		(the “Company”),
		hereby promises to pay to the order of
		_________ or any future holder of this
		promissory note (the “Payee”), at
		the principal office of the Payee set forth herein, or at such other place as
		the holder may designate in writing to the Company, the principal sum of
		_____________ Dollars (U.S. $__________), or such other amount as may be
		outstanding hereunder (the “Principal Amount”), together with all accrued but unpaid interest,
		in such coin or currency of the United States of America as at the time shall
		be legal tender for the payment of public and private debts and in immediately
		available funds, as provided in this promissory note (the “Note”).
	 

	 
		This Note is one of a duly authorized issue
		of Series A 6% Secured Convertible Promissory Notes of the Company, in
		aggregate principal amount of Two Million Five Hundred Thousand Dollars
		($2,500,000) (together with the authorized issue of Series B 6% Secured
		Convertible Promissory Notes of the Company, in aggregate principal amount of
		Two Million Five Hundred Thousand Dollars ($2,500,000), collectively the
		“Promissory Notes”) issued pursuant to the Convertible Note and
		Warrant Purchase Agreement of even date herewith (the “Purchase Agreement”; capitalized terms used herein without definition
		shall have the meanings assigned in the Purchase Agreement). The Promissory
		Notes rank equally and ratably without priority over one another. No payment,
		including any prepayment, shall be made hereunder unless payment, including any
		prepayment, is offered with respect to the other Promissory Notes 
	 

	 
		 
	 

	 
		 
	 

	 

	 
	 

	 

	 
		in an amount which bears the same ratio to
		the then unpaid principal amount of such Promissory Notes as the payment made
		hereon bears to the then unpaid principal amount under this Note.
	 

	 
		1. Principal and Interest Payments.
	 

	 
		(a) The Company shall repay in full the
		entire principal balance then outstanding under this Note plus all accrued and
		unpaid interest on the first to occur (the “Maturity Date”) of: (i) May 29, 2009; (ii) such time as there
		occurs a Sale Transaction (as defined below) or (iii) the acceleration of the
		obligations as contemplated by this Note. 
	 

	 
		“Sale Transaction” shall mean (i) the sale or other disposition of
		all or substantially all of the Company’s assets, or (ii) the acquisition
		of the Company by another entity by means of any transaction or series of
		related transactions to which the Company is party (including, without
		limitation, any stock acquisition, reorganization, merger or consolidation but
		excluding any sale of stock for capital raising purposes) other than a
		transaction or series of transactions in which the holders of the voting
		securities of the Company outstanding immediately prior to such transaction
		continue to retain (either by such voting securities remaining outstanding or
		by such voting securities being converted into voting securities of the
		surviving entity), as a result of shares in the Company held by such holders
		prior to such transaction, at least fifty percent (50%) of the total voting
		power represented by the voting securities of the Company or such surviving
		entity outstanding immediately after such transaction or series of
		transactions. 
	 

	 
		(b) Interest on the outstanding principal
		balance of this Note shall accrue at a rate of six percent (6.00%) per annum,
		compounded quarterly. Interest on the outstanding principal balance of this
		Note shall be computed on the basis of the actual number of days elapsed and a
		year of three hundred sixty (360) days and shall be payable on the Maturity
		Date, upon earlier prepayment of this Note or in the form of shares of common
		stock, par value $0.01 per share, of the Company (the “Common Stock”) upon conversion of this Note as set forth in
		Section 8 below. Furthermore, upon the occurrence of an Event of Default, then
		to the extent permitted by law, the Company will pay interest to the Payee,
		payable on demand, on the outstanding principal balance of this Note from the
		date of the Event of Default until payment in full at the rate of fifteen
		percent (15%) per annum, compounded quarterly.
	 

	 
		(c) The Company may not prepay the
		outstanding principal amount of this Note or the interest thereon prior to the
		Maturity Date (a “Prepayment”) without the written consent of the Payee, unless
		the Company shall provide at least thirty (30) days prior written notice of the
		date on which the Company intends to make such Prepayment (a
		“Prepayment Notice”). Any partial Prepayment shall be applied first
		to accrued but unpaid interest and second to unpaid principal. Nothing in this
		Section 1(c) shall limit the right of the Payee to convert this Note into
		Common Stock at any time after receipt of the Prepayment Notice and prior to
		the time at which such Prepayment is made.
	 

	 
		2. Non-Business Days. Whenever any payment to be made shall be due on a
		non-Business Day, such payment may be due on the next succeeding Business Day
		and such next 
	 

	 
		 
	 

	 
		 
	 

	 
		2
	 

	 
		 
	 

	 
	 

	 

	 
		succeeding day shall be included in the
		calculation of the amount of accrued interest payable on such date.
	 

	 
		3. Security. This
		Note is secured pursuant to the terms of a Security Agreement (the
		“Security Agreement”) between the Company and the holders of the
		Promissory Notes of even date herewith by a security interest in the Collateral
		(as such term is defined in the Security Agreement). This Note is subject to
		the provisions of the Security Agreement.
	 

	 
		4. Subordination of Future Debt; Payment of
		Dividends. Except as provided in the
		Transaction Documents, any debt incurred after the date hereof to any creditor
		shall be subordinated to the indebtedness evidenced by this Note. The Company
		shall not declare or pay any dividend or distribution with respect to any
		preferred stock or Common Stock of the Company other than a pro rata dividend
		with respect to the Common Stock payable solely in shares of Common
		Stock.
	 

	 
		5. Representations and Warranties of the
		Company. The Company represents and
		warrants to the Payee as follows:
	 

	 
		(a) The Company has been duly incorporated
		and is validly existing and in good standing under the laws of the state of
		Delaware, with full corporate power and authority to own, lease and operate its
		properties and to conduct its business as currently conducted.
	 

	 
		(b) This Note has been duly authorized,
		validly executed and delivered on behalf of the Company and is a valid and
		binding obligation of the Company enforceable against the Company in accordance
		with its terms, subject to limitations on enforcement by general principles of
		equity and by bankruptcy or other laws affecting the enforcement of
		creditors’ rights generally, and the Company has full power and authority
		to execute and deliver this Note and to perform its obligations
		hereunder.
	 

	 
		6. Events of Default. The occurrence of any of the following events shall be
		an “Event of
		Default” under this Note:
	 

	 
		(a) the Company shall fail to pay the
		principal or any accrued interest hereunder or any other Note after the date
		such payment shall become due and payable hereunder or thereunder; or
	 

	 
		(b) if default shall be made in the
		performance or observance of any representation, warranty, covenant, or
		agreement contained in this Note, in the Security Agreement, in the Purchase
		Agreement or in the Investor Rights Agreement, or in any other agreement
		between the Company and the Payee relating to indebtedness of the Company to
		the Payee or any of its affiliates for borrowed money and such default shall
		have continued for a period of five (5) days after Company’s receipt of
		written notice of such default (unless such default is on account of failure to
		give a required notice, in which event such 5 day cure period shall commence
		with the date of such default); or
	 

	 
		 
	 

	 
		 
	 

	 
		3
	 

	 
		 
	 

	 
	 

	 

	 
		(c) the Company shall (i) apply for or
		consent to the appointment of, or the taking of possession by, a receiver,
		custodian, trustee or liquidator of itself or of all or a substantial part of
		its property or assets, (ii) make a general assignment for the benefit of its
		creditors, (iii) commence a voluntary case under the United States Bankruptcy
		Code (the “Bankruptcy
		Code”) or under the comparable
		laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to
		take advantage of any bankruptcy, insolvency, moratorium, reorganization or
		other similar law affecting the enforcement of creditors’ rights
		generally, (v) acquiesce in writing to any petition filed against it in an
		involuntary case under the Bankruptcy Code or under the comparable laws of any
		jurisdiction (foreign or domestic), or (vi) take any action under the laws of
		any jurisdiction (foreign or domestic) analogous to any of the foregoing;
		or
	 

	 
		(d) a proceeding or case shall be commenced
		in respect of the Company or any of its subsidiaries without its application or
		consent, in any court of competent jurisdiction, seeking (i) the liquidation,
		reorganization, moratorium, dissolution, winding up, or composition or
		readjustment of its debts, (ii) the appointment of a trustee, receiver,
		custodian, liquidator or the like of it or of all or any substantial part of
		its assets or (iii) similar relief in respect of it under any law providing for
		the relief of debtors, and such proceeding or case described in clause (i),
		(ii) or (iii) shall continue undismissed, or unstayed and in effect, for a
		period of thirty (30) consecutive days or any order for relief shall be entered
		in an involuntary case under the Bankruptcy Code or under the comparable laws
		of any jurisdiction (foreign or domestic) against the Company or any of its
		subsidiaries or action under the laws of any jurisdiction (foreign or domestic)
		analogous to any of the foregoing shall be taken with respect to the Company or
		any of its subsidiaries and shall continue undismissed, or unstayed and in
		effect for a period of ninety (90) consecutive days.
	 

	 
		7. Remedies Upon an Event of Default. If an Event of Default shall have occurred and shall
		be continuing, the Payee of this Note may at any time at its option, (a)
		declare the entire unpaid principal balance of this Note, together with all
		interest accrued hereon, due and payable, and thereupon, the same shall be
		accelerated and so due and payable; provided,
		however, that upon the occurrence of an Event of Default
		described in (i) Sections 6(c) and (d), without presentment, demand, protest,
		or notice, all of which are hereby expressly unconditionally and irrevocably
		waived by the Company, the outstanding principal balance and accrued interest
		hereunder shall be automatically due and payable, and (ii) Sections 6(a) and
		(b) the Payee may exercise or otherwise enforce any one or more of the
		Payee’s rights, powers, privileges, remedies and interests under this Note
		or applicable law. No course of delay on the part of the Payee shall operate as
		a waiver thereof or otherwise prejudice the right of the Payee. No remedy
		conferred hereby shall be exclusive of any other remedy referred to herein or
		now or hereafter available at law, in equity, by statute or otherwise.
	 

	 
		8. Conversion.
		
	 

	 
		(a) General. The
		holder of this Note shall have the right at any time following approval by the
		American Stock Exchange of an Additional Listing Application with respect to
		the Conversion Shares, at such holder’s option, to convert all or any
		lesser portion of the 
	 

	 
		 
	 

	 
		 
	 

	 
		4
	 

	 
		 
	 

	 
	 

	 

	 
		Principal Amount plus accrued and unpaid
		interest thereon into such number of fully paid and non-assessable shares of
		Common Stock as is determined by dividing (i) the portion of the Principal
		Amount to be converted plus accrued and unpaid interest thereon by (ii) the
		Conversion Rate (as defined below) then in effect for this Note. The initial
		conversion rate shall be $1.00, such rate to be subject to adjustment in
		accordance with the provisions of this Section 8. Such conversion rate in
		effect from time to time, as adjusted pursuant to this Section 8, is referred
		to herein as a “Conversion
		Rate.” All of the remaining
		provisions of this Section 8 shall apply separately to each Conversion Rate in
		effect from time to time with respect to this Note.
	 

	 
		(b) Mechanics of Conversion.
	 

	 
		(i) Such right of conversion shall be
		exercised by the Payee by delivering to the Company a conversion notice in the
		form attached hereto as Exhibit
		A (the “Conversion Notice”), appropriately completed and duly signed, and by
		surrender not later than two (2) Business Days thereafter of this Note. The
		Conversion Notice shall also contain a statement of the name or names (with
		addresses and tax identification or social security numbers) in which the
		certificate or certificates for Common Stock shall be issued, if other than the
		name in which this Note is registered. Promptly after the receipt of the
		Conversion Notice, the Company shall issue and deliver, or cause to be
		delivered, to the Payee or such Payee’s nominee, a certificate or
		certificates for the number of shares of Common Stock issuable upon such
		conversion. Such conversion shall be deemed to have been effected as of the
		close of business on the date of receipt by the Company of the Conversion
		Notice (the “Conversion
		Date”), and the person or persons
		entitled to receive the shares of Common Stock issuable upon conversion shall
		be treated for all purposes as the holder or holders of record of such shares
		of Common Stock as of the close of business on the Conversion Date. If the
		Payee has not converted the entire amount of this Note pursuant to the
		Conversion Notice, then the Company shall execute and deliver to the Payee a
		new Note instrument identical in terms to this Note, but with a principal
		amount reflecting the unconverted portion of this Note. The new Note instrument
		shall be delivered subject to the same timing terms as the certificates for the
		Common Stock.
	 

	 
		(ii) The Company shall effect such issuance
		of Common Stock within three (3) trading days following the Conversion Date and
		shall transmit the certificates by messenger or reputable overnight delivery
		service to reach the address designated by such holder within three (3) trading
		days after the receipt by the Company of such Conversion Notice. Provided that
		the holder complies with all of the provisions of this Note relating to the
		conversion hereof, if certificates evidencing the Common Stock are not received
		by the holder (through no fault or negligence of the holder) within five (5)
		Business Days following the Conversion Date, then the holder will be entitled
		to revoke and withdraw its Conversion Notice, in whole or in part, at any time
		prior to its receipt of those certificates.
	 

	 
		(d) Fractional Shares. The Company shall not be required to issue a
		fractional share of Common Stock upon conversion of this Note. As to any
		fraction of a share which the holder of this Note would otherwise be entitled
		to acquire upon such conversion, the Company shall pay an amount in cash equal
		to the Current Market Price (as defined below) per share of Common Stock on the
		date of conversion, multiplied by such fraction.
	 

	 
		 
	 

	 
		 
	 

	 
		5
	 

	 
		 
	 

	 
	 

	 

	 
		“Current Market Price” means, in respect of any share of Common Stock on
		any date herein specified:
	 

	 
		(1) if there shall not then be a public
		market for the Common Stock, the higher of (a) the book value per share of
		Common Stock at such date, and (b) the fair market value per share of Common
		Stock as determined in good faith by the Board, or
	 

	 
		(2) if there shall then be a public market
		for the Common Stock, the average of the daily market prices for the 20
		consecutive trading days immediately before such date. The daily market price
		for each such trading day shall be (i) the closing bid price on such day on the
		principal stock exchange (including Nasdaq) on which such Common Stock is then
		listed or admitted to trading, or quoted, as applicable, (ii) if no sale takes
		place on such day on any such exchange, the last reported closing bid price on
		such day as officially quoted on any such exchange (including Nasdaq), (iii) if
		the Common Stock is not then listed or admitted to trading on any stock
		exchange, the last reported closing bid price on such day in the
		over-the-counter market, as furnished by the National Association of Securities
		Dealers Automatic Quotation System or the Pink Sheets LLC, (iv) if neither such
		corporation at the time is engaged in the business of reporting such prices, as
		furnished by any similar firm then engaged in such business, or (v) if there is
		no such firm, as furnished by any member of the National Association of
		Securities Dealers, Inc. (the “NASD”)
		selected mutually by holders of a majority in interest of the Promissory Notes
		and the Company or, if they cannot agree upon such selection, as selected by
		two such members of the NASD, one of which shall be selected by holders of a
		majority in interest of the Promissory Notes and one of which shall be selected
		by the Company (as applicable, the “Daily Market Price”).
	 

	 
		(e) Stock Dividends, Subdivisions and
		Combinations. If at any time while this
		Note is outstanding, the Company shall: 
	 

	 
		(i) cause the holders of its Common Stock to
		be entitled to receive a dividend payable in, or other distribution of,
		additional shares of Common Stock,
	 

	 
		(ii) subdivide its outstanding shares of
		Common Stock into a larger number of shares of Common Stock, or
	 

	 
		(iii) combine its outstanding shares of
		Common Stock into a smaller number of shares of Common Stock,
	 

	 
		then in each such case the Conversion Rate
		shall be multiplied by a fraction of which the numerator shall be the number of
		shares of Common Stock (excluding treasury shares, if any) outstanding
		immediately before such event and of which the denominator shall be the number
		of shares of Common Stock outstanding immediately after such event. Any
		adjustment made 
	 

	 
		 
	 

	 
		 
	 

	 
		6
	 

	 
		 
	 

	 
	 

	 

	 
		pursuant to clause (i) of this Section 8(e)
		shall become effective immediately after the record date for the determination
		of stockholders entitled to receive such dividend or distribution, and any
		adjustment pursuant to clauses (ii) or (iii) of this Section 8(e) shall become
		effective immediately after the effective date of such subdivision or
		combination. If any event requiring an adjustment under this paragraph occurs
		during the period that a Conversion Rate is calculated hereunder, then the
		calculation of such Conversion Rate shall be adjusted appropriately to reflect
		such event.
	 

	 
		(f) Certain Other Distributions. If at any time while this Note is outstanding the
		Company shall take a record of the holders of its Common Stock for the purpose
		of entitling them to receive any dividend or other distribution of:
	 

	 
		(i) cash,
	 

	 
		(ii) any evidences of its indebtedness, any
		shares of stock of any class or any other securities or property or assets of
		any nature whatsoever (other than cash or additional shares of Common Stock as
		provided in Section 8(e) hereof), or 
	 

	 
		(iii) any warrants or other rights to
		subscribe for or purchase any evidences of its indebtedness, any shares of
		stock of any class or any other securities or property or assets of any nature
		whatsoever (in each case set forth in subparagraphs 8(f)(i), 8(f)(ii) and
		8(f)(iii) hereof, the “Distributed
		Property”), 
	 

	 
		then upon any conversion of this Note that
		occurs after such record date, the holder of this Note shall be entitled to
		receive, in addition to the Conversion Shares, the Distributed Property that
		such holder would have been entitled to receive in respect of such number of
		Conversion Shares had the holder been the record holder of such Conversion
		Shares as of such record date. Such distribution shall be made whenever any
		such conversion is made. In the event that the Distributed Property consists of
		property other than cash, then the fair value of such Distributed Property
		shall be as determined in good faith by the Board and set forth in reasonable
		detail in a written valuation report (the “Valuation Report”) prepared by the Board. The Company shall give
		written notice of such determination and a copy of the Valuation Report to the
		holder of this Note, and if the holder objects to such determination within
		twenty (20) Business Days following the date such notice is given, the Company
		shall submit such valuation to an investment banking firm of recognized
		national standing selected by the holder of this Note and acceptable to the
		Company in its reasonable discretion, whose opinion shall be binding upon the
		Company and the holder of this Note. A reclassification of the Common Stock
		(other than a change in par value, or from par value to no par value or from no
		par value to par value) into shares of Common Stock and shares of any other
		class of stock shall be deemed a distribution by the Company to the holders of
		its Common Stock of such shares of such other class of stock within the meaning
		of this Section 8(f) and, if the outstanding shares of Common Stock shall be
		changed into a larger or smaller number of shares of Common Stock as a part of
		such reclassification, such change shall be deemed a subdivision or
		combination, as the case may be, of the outstanding shares of Common Stock
		within the meaning of Section 8(e).
	 

	 
		 
	 

	 
		 
	 

	 
		7
	 

	 
		 
	 

	 
	 

	 

	 
		(g) Common Stock Reserved. The Company shall at all times reserve and keep
		available out of its authorized but unissued Common Stock, solely for issuance
		upon the conversion of the Promissory Notes, such number of shares of Common
		Stock as shall from time to time be issuable upon the conversion of all the
		Promissory Notes at the time outstanding.
	 

	 
		9. Other Provisions Applicable to
		Adjustments. The following provisions
		shall be applicable to the making of adjustments of the number of shares of
		Common Stock into which this Note is convertible and the current Conversion
		Rate provided for in Section 8: 
	 

	 
		(a) When Adjustments to Be Made. The adjustments required by Section 8 shall be made
		whenever and as often as any specified event requiring an adjustment shall
		occur, except that any adjustment to the Conversion Rate that would otherwise
		be required may be postponed (except in the case of a subdivision or
		combination of shares of the Common Stock, as provided for in Section 8(e)) up
		to, but not beyond the Conversion Date if such adjustment either by itself or
		with other adjustments not previously made adds or subtracts less than 1% of
		the shares of Common Stock into which this Note is convertible immediately
		prior to the making of such adjustment. Any adjustment representing a change of
		less than such minimum amount (except as aforesaid) which is postponed shall be
		carried forward and made as soon as such adjustment, together with other
		adjustments required by Section 8 and not previously made, would result in a
		minimum adjustment or on the Conversion Date. For the purpose of any
		adjustment, any specified event shall be deemed to have occurred at the close
		of business on the date of its occurrence. 
	 

	 
		(b) Fractional Interests. In computing adjustments under Section 8, fractional
		interests in Common Stock shall be taken into account to the nearest 1/100th of
		a share.
	 

	 
		(c) When Adjustment Not Required. If the Company undertakes a transaction contemplated
		under Section 8(f) and as a result takes a record of the holders of its Common
		Stock for the purpose of entitling them to receive a dividend or distribution
		or subscription or purchase rights or other benefits contemplated under Section
		8(f) and shall, thereafter and before the distribution to stockholders thereof,
		legally abandon its plan to pay or deliver such dividend, distribution,
		subscription or purchase rights or other benefits contemplated under Section
		8(f), then thereafter no adjustment shall be required by reason of the taking
		of such record and any such adjustment previously made in respect thereof shall
		be rescinded and annulled.
	 

	 
		(d) Escrow of Stock.
		If after any property becomes distributable pursuant to Section 8 by reason of
		the taking of any record of the holders of Common Stock, but prior to the
		occurrence of the event for which such record is taken, a holder of this Note
		converts this Note during such period, the holder of this Note shall continue
		to be entitled to receive any shares of Common Stock issuable upon conversion
		under Section 8 by reason of such adjustment (as if this Note were not yet
		converted) and such shares or other property shall be held in escrow for the
		holder of this Note by the Company to be issued to holder of this Note upon and
		to the extent that the event actually takes place. Notwithstanding any other
		provision to the contrary herein, if the event for which such record was taken
		fails to occur or is rescinded, then such escrowed shares shall be canceled by
		the Company and escrowed property returned to the Company.
	 

	 
		 
	 

	 
		 
	 

	 
		8
	 

	 
		 
	 

	 
	 

	 

	 
		10. Replacement.
		Upon receipt of a duly executed, notarized and unsecured written statement from
		the Payee with respect to the loss, theft or destruction of this Note (or any
		replacement hereof), and, if requested by the Company, an indemnity bond
		customary in the industry, or, in the case of a mutilation of this Note, upon
		surrender and cancellation of such Note, the Company shall issue a new Note, of
		like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated
		Note.
	 

	 
		11. Parties in Interest, Transferability. This Note shall be binding upon the Company and its
		successors and permitted assigns and the terms hereof shall inure to the
		benefit of the Payee and its successors and assigns. This Note may be
		transferred or sold, subject to the provisions of Section 19 of this Note, or
		pledged, hypothecated or otherwise granted as security by the Payee.
	 

	 
		12. Amendments. This
		Note may not be modified or amended in any manner except in writing executed by
		the Company and the Payee.
	 

	 
		13. Notices. Any
		notice, demand, request, waiver or other communication required or permitted to
		be given hereunder shall be in writing and shall be effective (a) upon hand
		delivery by telecopy or facsimile at the address or number designated below (if
		delivered on a Business Day during normal business hours where such notice is
		to be received), or the first Business Day following such delivery (if
		delivered other than on a Business Day during normal business hours where such
		notice is to be received) or (b) on the second Business Day following the date
		of mailing by express courier service, fully prepaid, addressed to such
		address, or upon actual receipt of such mailing, whichever shall first occur.
		The Company will give written notice to the Payee at least twenty (20) days
		prior to the date on which dissolution, liquidation or winding-up will take
		place and in no event shall such notice be provided to the Payee prior to such
		information being made known to the public. Notices to the Payee shall be made
		to the address set forth in the Purchase Agreement. Notices to the Company
		shall be made to the following:
	 

	 
		 
	 

	 
			
				
				  Address of the Company:
				

			 	
				
				   
				

			 	
				
				  AXS-One Inc.
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  301 Route 17 North
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Rutherford, New Jersey 07070
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Attention: Chief Financial
				  Officer
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Facsimile No.: (201) 935-5230
				

			 
	 	 	 
	
				
				  with a copy to:
				

			 	
				
				   
				

			 	
				
				  Wiggin and Dana LLP
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  400 Atlantic Street
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Stamford, Connecticut 06901
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Attention: Michael Grundei
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Facsimile No.: (203) 363-7676
				

			 

 

	 
		14. Governing Law. This Note shall be
		governed by and construed in accordance with the internal laws of the State of
		New York, without giving effect to the choice of
	 

	 
		 
	 

	 
		 
	 

	 
		9
	 

	 
		 
	 

	 
	 

	 

	 
		law provisions. This Note shall not be
		interpreted or construed with any presumption against the party causing this
		Note to be drafted.
	 

	 
		15. Headings.
		Article and section headings in this Note are included herein for purposes of
		convenience of reference only and shall not constitute a part of this Note for
		any other purpose.
	 

	 
		16. Remedies, Characterizations, Other Obligations, Breaches
		and Injunctive Relief. The remedies
		provided in this Note shall be cumulative and in addition to all other remedies
		available under this Note, at law or in equity (including, without limitation,
		a decree of specific performance and/or other injunctive relief), no remedy
		contained herein shall be deemed a waiver of compliance with the provisions
		giving rise to such remedy and nothing herein shall limit a Payee’s right
		to pursue actual damages for any failure by the Company to comply with the
		terms of this Note. Amounts set forth or provided for herein with respect to
		payments and the like (and the computation thereof) shall be the amounts to be
		received by the Payee and shall not, except as expressly provided herein, be
		subject to any other obligation of the Company (or the performance thereof).
		The Company acknowledges that a breach by it of its obligations hereunder will
		cause irreparable and material harm to the Payee and that the remedy at law for
		any such breach may be inadequate. Therefore the Company agrees that, in the
		event of any such breach or threatened breach, the Payee shall be entitled, in
		addition to all other available rights and remedies, at law or in equity, to
		such equitable relief, including but not limited to an injunction restraining
		any such breach or threatened breach, without the necessity of showing economic
		loss and without any bond or other security being required.
	 

	 
		17. Failure or Indulgence Not Waiver. No failure or delay on the part of the Payee in the
		exercise of any power, right or privilege hereunder shall operate as a waiver
		thereof, nor shall any single or partial exercise of any such power, right or
		privilege preclude other or further exercise thereof or of any other right,
		power or privilege.
	 

	 
		18. Enforcement Expenses. The Company agrees to pay all costs and expenses of
		enforcement of this Note, including, without limitation, reasonable
		attorneys’ fees and expenses.
	 

	 
		19. Compliance with Securities Laws. The Payee of this Note acknowledges that this Note is
		being acquired solely for the Payee’s own account and not as a nominee for
		any other party, and for investment, and that the Payee shall not offer, sell
		or otherwise dispose of this Note other than in compliance with the laws of the
		United States of America and as guided by the rules of the Securities and
		Exchange Commission. This Note and any Note issued in substitution or
		replacement therefore shall be stamped or imprinted with legends, as
		applicable, in substantially the following form:
	 

	 
		“THIS NOTE AND THE RIGHTS PROVIDED
		HEREIN ARE SUBJECT IN ALL RESPECTS TO THE TERMS OF THE 
	 

	 
		 
	 

	 
		 
	 

	 
		10
	 

	 
		 
	 

	 
	 

	 

	 
		SUBORDINATION AGREEMENT OF EVEN DATE
		HEREWITH BETWEEN THE AGENT OF THE PAYEE AND SILICON VALLEY BANK.
	 

	 
		THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
		SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
		STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
		UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE
		SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT
		REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
		PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”
	 

	 
		20. Severability.
		The provisions of this Note are severable, and if any provision shall be held
		invalid or unenforceable in whole or in part in any jurisdiction, then such
		invalidity or unenforceability shall not in any manner affect such provision in
		any other jurisdiction or any other provision of this Note in any
		jurisdiction.
	 

	 
		21. Consent to Jurisdiction. Each of the Company and the Payee (i) hereby
		irrevocably submits to the jurisdiction of the United States District Court
		sitting in the Southern District of New York and the courts of the State of New
		York located in New York county for the purposes of any suit, action or
		proceeding arising out of or relating to this Note and (ii) hereby waives, and
		agrees not to assert in any such suit, action or proceeding, any claim that it
		is not personally subject to the jurisdiction of such court, that the suit,
		action or proceeding is brought in an inconvenient forum or that the venue of
		the suit, action or proceeding is improper. Each of the Company and the Payee
		consents to process being served in any such suit, action or proceeding by
		mailing a copy thereof to such party at the address set forth in Section 13
		hereof and agrees that such service shall constitute good and sufficient
		service of process and notice thereof. Nothing in this Section 21 shall affect
		or limit any right to serve process in any other manner permitted by
		law.
	 

	 
		22. Company Waivers.
		
	 

	 
		(a) Except as otherwise specifically
		provided herein, the Company and all others that may become liable for all or
		any part of the obligations evidenced by this Note, hereby waive presentment,
		demand, notice of nonpayment, protest and all other demands and notices in
		connection with the delivery, acceptance, performance and enforcement of this
		Note, and do hereby consent to any number of renewals of extensions of the time
		or payment hereof and agree that any such renewals or extensions may be made
		without notice to any such persons and without affecting their liability herein
		and do further consent to the release of any person liable hereon, all without
		affecting the liability of the other persons, firms or Company liable for the
		payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.
	 

	 
		 
	 

	 
		 
	 

	 
		11
	 

	 
		 
	 

	 
	 

	 

	 
		(b) No delay or omission on the part of the
		Payee in exercising its rights under this Note, or course of conduct relating
		hereto, shall operate as a waiver of such rights or any other right of the
		Payee, nor shall any waiver by the Payee of any such right or rights on any one
		occasion be deemed a waiver of the same right or rights on any future
		occasion.
	 

	 
		(c) THE COMPANY ACKNOWLEDGES THAT THE
		TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO
		THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND
		HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE PAYEE OR ITS
		SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.
	 

	 
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		BLANK]
	 

	 
		 
	 

	 
		 
	 

	 
		12
	 

	 
		 
	 

	 
	 

	 

	 
		IN WITNESS WHEREOF, the Company has executed and delivered this Promissory
		Note as of the date first written above.
	 

	 
		 
	 

	 
			
				
				   
				

			 	
				
				   
				

			 	
				
				  AXS-ONE INC.
				

			 
	
				
				

			 	
				
				   
				

			 	
				
				  
 By: 
				

			 	
				
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				  Name:
				

				
				  Title:
				

			 

 

	 
		 
	 

	 
		 
	 

	 
		13
	 

	 
		 
	 

	 
	 

	 

	 
		EXHIBIT A
	 

	 
		FORM OF CONVERSION NOTICE
	 

	 
		(To be executed by the registered holder in
		order to convert the Note)
	 

	 
		The undersigned hereby irrevocably elects to
		convert the Series A 6% Secured Convertible Promissory Note (the
		“Note”) of AXS-One Inc., a Delaware corporation (the
		“Company”), due May 29, 2009 held by the
		undersigned into shares of Common Stock, according to the terms and conditions
		of the Note and the conditions hereof, as of the date written below. The
		undersigned hereby requests that certificates for the shares of Common Stock to
		be issued to the undersigned pursuant to this Conversion Notice be issued in
		the name of, and delivered to, the undersigned or its designee as indicated
		below. If the shares of Common Stock are to be issued in the name of a person
		other than the undersigned, the undersigned will pay all transfer taxes payable
		with respect thereto. A copy of the Note being converted is attached hereto
		(and the original Note shall be transmitted to the Company pursuant to the
		terms thereof). All capitalized terms used in this Conversion Notice, but not
		otherwise defined herein shall have the meanings assigned in the Note.
	 

	 
		 
	 

	 
			
				
				   
				

			 
	
				
				  Date of Conversion (Date of
				  Notice)
				

			 
	
				
				   
				

			 
	
				
				  Principal Amount of Note to be
				  Converted 
				

			 
	
				
				   
				

			 
	
				
				  Principal Amount of Note not to be
				  Converted (Principal Amount Remaining after Conversion)
				

			 
	
				
				   
				

			 
	
				
				  Amount of accumulated and unpaid
				  interest on principal amount of Note to be Converted
				

			 
	
				
				   
				

			 
	
				
				  Number of shares of Common Stock to
				  be Issued (including conversion of accrued but unpaid interest on Notes to be
				  Converted)
				

			 
	
				
				   
				

			 
	
				
				  Applicable Conversion Value
				

			 

 

	 
		 
	 

	 
			
				
				  Conversion Information:[NAME OF
				  HOLDER]
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 
	
				
				  Address of Holder:
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 
	

				
				   
				

			 	
				
				   
				

			 
	
				
				  Issue Common Stock to (if different
				  than above):
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
		 
	 

	 
		14
	 

	 
		 
	 

	 
	 

	 

	 
		 
	 

	 
			
				
				  Name:
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  Address:
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 
	
				
				  Tax ID #:
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 
	
				
				  Name of Holder
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
			
				
				  By: 
				

			 	
				
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				

			 
	
				
				  Name: 
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  Title: 
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
		 
	 

	 
		15

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