Document:

EXHIBIT
      10.38

    
 

    AMENDMENT
      NO. 1

    TO

    SENIOR
      SECURED BRIDGE NOTE PURCHASE AGREEMENT

    

    THIS
      AMENDMENT NO. 1 to the Senior Secured Bridge Note Purchase Agreement (the
“Amendment”)
      is
      entered into effective as of September 1, 2005, by and among Axeda Systems
      Inc.,
      a Delaware corporation (the “Company”),
      Axeda
      Systems Operating Company, Inc., a Massachusetts corporation (“ASOC”),
      and
      JMI Equity Fund V, L.P., a Delaware limited partnership, and JMI Equity Fund
      V
      (AI), L.P., a Delaware limited partnership (collectively, the “Purchasers”).

    

    WHEREAS,
      the Company, ASOC and the Purchasers have entered into that certain Senior
      Secured Bridge Note Purchase Agreement, dated as of July 8, 2005 (the
“Bridge
      Loan Agreement”).
      

    

    WHEREAS,
      the Company, ASOC and the Purchasers desire to amend the provisions of the
      Bridge Loan Agreement to modify the definition of Maturity Date. 

    

    NOW,
      THEREFORE, in consideration of the foregoing and the mutual promises and
      conditions of the Amendment, and for other good and valuable consideration,
      the
      receipt and sufficiency of which are hereby acknowledged, the parties hereto
      agree as follows:

    

    1.    Maturity
      Date.
      Section
      5(a)(vi) of the Bridge Loan Agreement is hereby amended by removing “October 31,
      2005” and inserting “December 15, 2005”. 

    

    2.    Amendment
      of Bridge Loan Agreement.
      This
      Amendment hereby amends the Bridge Loan Agreement. Except as explicitly provided
      in this Amendment, the Bridge Loan Agreement will remain unchanged and in full
      force and effect. The term “Bridge Loan Agreement” as used in the Bridge Loan
      Agreement and all other instruments and agreements executed thereunder shall
      for
      all purposes refer to the Bridge Loan Agreement as amended by this Amendment.
      

    

    3.    Counterparts.
      This
      Amendment may be executed in several counterparts, each of which shall be deemed
      an original, but all of which together shall constitute one and the same
      instrument. 

    

    4.    Capitalized
      Terms.
      Capitalized terms used but not otherwise defined herein shall have the meaning
      ascribed to them in the Bridge Loan Agreement. 

    

    5.    Continued
      Effect; Conflict of Terms.
      Each of
      the parties hereto hereby confirms that the Security Agreement, except as
      expressly amended by this Amendment, remains in full force and effect. To the
      extent there is any conflict between the terms of the Bridge Loan Agreement
      and
      this Amendment, the terms of this Amendment shall take precedence. 

    

    6.    Governing
      Law.
      This
      Amendment shall be governed by and construed under the laws of the Commonwealth
      of Massachusetts, without giving effect to the principles of conflict of laws
      thereof. 

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Amendment effective
      as of
      the day and year first written above. 

    

    

    AXEDA
      SYSTEMS INC.

     

    By: 
      /s/
      Robert M. Russell Jr.

      
        

      

    

    Name:
      Robert M. Russell Jr.

    Title:
      Chief Executive Officer

     

     

    AXEDA
      SYSTEMS OPERATING COMPANY, INC.

     

    By:  
      /s/
      Karen
      F. Kupferberg

      
        

      

    

    Name:
      Karen F. Kupferberg

    Title:
      Chief Financial Officer

     

     

    JMI
      EQUITY
      FUND V, L.P.

     

    By: 
      JMI Associates V, L.L.C.

    its
      General Partner

     

    By:  
      /s/
      Bradford D. Woloson

      
        

      

    

    Name:
      Bradford D. Woloson

    Title:
      Managing Member

     

    JMI
      EQUITY
      FUND V (AI), L.P.

     

    By: 
      JMI Associates V, L.L.C.

    its
      General Partner

     

    By: 
      /s/
      Bradford D. Woloson

      
        

      

    

    Name:
      Bradford D. Woloson

    Title:
      Managing MemberEXHIBIT
      10.39

    
 

    AMENDED
      AND RESTATED SECURITY AGREEMENT

    

    This
      Amended and Restated Security Agreement, dated as of September 1, 2005
      (the “Security
      Agreement”),
      by
      and among Axeda Systems, Inc., a Delaware corporation (the “Company”),
      Axeda
      Systems Operating Company, Inc., a Massachusetts corporation and an indirect
      wholly owned subsidiary of the Company (“ASOC”),
      and
      Axeda IP, Inc., a Nevada corporation and an indirect wholly owned subsidiary
      of
      the Company (“AIP”
      and
      together with ASOC and AIP, the “Guarantors”)
      (the
      Guarantors together with the Company, the “Obligors”),
      and
      the purchasers named in Schedule
      1
      hereto
      (the “Purchasers”):

    

    WITNESSETH:

    

    WHEREAS,
      the Obligors and the Purchasers are parties to the Senior Secured Bridge Note
      Purchase Agreement, dated as of July 8, 2005 (as may be hereafter amended,
      modified, substituted, extended or restated from time to time, including any
      replacement agreement therefor, the “Senior
      Purchase Agreement”),
      pursuant to which the Company issued to the Purchasers its 7% Senior Secured
      Bridge Notes with an aggregate principal amount of $600,000 (the “Senior
      Notes”);

    

    WHEREAS,
      in connection with the Senior Purchase Agreement, the Obligors granted a first
      priority security interest in collateral to the Purchasers pursuant to the
      Security Agreement dated as of July 8, 2005 (the “Original
      Security Agreement”);

    

    WHEREAS,
      the Obligors and the Purchasers have entered into the Senior Subordinated
      Secured Bridge Note Purchase Agreement, dated as of the date hereof (as may
      be
      hereafter amended, modified, substituted, extended or restated from time to
      time, including any replacement agreement therefor, the “Senior
      Subordinated Purchase Agreement”
      and
      together with the Senior Purchase Agreement, the “Purchase
      Agreements”),
      pursuant to which the Company will issue to the Purchasers its 7% Senior
      Subordinated Secured Bridge Notes with an aggregate principal amount of up
      to
      $900,000 (the “Senior
      Subordinated Notes”
      and
      together with the Senior Notes, the “Notes”);
      and

    

    WHEREAS,
      the Obligors, as an inducement to the Purchasers to purchase the Senior
      Subordinated Notes pursuant to the Senior Subordinated Purchase Agreement,
      desire to amend and restate the Original Security Agreement to grant the
      Purchasers a priority security interest in the Collateral (as defined below)
      to
      secure the obligations under the Notes;

    

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants hereinafter
      set forth, and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged by the Obligors, the Obligors
      hereby agree with the Purchasers as follows:

    

    1.    Certain
      Definitions.
      The
      following terms used herein shall have the meanings ascribed to them under
      the
      Uniform Commercial Code in effect in the Commonwealth of Massachusetts on the
      date hereof: Accounts, Chattel Paper, Documents, Equipment, Fixtures, General
      Intangibles, Goods, Instruments, Inventory, Investment Property and Proceeds.
      Terms not otherwise defined herein shall have the meaning assigned such terms
      in
      the Purchase Agreements.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.    Security
      Agreement.
      Each
      Obligor hereby grants to the Purchasers a first and second priority security
      interest in all of the following property now owned or at any time hereafter
      acquired by the Obligor or in which the Obligor now has or at any time in the
      future may acquire any right, title or interest: (i) Accounts;
      (ii) Chattel Paper; (iii) Deposit Accounts; (iv) Documents;
      (v) Equipment; (vi) Fixtures; (vii) General Intangibles (including without
      limitation patents, letters patent, patent applications, trademarks, service
      marks, trade names and copyrights and any applications therefor or
      registrations, recordings, divisions, continuations, continuations-in-part,
      renewals, reissues or extensions thereof); (viii) Investment Property; (ix)
      Goods; (x) Instruments; (xi) Inventory; (xii) insurance
      claims
      and proceeds; (xiii) books and records, computer programs, databases
      and
      other computer materials of the Obligor pertaining to any and all of the
      foregoing; and (xiv) to the extent not otherwise included, Proceeds
      and
      products of any and all of the foregoing (all such property described above
      being referred to hereinafter collectively as the “Collateral”).

     

    3.    Obligations
      Secured.
      The
      security interest granted hereby secures payment of all amounts owed pursuant
      to
      the Notes issued pursuant to the Purchase Agreements and all other obligations
      of the Obligors to the Purchasers under the Bridge Loan Documents.

     

    4.    Obligors’
      Representations, Warranties and Covenants.
      The
      Obligors represent, warrant and covenant that:

     

    (a)    Each
      of
      the Obligors’ principal place of business is 21 Oxford Road, Mansfield,
      Massachusetts 02048 and the Obligors keep their records concerning accounts,
      contract rights and other property at that location. The Obligors will promptly
      notify the Purchasers in writing of the establishment of any new place of
      business where any of their Inventory or records, or any of the Collateral,
      are
      kept.

     

    (b)    The
      Obligors will at all times keep in a manner reasonably satisfactory to the
      Purchasers accurate and complete records of the Obligors’ Inventory and Accounts
      and will keep such Inventory insured. The Purchasers shall be entitled, at
      reasonable times and intervals after reasonable notice to the Company, and
      without undue disruption to the Company’s business to enter any of the Obligors’
      premises for purposes of inspecting the Collateral and the Obligors’ books and
      records relating thereto.

     

    (c)    The
      Obligors will not create, incur, assume or suffer to exist, or permit any
      subsidiary to create, incur, assume or suffer to exist, any mortgage, deed
      of
      trust, pledge, lien, security interest or other charge or encumbrance (including
      the lien or retained security title of a conditional vendor) of any nature,
      upon
      or with respect to any of their properties, now owned or hereinafter acquired,
      or assign or otherwise convey any right to receive income, except that the
      foregoing restrictions shall not apply to liens, security interests or other
      charges or encumbrances (i) for taxes, assessments or governmental charges
      or
      levies on property of the Obligors or any subsidiary if the same shall not
      at
      the time be delinquent or thereafter can be paid without penalty, or are being
      contested in good faith and by appropriate proceedings, (ii) imposed by law,
      such as carriers’, warehousemen’s and mechanics’ liens and other similar liens
      arising in the ordinary course of business or (iii) granted prior to the date
      hereof to Laurus Master Fund, Ltd. pursuant to that certain Master Security
      Agreement, dated as of October 4, 2004, and those other security and pledge
      agreements related to the Laurus Debt. 

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (d)    The
      Obligors shall not use the Collateral in violation of any applicable statute,
      ordinance, law or regulation or in violation of any insurance policy maintained
      by the Obligors with respect to the Collateral.

     

    5.    Financing
      Statements.
      The
      Obligors shall execute any financing statements, or other notices appropriate
      under applicable law (including without limitation the filing of notices with
      the Patent and Trademark Office), in respect of any security interest created
      pursuant to this Security Agreement which may at any time be required or which,
      in the reasonable opinion of the Purchasers, may at any time be desirable.
      In
      the event that any recording or filing thereof (or the filing of any statements
      of continuation or assignment of any financing statement) is required to protect
      and preserve such lien or security interest, the Obligors shall execute the
      same
      at the time and in the manner requested by the Purchasers.

     

    6.    Obligors’
      Rights Until Default.
      In the
      absence of any Event of Default (as defined in the Purchase Agreements), the
      Obligors shall have the right to possess the Collateral, manage their property
      and sell their inventory in the ordinary course of business.

     

    7.    Purchasers’
      Rights Upon Default.
      Upon an
      Event of Default and at any time thereafter, the Purchasers of at least a
      majority of the aggregate principal amount of the Notes then outstanding may
      exercise any of the remedies available to them, including without limitation,
      those available to a secured party under the Uniform Commercial Code as from
      time to time in effect in the Commonwealth of Massachusetts. The Obligors shall
      pay to the Purchasers of at least a majority of the aggregate principal amount
      of the Notes then outstanding on demand any and all reasonable counsel fees
      and
      other expenses incurred by the Purchasers in exercising their available remedies
      upon an Event of Default hereunder.

     

    8.    Amendment.
      Any
      provision in this Security Agreement or the Purchase Agreements to the contrary
      notwithstanding, amendments to this Security Agreement may be made, and
      compliance with any covenant or provision set forth herein may be omitted or
      waived, only with the prior written consent thereto of the Purchasers of at
      least a majority of the aggregate principal amount of all Notes then outstanding
      and, in the case of amendments only, the Company. Any waiver or consent may
      be
      given subject to satisfaction of conditions stated therein and any waiver or
      consent shall be effective only in the specific instance and for the specific
      purpose for which given. No failure or delay on the part of any of the
      Purchasers, or any other holder of any Note, in exercising any right, power
      or
      remedy hereunder shall operate as a waiver thereof, nor shall any single or
      partial exercise of any such right, power or remedy preclude any other or
      further exercise thereof or the exercise of any other right, power or remedy
      hereunder. Written notice of any waiver or consent effected under this Section
      8
      shall promptly be delivered by the Company to any Purchasers who did not execute
      the same.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    9.    Notices.
      All
      notices and other communications required or permitted hereunder shall be in
      writing and shall be given as provided in Section 15 of the Purchase
      Agreements.

     

    10.    Cumulation
      of Remedies.
      The
      rights and remedies under this Security Agreement are cumulative and not
      exclusive of any rights, remedies, powers and privileges that may otherwise
      be
      available to the Purchasers.

     

    11.    Binding
      Effect.
      This
      Security Agreement shall be binding upon and inure to the benefit of the
      successors and assigns of the parties hereto, including without limitation,
      all
      future holders of the Notes. This Security Agreement constitutes the entire
      agreement with respect to the matter set forth herein and supersedes the
      Original Security Agreement and any prior agreements or understandings with
      respect thereto.

     

    12.    Governing
      Law.
      This
      Security Agreement shall be governed by, and construed in accordance with the
      laws of the Commonwealth of Massachusetts, without giving effect to the
      principles of conflict of laws thereof. 

     

    13.    Counterparts.
      This
      Security Agreement may be executed and delivered (including by facsimile
      transmission) in more than one counterpart, each of which shall be deemed to
      be
      an original and which, together, shall constitute one and the same
      instrument.

     

    14.    Severability.
      If any
      provision of this Security Agreement shall be held to be illegal, invalid or
      unenforceable, such illegality, invalidity or unenforceability shall attach
      only
      to such provision and shall not in any manner affect or render illegal, invalid
      or unenforceable any other provision of this Security Agreement, and this
      Security Agreement shall be carried out as if any such illegal, invalid or
      unenforceable provision were not contained herein.

     

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, this Security Agreement has been executed by the parties hereto
      as of the date first above written.

    

    THE
      COMPANY:

     

    AXEDA
      SYSTEMS, INC.

     

    By:  
      /s/
      Robert M. Russell Jr.

      
        

      

    

    Name: Robert
      M.
      Russell Jr.

    Title:
      Chief Executive Officer

     

     

    THE
      GUARANTORS:

     

    AXEDA
      SYSTEMS OPERATING COMPANY, INC.

     

    By:  
      /s/
      Karen
      F. Kupferberg

      
        

      

    

    Name:
      Karen F. Kupferberg

    Title:
      Chief Financial Officer

     

     

    AXEDA
      IP,
      INC.

     

    By:  
      /s/
      Lynn
      Magnani

      
        

      

    

    Name:
      Lynn Magnani

    Title:
      Secretary

    
 

    

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    THE
      PURCHASERS:

     

    JMI
      EQUITY
      FUND V, L.P.

    By: 
      JMI Associates V, L.L.C.

    its
      General Partner

     

    By:

    
      
        

      

    

    Name:
      Bradford D. Woloson

    Title:
      Managing Member

     

     

    JMI
      EQUITY
      FUND V (AI), L.P.

    By: 
      JMI Associates V, L.L.C.

    its
      General Partner

     

    By:

    
      
        

      

    

    Name:
      Bradford D. Woloson

    Title:
      Managing Member

     

    

    

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    Schedule
      1

    

    PURCHASERS:

    

    
      	
              JMI
                EQUITY
                FUND V, L.P.

              1119
                St.
                Paul Street

              Baltimore,
                MD 21202

            
	
              JMI
                EQUITY
                FUND V (AI), L.P.

              1119
                St.
                Paul Street

              Baltimore,
                MD 21202

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