Document:

AMENDMENT
        NO. 1 

      TO
        

      SUBSIDIARY
        GUARANTY

      

      THIS
        AMENDMENT NO. 1 to the Subsidiary Guaranty (the “Amendment”)
        is
        entered into effective as of July 14,
        2005,
        by and among Axeda Systems Operating Company, Inc., a Massachusetts corporation
        (“ASOC”),
        Axeda
        IP, Inc., a Nevada corporation (the “Subsidiary”),
        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,
        ASOC executed, in favor of the Purchasers, that certain Subsidiary Guaranty,
        dated as of July 8, 2005 (the “Subsidiary
        Guaranty”).
        

      

      WHEREAS,
        ASOC, the Subsidiary and the Purchasers desire, to amend the provisions of
        the
        Subsidiary Guaranty to include the Subsidiary as a “Guarantor” under the
        Subsidiary Guaranty. 

      

      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. Additional
        Guarantor.
        The
        Subsidiary Guaranty is hereby amended to include the Subsidiary as a “Guarantor”
        for all purposes under the Subsidiary Guaranty effective as of July 8, 2005,
        and
        the Subsidiary hereby consents and agrees to become a party to the Subsidiary
        Guaranty as a “Guarantor” and agrees to be bound by, and subject to, all of the
        obligations and liabilities thereunder. 

      

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

      

      5. Continued
        Effect; Conflict of Terms.
        Each of
        the parties hereto hereby confirms that the Subsidiary Guaranty, 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 Subsidiary Guaranty
        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. 

      

      

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

      
        	 	 	 
	 	AXEDA
                SYSTEMS OPERATING COMPANY, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Dale
                Calder
	 	
                
Name: Dale
                Calder
	 	Title:
                President

      

      
         

         

        
          	 	 	 
	 	AXEDA
                  IP, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Dale
                  Calder
	 	
                  
Dale
                  Calder
	 	Title:
                  President

      

      
        
          	 	 	 
	 	
                  JMI
                    EQUITY
                    FUND V, L.P.

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

                  its
                    General Partner

                
	 
 	 
 	 
 
	 	By:  	/s/ Bradford
                  D. Woloson
	 	
                  
Bradford
                  D. Woloson
	 	Managing
                  Member

      

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

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

                  its
                    General Partner

                
	 
 	 
 	 
 
	 	By:  	/s/ Bradford
                  D. Woloson
	 	
                  
Bradford
                  D. Woloson
	 	Managing
                  MemberSUBORDINATION
        AGREEMENT

      

      This
        Subordination Agreement, dated as of July 8, 2005 (the “Subordination
        Agreement”),
        by
        and among Axeda Systems, Inc., a Delaware corporation, the several Purchasers
        listed in Schedule
        1
        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 therefore, the “Purchase
        Agreement”),
        by
        and among the Company (defined below) and the Purchasers (together with any
        subsequent holders of the Notes (as defined in the Purchase Agreement), the
        “Senior
        Holders”)
        and
        Laurus Master Fund, Ltd. and its successors and assigns of the notes and
        other
        securities issued under the Securities Purchase Agreement referenced below
        (each
        a “Subordinated
        Creditor”
        and
        collectively, the “Subordinated
        Creditors”).

      

      WITNESSETH:

      

      WHEREAS,
        pursuant to the provisions of the Purchase Agreement, the Senior Holders
        have
        agreed, upon the terms and subject to the conditions contained therein, to
        make
        loans and otherwise extend credit to the Company; and

      

      WHEREAS,
        each Subordinated Creditor has extended credit to the Company pursuant to
        that
        certain Securities Purchase Agreement, dated as of October 5, 2004, by and
        among
        the Subordinated Creditors and the Company (as amended, modified or supplemented
        from time to time, the “Securities
        Purchase Agreement”);
        and

      

      WHEREAS,
        it is a condition precedent to the Senior Holders’ willingness to make loans and
        otherwise extend credit to the Company pursuant to the Purchase Agreement
        that
        the Company and the Subordinated Creditors enter into this Agreement;
        and

      

      WHEREAS,
        in order to induce the Senior Holders to make loans and otherwise extend
        credit
        to the Company pursuant to the Purchase Agreement, the Company and the
        Subordinated Creditors have agreed to enter into this Agreement.

      

      NOW,
        THEREFORE, in consideration of the foregoing premises and the mutual covenants
        hereinafter set forth, and for other good and valuable consideration, the
        receipt and sufficiency of which is hereby acknowledged, the parties hereto,
        intending to be legally bound, do hereby agree as follows: 

      

      1.    Definitions.
        The
        following terms shall have the meanings given to such terms as set forth
        below:

       

      “Company”
        For
        purposes hereof, the term “Company” shall include Axeda Systems, Inc. and all of
        its direct and indirect subsidiaries whether now or hereafter existing,
        including without limitation, Axeda Systems Operating Company, Inc.

       

      “Senior
        Debt”
        All
        principal (which principal shall not exceed $600,000), interest, fees, costs,
        enforcement expenses (including legal fees and disbursements), collateral
        protection expenses and other reimbursement or indemnity obligations created
        or
        evidenced by the Purchase Agreement or any of the other Senior Documents.
        Notwithstanding anything herein to the contrary Senior Debt shall not include
        any termination or break-up fees or expense reimbursement amounts payable
        to the
        Senior Holders by the Company under the Letter of Intent. Senior Debt shall
        expressly include any and all interest accruing or costs or expenses (including
        legal fees and expenses) incurred on or after the date of any filing by or
        against the Company of any petition under the United States Bankruptcy Code
        or
        any other bankruptcy, insolvency or reorganization act regardless of whether
        the
        Senior Holders’ claim therefor is allowed or allowable in the case or proceeding
        relating thereto.

      

      
        
           

        

        
           

          
            

          

        

        
          
            Subordination
              Agreement - Page 2

             

          

        

      

      “Senior
        Documents”
        Collectively, the Purchase Agreement, the Notes, the Security Agreement,
        the
        Guaranty, any promissory notes executed in connection therewith (subject
        to the
        aggregate principal not exceeding $600,000) and any and all guaranties and
        security interests, mortgages and other liens directly or indirectly guarantying
        or securing any of the Senior Debt, and any and all other documents or
        instruments otherwise evidencing or further guarantying or securing directly
        or
        indirectly any of the Senior Debt, whether now existing or hereafter
        created.

      

      “Subordinated
        Debt”
        All
        principal, interest, fees, costs, enforcement expenses (including legal fees
        and
        disbursements), collateral protection expenses and other reimbursement and
        indemnity obligations created or evidenced by any of the Subordinated Documents
        or any prior, concurrent or subsequent notes, instruments or agreements of
        indebtedness, liabilities or obligations of any type or form whatsoever relating
        thereto in favor of the Subordinated Creditors with respect to the
        Company.

      

      “Subordinated
        Documents”
        Collectively, the Securities Purchase Agreement, any promissory notes executed
        in connection therewith and any and all guaranties and security interests,
        mortgages and other liens directly or indirectly guarantying or securing
        any of
        the Subordinated Debt, and any and all other documents or instruments executed
        in connection with the Securities Purchase Agreement or otherwise evidencing
        or
        further guarantying or securing directly or indirectly any of the Subordinated
        Debt, whether now existing or hereafter created.

      

      Terms
        not
        otherwise defined herein shall have the meaning assigned such terms in the
        Purchase Agreement.

      

      2.   Subordination.
        Each
        Subordinated Creditor, for itself, its executors, administrators, personal
        representatives, heirs, devisees, legatees, successors and assigns, covenants
        and agrees that the payment of the principal of and interest on all Subordinated
        Debt now or hereafter outstanding is hereby expressly subordinated, to the
        extent and in the manner hereinafter set forth, to the payment in full in
        cash
        of the Senior Debt; provided, however, that the Company shall be permitted
        to
        make certain payments in the form of equity on account of the Subordinated
        Debt
        in accordance with Section 3 below. 

       

      3.   No
        Payment.
        As long
        as any of the Senior Debt is outstanding, no payment of principal of, interest
        on, or premiums, fees, costs, expenses or other amounts with respect to,
        any
        Subordinated Debt shall be made by the Company or accepted by any Subordinated
        Creditor and the Company shall not set off, contra or otherwise apply all
        or any
        part of any obligation of any Subordinated Creditor to the Company toward
        satisfaction of the Subordinated Debt, or acquire, redeem or otherwise purchase
        any Subordinated Debt; provided, however, that the Company shall be permitted
        (but not obligated) to make payments on the Subordinated Debt payable solely
        in
        the form of shares of common stock of the Company or warrants or options
        to
        purchase shares of common stock of the Company in accordance with the terms
        of
        the Securities Purchase Agreement so long as no Event of Default has occurred
        under the Purchase Agreement.

       

      
        
           

        

        
           

          
            

          

        

        
          
            Subordination
              Agreement - Page 3

             

          

        

      

      4.   Payments
        Held in Trust.
        If any
        payment of principal of, interest on, or premiums, fees, costs, expenses
        or
        other amounts with respect to, any Subordinated Debt is received by a
        Subordinated Creditor before all Senior Debt shall have been paid or satisfied
        in full, despite or in violation or contravention of the terms of this
        Subordination Agreement, the Subordinated Creditor will hold the same in
        trust
        for the Senior Holders and forthwith pay the same to the Senior Holders,
        to be
        held by the Senior Holders as additional security for the Senior Debt or
        applied
        by the Senior Holders to payment of the Senior Debt in such manner as the
        Senior
        Holders may choose in their sole discretion. Any such payment of principal
        of,
        interest on, or premiums, fees, costs, expenses or other amounts with respect
        to, any Subordinated Debt paid over to the Senior Holders and held by the
        Senior
        Holders as additional security pursuant to the immediately preceding sentence
        shall, to the extent not applied to the payment of the Senior Debt, be paid
        over
        to the Subordinated Creditor after the Senior Debt has been finally paid
        in full
        in cash. Until the Senior Debt has been finally paid in full in cash, no
        Subordinated Creditor shall have any right of subrogation, reimbursement,
        restitution, contribution or indemnity whatsoever from any assets of the
        Company
        or any guarantor of or provider of collateral security for the Senior Debt.
        Notwithstanding anything to the contrary contained herein, following the
        payment
        in full of the Senior Debt, each Senior Holder hereby agrees that in the
        event
        such Senior Holder receives as a result of its exercise of remedies under
        the
        Senior Documents any amount on account of the Senior Debt in excess of the
        outstanding Senior Debt, such Senior Holder shall be pay over such excess
        amount
        to the Subordinated Creditors as promptly as practicable.

       

      5.   Bankruptcy.
        In the
        event of any receivership, insolvency, bankruptcy, assignment for the benefit
        of
        creditors, reorganization (whether or not pursuant to bankruptcy laws), sale
        of
        all or substantially all of the assets, dissolution, liquidation, winding
        up of
        the business or affairs of the Company or any other marshalling of the assets
        and liabilities of the Company: 

       

      (a)    Each
        Subordinated Creditor will prove, enforce and endeavor to obtain payment
        of the
        principal of, interest on and all other amounts payable with respect to all
        Subordinated Debt and will pay over to the Senior Holders amounts thereof
        sufficient for payment of principal of and interest on, or other payments
        with
        respect to, the Senior Debt, to pay in full the Senior Debt. The Senior Holders
        may file claims in any such proceeding on each Subordinated Creditor’s behalf
        and in no event shall any Subordinated Creditor waive, forgive or cancel
        any
        claim it may now or hereafter have against the Company.

       

      (b)    The
        Senior Holders may, at their option, claim directly from the trustee or
        representative of the Company’s estate in such proceeding. In the event that the
        Senior Holders do so elect to claim directly against the trustee or
        representative of the Company’s estate, each Subordinated Creditor hereby grants
        to the Senior Holders an irrevocable proxy to vote its claims in any such
        proceeding or at any meeting of creditors, and agrees to execute all further
        documents requested by the Senior Holders to facilitate exercise of this
        proxy.
        The Subordinated Creditors and the Company agree to furnish all assignments,
        powers or other documents requested by the Senior Holders to facilitate such
        direct collection by the Senior Holders or the perfection of any interest
        of the
        Senior Holders hereunder.

       

      
        
           

        

        
           

          
            

          

        

        
          
            Subordination
              Agreement - Page 4

             

          

        

      

      6.    Certain
        Prohibited Actions.
        Until
        the payment or satisfaction in full of the Senior Debt, without the prior
        written consent of the Senior Holders: 

       

      (a)    no
        Subordinated Creditor shall from and after the date hereof request, demand
        or
        seek to obtain from the Company, and the Company shall not grant or deliver
        to
        the Subordinated Creditor, any collateral or other security for the Subordinated
        Debt (the parties hereto acknowledge that this clause (a) does not require
        the
        Subordinated Creditors to terminate the liens granted prior to this date
        under
        the Subordinated Documents); 

       

      (b)    no
        Subordinated Creditor shall (i) accelerate the maturity of any Subordinated
        Debt, (ii) demand payment of any Subordinated Debt or (iii) exercise any
        right
        or remedy, or take any action, against the Company or any of the assets or
        property of the Company to enforce its rights with respect to any Subordinated
        Debt; 

       

      (c)    no
        Subordinated Creditor will amend or modify any of the terms of any of the
        Subordinated Debt or any of the Subordinated Documents in a manner that is
        materially adverse to the interests of the Senior Holders (including those
        interests relating to the Senior Documents and the transactions contemplated
        by
        the Letter of Intent), provided, however, that the Subordinated Creditors
        shall
        provide the Senior Holders at least five business days' prior notice of any
        proposed amendment or modification to afford the Senior Holders an opportunity
        to object to such proposed amendment or modification as being materially
        adverse
        to their interests; and

       

      (d)    no
        Subordinated Creditor shall sell, assign or otherwise transfer or further
        encumber any Subordinated Debt or interest therein without first procuring
        and
        delivering to the Senior Holders evidence in writing of the consent and
        agreement of the purchaser, pledgee, assignee or transferee of such Subordinated
        Debt or interest therein to comply with all terms, conditions and provisions
        of
        this Subordination Agreement. The rights of the Senior Holders under this
        Section 6 shall inure to the benefit of their successors and
        assigns.

       

      7.    Subordinated
        Creditors' Security.
        

       

      (a)    Each
        Subordinated Creditor hereby confirms that, regardless of the relative times
        and
        method of attachment or perfection thereof (or any failure to perfect) or
        the
        order of filing of financing statements, mortgages or other security agreements
        or documents, or anything in the Subordinated Documents or this Agreement
        to the
        contrary, the security interests and liens granted or to be granted from
        time to
        time to secure the Senior Indebtedness, shall in all respects be first and
        senior security interests and liens, superior to any security interests and
        liens granted or to be granted to Subordinated Creditor in assets of or
        ownership interests in, the Company or any other person pursuant to the
        Subordinated Documents or otherwise, it being the express intention of the
        parties that, notwithstanding anything in this Agreement to the contrary,
        all
        liens and security interests granted to Senior Holders from time to time
        shall
        be prior and superior to any liens or security interests granted to Subordinated
        Creditor. In foreclosing on Senior Holders’ security interests and liens in the
        collateral described in or purportedly covered by the Security Agreement
        (as
        defined in the Purchase Agreement) (the "Collateral"),
        the
        Senior Holders may proceed to foreclose on their security interests and liens
        in
        any manner which the Senior Holders, in their sole discretion, choose, even
        though a higher price might have been realized if Senior Holders had proceeded
        to foreclose on their security interests and liens in another
        manner.

       

      
        
           

        

        
           

          
            

          

        

        
          
            Subordination
              Agreement - Page 5

             

          

        

      

      (b)    Each
        Subordinated Creditor hereby consents and agrees that the Senior Holders
        shall
        be under no obligation with respect to marshaling collateral security for
        the
        Senior Debt in favor of Subordinated Creditors or in payment of indebtedness
        of
        the Company to the Subordinated Creditors.

       

      (c)    Without
        limiting any of the rights (including any of the foreclosure rights) of Senior
        Holders under the Purchase Agreement, the Security Agreement, or any documents
        delivered to secure the obligations of the Company to the Senior Holders
        in
        connection therewith or under the provisions of any applicable law, and without
        placing any obligation on the part of the Senior Holders to follow any of
        the
        following provisions in order to retain their priority status hereunder,
        in the
        event that the Senior Holders release or discharge their security interests
        in,
        or liens upon, any Collateral which is subject to a lien or security interest
        in
        favor of any Subordinated Creditor, in each case in connection with exercising
        the Senior Holders’ rights under the Security Agreement, such Collateral shall
        thereupon be deemed to have been released from all such liens and security
        interests. Each Subordinated Creditor agrees that within two Business Days'
        following Senior Holder’s written request therefor, it will execute, deliver and
        file any and all such termination statements, lien releases and other agreements
        and instruments as Senior Holders reasonably deem necessary or appropriate
        in
        order to give effect to the preceding sentence. Each Subordinated Creditor
        hereby irrevocably appoints the Senior Holders the true and lawful attorney
        of
        such Subordinated Creditor for the purpose of effecting any such executions,
        deliveries and filings. Without limiting the foregoing, and without implying
        that any Senior Holder is obligated to undertake any special investigation
        with
        respect to its good faith belief as to the fair value of any property, the
        parties hereto agree to be bound as to the fair value of any property as
        determined by any independent appraisal of such property that may be conducted
        at the Senior Holders’ request. The cost of any such appraisal shall be borne by
        the Company and, if funded by the Senior Holders, shall constitute Senior
        Debt.
        Each Senior Holder agrees that if, as a result of a release of its liens
        on
        Collateral which is subject to a lien or security interest in favor of any
        Subordinated Creditor, such Senior Holder receives any amount on account
        of the
        Senior Debt in excess of the outstanding Senior Debt, such Senior Holder
        shall
        in accordance with the last sentence of Section 4 above pay over such excess
        amount to the Subordinated Creditors as promptly as practicable following
        payment in full of the Senior Debt. 

       

      8.    Consents
        and Waivers.
        Each
        Subordinated Creditor hereby irrevocably consents to (a) the Company
        entering into the Purchase Agreement and the other Senior Documents, the
        Company’s incurrence of the Senior Debt and the Company’s performance of its
        obligations thereunder and irrevocably waives any rights it may have to
        participate in, receive notice of or otherwise prohibit the issuance of the
        Senior Debt, (b) any waiver of the terms of the Senior Debt, (c) any
        renewal, extension or postponement of the time of payment of the Senior Debt
        or
        any other indulgence with respect to the Senior Debt, (d) any substitution,
        exchange or release of collateral for the Senior Debt and (e) the
        addition
        or release of any person primarily or secondarily liable on the Senior Debt,
        made or effected by the Senior Holders. The Senior Holders may exercise,
        fail to
        exercise, waive or amend any of their rights under any instrument evidencing
        or
        securing or under any agreement delivered in connection with any Senior Debt,
        and in reference thereto may make and enter into such agreements as to them
        may
        seem proper or desirable, all without notice to or further assent from the
        Subordinated Creditors, and any such action shall not in any manner impair
        or
        affect this Subordination Agreement or any of the Senior Holders’ rights
        hereunder. Notwithstanding anything herein to the contrary, the Senior Documents
        shall not be amended or modified to (i) increase the aggregate principal
        of, or
        increase the rates of interest, fees, other premiums or similar amounts payable
        on, the Senior Debt, in each case, from that in effect on the date hereof
        or
        (ii) restrict the Company from entering into an amendment or modification
        to the
        terms of the Subordinated Debt which amendment or modification is in accordance
        with the terms and conditions of Section 6(c) hereof, in each case without
        the
        consent of the Subordinated Creditors representing at least a majority of
        the
        aggregate principal amount of the Subordinated Debt then outstanding. Each
        Subordinated Creditor hereby irrevocably waives (i) presentment, notice
        and
        protest in connection with all negotiable instruments evidencing Senior Debt
        or
        Subordinated Debt, (ii) notice of the acceptance of this Subordination
        Agreement by the Senior Holders, (iii) notice of any extensions of
        credit
        made, extensions granted or other action taken in reliance hereon, and
        (iv) all demands and notices of every kind in connection with this
        Subordination Agreement. Each Subordinated Creditor hereby waives and agrees
        not
        to assert against the Senior Holders any rights which a guarantor or surety
        with
        respect to any indebtedness of the Company could exercise; but nothing in
        this
        Subordination Agreement shall constitute the Subordinated Creditor a guarantor
        or surety. 

       

      
        
           

        

        
           

          
            

          

        

        
          
            Subordination
              Agreement - Page 6

             

          

        

      

      9.    Purchase
        of Senior Debt.
        The
        Subordinated Creditors shall be entitled, at any time, to purchase the Notes
        representing the entire amount of the Senior Debt from the Senior Holders
        by
        paying in full in immediately available U.S funds by wire transfer to the
        Senior
        Holders the aggregate amount of all principal, interest and other amounts
        payable under the Notes and the Bridge Loan Documents then outstanding;
        provided, however, that the Subordinated Creditors shall not have the right
        to
        purchase the Notes prior to the Maturity Date (as defined in the Purchase
        Agreement on the date hereof) if any Subordinated Creditor is (i) purchasing
        the
        Notes in connection with the provision by the Subordinated Creditors of
        financing for the acquisition of the stock or assets of the Company or any
        of
        its subsidiaries by any person other than the Senior Holders or their
        affiliates, or (ii) acting directly with a person other than the Senior Holders
        and their affiliates to take any action that could reasonably be expected
        to
        prevent, interfere with, delay or postpone the acquisition of the stock or
        assets of the Company or any of its subsidiaries by the Senior Holders or
        their
        affiliates. Furthermore, each Subordinated Creditor agrees that, at no time
        prior to the Maturity Date (as defined in the Purchase Agreement on the date
        hereof), shall such Subordinated Creditor provide direct assistance to any
        person attempting to acquire the stock or assets of the Company or any of
        its
        subsidiaries other than the Senior Holders or their affiliates. If the
        Subordinated Creditors exercise their right to purchase the Notes and pay
        the
        purchase price therefor, the Senior Holders will assign to the Subordinated
        Creditors all right, title and interest they have to the Guaranty, the Security
        Agreement and this Agreement concurrently with the transfer of the
        Notes.

       

      10.   No
        Obligations of Senior Holders.
        The
        rights granted to the Senior Holders hereunder are solely for their protection
        and, except to the extent explicitly provided herein, nothing herein contained
        shall impose on the Senior Holders any duties with respect to the Subordinated
        Debt or any property of the Subordinated Creditor or the Company received
        hereunder beyond reasonable care while in the Senior Holders’ custody and
        redelivery upon expiration of this Subordination Agreement. 

       

      
        
           

        

        
           

          
            

          

        

        
          
            Subordination
              Agreement - Page 7

             

          

        

      

      11.   Specific
        Performance.
        The
        Senior Holders are hereby authorized to demand specific performance of this
        Subordination Agreement, whether or not the Company shall have complied with
        the
        provisions hereof applicable to it, at any time when the Subordinated Creditor
        shall have failed to comply with any provision hereof. 

       

      12.   Amendment.
        This
        Subordination Agreement may not be amended or waived except by an instrument
        in
        writing signed by the Company, the Subordinated Creditors representing at
        least
        a majority of the aggregate principal amount of the Subordinated Debt then
        outstanding and the Senior Holders representing at least a majority of the
        aggregate principal amount of the Notes then outstanding.

       

      13.   Notices.
        All
        notices, requests, demands and other communications provided for hereunder
        shall
        be in writing (including telecopy communication) and telecopied or delivered:
        (i) if to a Senior Holder, c/o JMI Management, Inc.,
        1119
        St.
        Paul Street, Baltimore, MD 21202, Attn: Bradford D. Woloson or at such other
        address as to which such Senior Holder may inform the other parties in writing
        in compliance with the terms of this Section 13, with a copy to Goodwin
        Procter LLP, Exchange Place, 53 State Street, Boston, MA 02109, Attn: Mark
        H.
        Burnett, Esq., Fax. No.: (617) 523-1231; (ii) if to the Company, at 21 Oxford
        Road, Mansfield, Massachusetts 02048, or at such other address as shall be
        designated by the Company in a written notice to the other parties complying
        as
        to delivery with the terms of this Section 13, with a copy to Arent
        Fox
        PLLC, 1675 Broadway, New York, New York 10019-5820, Attn: Steven D. Dreyer,
        Fax
        No. (212) 484-3990; and (iii) if to the Subordinated Creditor, at c/o Laurus
        Capital Management LLC, 825 Third Avenue, 14th
        Floor,
        New York, New York 10022, Attn: Jason Ban, Esq., Fax No.: (212) 541-4434
        or at
        such other address as shall be designated by the Subordinated Creditor in
        a
        written notice to the other parties complying as to delivery with the terms
        of
        this Section 13.

       

      All
        such
        notices, requests, demands and other communications shall be in writing and
        shall be deemed to have been given (i) on the date of delivery, if personally
        delivered or telecopied to the party to whom notice is to be given, or (ii)
        upon
        confirmed receipt after being deposited with a nationally recognized overnight
        delivery service for next business day delivery or (iii) on the third Business
        Day after mailing, if mailed to the party to whom notice is to be given,
        by
        certified mail, return receipt requested, postage prepaid, and addressed
        to the
        addressee at the address of the addressee set forth herein, or to the most
        recent address, specified by written notice, given to the sender pursuant
        to
        this paragraph.

       

      14.   Waiver.
        No
        delay on the part of the Senior Holders or Subordinated Creditors in exercising
        any right, power or privilege hereunder shall operate as a waiver thereof,
        nor
        shall any partial exercise or waiver of any privilege or right hereunder
        preclude any further exercise of such privilege or right or the exercise
        of any
        other right, power or privilege. The rights and remedies expressed in this
        Subordination Agreement are cumulative and not exclusive of any right or
        remedy
        which the Senior Holders or Subordinated Creditors may otherwise
        have.

       

      
        
           

        

        
           

          
            

          

        

        
          
            Subordination
              Agreement - Page 8

             

          

        

      

      15.   Further
        Assurances.
        The
        Subordinated Creditors and the Company shall execute and deliver to the Senior
        Holders such further instruments and documents and shall take such further
        action as the Senior Holders may at any time or times reasonably request
        in
        order to carry out the provisions and intent of this Subordination Agreement.
        

       

      16.   Prior
        Agreements.
        This
        Agreement constitutes the entire agreement between the parties and supercedes
        any other prior understandings or agreements concerning the subject matter
        hereof. 

       

      17.   Governing
        Law.
        This
        Subordination Agreement shall be governed by, and construed in accordance
        with
        the laws of the Commonwealth of Massachusetts, without giving effect to the
        principles of conflicts of laws thereof. The Company and the Subordinated
        Creditors hereby consent to the jurisdiction of any federal or state court
        in
        the Commonwealth of Massachusetts located in the counties of Suffolk, Middlesex,
        or Norfolk.

       

      18.   Waiver
        of Jury Trial.
        EACH OF
        THE SUBORDINATED CREDITORS AND THE COMPANY EACH HEREBY WAIVES ITS RIGHT TO
        A
        JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE
        IN
        CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
        PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW,
        EACH OF
        THE SUBORDINATED CREDITORS AND THE COMPANY HEREBY WAIVES ANY RIGHT WHICH
        IT MAY
        HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE
        ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
        OTHER
        THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH OF THE SUBORDINATED CREDITORS
        AND
        THE COMPANY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE
        SENIOR HOLDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE SENIOR HOLDER
        WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS
        AND
        (B) ACKNOWLEDGES THAT THE SENIOR HOLDER HAS BEEN INDUCED TO ENTER INTO THIS
        AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED
        HEREIN.

       

      19.   Counterparts.
        This
        Subordination Agreement may be signed in any number of counterparts, which
        together will be one and the same instrument. This Subordination Agreement
        shall
        become effective whenever each party shall have signed at least one such
        counterpart. This Subordination Agreement shall be binding upon each party
        hereto and its executors, administrators, personal representatives, heirs,
        devisees, legatees, successors and assigns, and shall inure to the benefit
        of
        the Senior Holders and the Subordinated Creditors and each of their respective
        successors and assigns.

       

      20.   Assignment
        by Senior Holders.
        No
        Senior Holder shall sell, assign or otherwise transfer or further encumber
        any
        Senior Debt or interest therein without first procuring and delivering to
        the
        Subordinated Creditors evidence in writing of the consent and agreement of
        the
        purchaser, pledgee, assignee or transferee of such Senior Debt or interest
        therein to comply with all terms, conditions and provisions of, and be bound
        by,
        this Subordination Agreement. 

       

      
        
           

        

        
           

          
            

          

        

        
          
            Subordination
              Agreement - Page 9

             

          

        

      

      

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
            Subordination
              Agreement - Signature Page 

             

          

        

      

      IN
        WITNESS WHEREOF, each party hereto has cause this Subordination Agreement
        to be
        executed by its duly authorized officer as of the date first above
        written.

       

      
        	 	 	 
	 	COMPANY:
	 	 
	 	AXEDA SYSTEMS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Karen
                Kupferberg
	 	
                
Karen
                Kupferberg
	 	Chief
                Financial Officer

      

       

      
        	
              	 	 
	 	SENIOR
                HOLDERS:
	 	 
	 	
                JMI
                  EQUITY FUND V, L.P.

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

                its
                  General Partner

              
	 
 	 
 	 
 
	 	By:  	/s/ Bradford
                D. Woloson
	 	
                
Bradford
                D. Woloson
	 	Managing
                Member

      

       

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

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

                its
                  General Partner

              
	 
 	 
 	 
 
	 	By:  	/s/ Bradford
                D. Woloson
	 	
                
Bradford
                D. Woloson
	 	Managing
                Member

      
        	 	 	 
	 	SUBORDINATED CREDITORS:
	 	 
	 	LAURUS MASTER FUND, LTD.
	 
 	 
 	 
 
	 	By:  	/s/ David
                Grin
	 	
                
Name:
                David Grin
	 	Title: Fund
                Manager/Director

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