SUBSIDIARY GUARANTY
SUBSIDIARY
GUARANTY
July
8,
2005
FOR
VALUE
RECEIVED, and in consideration of note purchases from, loans made or to be
made
or credit otherwise extended or to be extended to or for the account of Axeda
Systems Inc., a Delaware corporation (the “Company”)
by the
persons identified as “Purchasers” (the “Purchasers”)
in
that certain Senior Secured Bridge Note Purchase Agreement, dated as of
July 8, 2005, among the Company, the Guarantor (defined below) and
the
Purchasers (as may be hereafter amended, modified, substituted, extended
or
restated from time to time, including any replacement agreement therefore,
the
“Purchase
Agreement”),
from
time to time and at any time and for other good and valuable consideration
and
to induce the Purchasers, in their discretion, to purchase such notes, make
such
loans or extensions of credit and to make or grant such renewals, extensions,
releases of collateral or relinquishments of legal rights as the Purchasers
may
deem advisable, Axeda Systems Operating Company, Inc., a Massachusetts
corporation and indirect wholly-owned subsidiary of the Company (the
“Guarantor”),
unconditionally guaranties to the Purchasers, their successors, endorsees
and
assigns the prompt payment when due (whether by acceleration or otherwise)
of
all present and future obligations and liabilities of any and all kinds of
the
Company to the Purchasers and of all instruments of any nature evidencing
or
relating to any such obligations and liabilities upon which the Company or
one
or more parties and the Company is or may become liable to the Purchasers,
whether incurred by the Company as maker, endorser, drawer, acceptor,
guarantors, accommodation party or otherwise, and whether due or to become
due,
secured or unsecured, absolute or contingent, joint or several, and however
or
whenever acquired by the Purchasers, whether arising under, out of, or in
connection with (i) the Purchase Agreement and (ii) each of the other Bridge
Loan Documents (as defined in the Purchase Agreement), or any documents,
instruments or agreements relating to or executed in connection with the
Bridge
Loan Documents or any documents, instruments or agreements referred to therein
or otherwise, or any other indebtedness, obligations or liabilities of the
Company to the Purchasers, whether now existing or hereafter arising, direct
or
indirect, liquidated or unliquidated, absolute or contingent, due or not
due and
whether under, pursuant to or evidenced by a note, agreement, guaranty,
instrument or otherwise (all of which are herein collectively referred to
as the
“Obligations”),
and
irrespective of the genuineness, validity, regularity or enforceability of
such
Obligations, or of any instrument evidencing any of the Obligations or of
any
collateral therefor or of the existence or extent of such collateral, and
irrespective of the allowability, allowance or disallowance of any or all
of the
Obligations in any case commenced by or against the Company under Title 11,
United States Code, including, without limitation, obligations or indebtedness
of the Company for post-petition interest, fees, costs and charges that would
have accrued or been added to the Obligations but for the commencement of
such
case. Terms not otherwise defined herein shall have the meaning assigned
such
terms in the Purchase Agreement. In furtherance of the foregoing, the Guarantor
hereby agrees as follows:
1. No
Impairment.
The
Purchasers may at any time and from time to time, either before or after
the
maturity thereof, without notice to or further consent of the Guarantor,
extend
the time of payment of, exchange or surrender any collateral for, renew or
extend any of the Obligations or increase or decrease the interest rate thereon,
or any other agreement with the Company or with any other party to or person
liable on any of the Obligations, or interested therein, for the extension,
renewal, payment, compromise, discharge or release thereof, in whole or in
part,
or for any modification of the terms thereof or of any agreement between
the
Purchasers and the Company or any such other party or person, or make any
election of rights the Purchasers may deem desirable under the United States
Bankruptcy Code, as amended, or any other federal or state bankruptcy,
reorganization, moratorium or insolvency law relating to or affecting the
enforcement of creditors' rights generally (any of the foregoing, an
“Insolvency
Law”)
without in any way impairing or affecting this Guaranty. This instrument
shall
be effective regardless of the subsequent incorporation, merger or consolidation
of the Company, or any change in the composition, nature, personnel or location
of the Company and shall extend to any successor entity to the Company,
including a debtor in possession or the like under any Insolvency Law.
Subsidiary
Guaranty - Page 2
2. Guaranty
Absolute.
Subject
to Section 5(c), the Guarantor guarantees that the Obligations will be paid
strictly in accordance with the terms of the Bridge Loan Documents and/or
any
other document, instrument or agreement creating or evidencing the Obligations,
regardless of any law, regulation or order now or hereafter in effect in
any
jurisdiction affecting any of such terms or the rights of the Company with
respect thereto. The Guarantor hereby knowingly accepts the full range of
risk
encompassed within a contract of “continuing guaranty” which risk includes the
possibility that the Company will contract additional indebtedness for which
the
Guarantor may be liable hereunder after the Company's financial condition
or
ability to pay its lawful debts when they fall due has deteriorated, whether
or
not the Company has properly authorized incurring such additional indebtedness.
The Guarantor acknowledges that no oral representations, including any
representations to extend credit or provide other financial accommodations
to
the Company, have been made by the Purchasers to induce the Guarantor to
enter
into this Guaranty. The liability of the Guarantor under this Guaranty shall
be
absolute and unconditional, in accordance with its terms, and shall remain
in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (a) any waiver, indulgence, renewal,
extension, amendment or modification of or addition, consent or supplement
to or
deletion from or any other action or inaction under or in respect of the
Bridge
Loan Documents or any other instruments or agreements relating to the
Obligations or any assignment or transfer of any thereof; (b) any lack of
validity or enforceability of any Bridge Loan Document or other documents,
instruments or agreements relating to the Obligations or any assignment or
transfer of any thereof; (c) any furnishing of any additional security to
the
Purchasers or their assignees or any acceptance thereof or any release of
any
security by the Purchasers or their assignees; (d) any limitation on any
party's
liability or obligation under the Bridge Loan Documents or any other documents,
instruments or agreements relating to the Obligations or any assignment or
transfer of any thereof or any invalidity or unenforceability, in whole or
in
part, of any such document, instrument or agreement or any term thereof;
(e) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to the Company, or any action
taken with respect to this Guaranty by any trustee or receiver, or by any
court,
in any such proceeding, whether or not the Guarantor shall have notice or
knowledge of any of the foregoing; (f) any exchange, release or nonperfection
of
any collateral, or any release, or amendment or waiver of or consent to
departure from any guaranty or security, for all or any of the Obligations;
or
(g) any other circumstance which might otherwise constitute a defense available
to, or a discharge of, the Guarantor. Any amounts due from the Guarantor
to the
Purchasers shall bear interest until such amounts are paid in full at the
highest rate then applicable to the Obligations. Obligations include
post-petition interest whether or not allowed or allowable.
Subsidiary
Guaranty - Page 3
3. Waivers.
(a) This
Guaranty is a guaranty of payment and not of collection. The Purchasers shall
be
under no obligation to institute suit, exercise rights or remedies or take
any
other action against the Company or any other person liable with respect
to any
of the Obligations or resort to any collateral security held by it to secure
any
of the Obligations as a condition precedent to the Guarantor being obligated
to
perform as agreed herein and the Guarantors hereby waives any and all rights
which it may have by statute or otherwise which would require the Purchasers
to
do any of the foregoing. The Guarantor further consents and agrees that the
Purchasers shall be under no obligation to marshal any assets in favor of
Guarantor, or against or in payment of any or all of the Obligations. The
Guarantor hereby waives all suretyship defenses and any rights to interpose
any
defense, counterclaim or offset of any nature and description which the
Guarantor may have or which may exist between and among the Purchasers, the
Company and/or the Guarantor with respect to the Guarantor's obligations
under
this Guaranty, or which the Company may assert on the underlying debt, including
but not limited to failure of consideration, breach of warranty, fraud, payment
(other than cash payment in full of the Obligations), statute of frauds,
bankruptcy, infancy, statute of limitations, accord and satisfaction, and
usury.
(b) The
Guarantor further waives (i) notice of the acceptance of this Guaranty, of
the
making of any such loans or extensions of credit, and of all notices and
demands
of any kind to which the Guarantor may be entitled, including, without
limitation, notice of adverse change in the Company's financial condition
or of
any other fact which might materially increase the risk of the Guarantor
and
(ii) presentment to or demand of payment from anyone whomsoever liable upon
any
of the Obligations, protest, notices of presentment, non-payment or protest
and
notice of any sale of collateral security or any default of any
sort.
(c) Notwithstanding
any payment or payments made by the Guarantor hereunder, or any setoff or
application of funds of the Guarantor by the Purchasers, the Guarantor shall
not
be entitled to be subrogated to any of the rights of the Purchasers against
the
Company or against any collateral or guarantee or right of offset held by
the
Purchasers for the payment of the Obligations, nor shall the Guarantor seek
or
be entitled to seek any contribution or reimbursement from the Company in
respect of payments made by the Guarantor hereunder, until all amounts owing
to
the Purchasers by the Company on account of the Obligations are paid in full.
If, notwithstanding the foregoing, any amount shall be paid to the Guarantor
on
account of such subrogation rights at any time when all of the Obligations
shall
not have been paid in full and the Purchasers' obligation to extend credit
pursuant to the Bridge Loan Documents shall not have been terminated, such
amount shall be held by the Guarantor in trust for the Purchasers, segregated
from other funds of the Guarantor, and shall forthwith upon, and in any event
within two (2) business days of, receipt by the Guarantor, be turned over
to the
Purchasers in the exact form received by the Guarantor (duly endorsed by
the
Guarantor to the Purchasers, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as the Purchasers
may
determine, subject to the provisions of the Bridge Loan Documents. Any and
all
present and future debts and obligations of the Company to the Guarantor
are
hereby waived and postponed in favor of, and subordinated to the full payment
and performance of, all present and future debts and Obligations of the Company
to the Purchasers.
Subsidiary
Guaranty - Page 4
4. Security.
All
sums at any time to the credit of the Guarantor and any property of the
Guarantor in the Purchasers' possession or in the possession of any bank,
financial institution or other entity that directly or indirectly, through
one
or more intermediaries, controls or is controlled by, or is under common
control
with, the Purchasers (each such entity, an “Affiliate”)
shall
be deemed held by the Purchasers or such Affiliate, as the case may be, as
security for any and all of the Guarantor's obligations to the Purchasers
and to
any Affiliate of the Purchasers, no matter how or when arising and whether
under
this or any other instrument, agreement or otherwise.
5. Representations
and Warranties.
The
Guarantor hereby represents and warrants (all of which representations and
warranties shall survive until all Obligations are indefeasibly satisfied
in
full and the Bridge Loan Documents have been irrevocably terminated),
that:
(a) Corporate
Status.
It is a
corporation duly organized, validly existing and in good standing under the
laws
of the Commonwealth of Massachusetts and has full corporate power, authority
and
legal right to own its property and assets and to transact the business in
which
it is engaged in all material respects.
(b) Authority
and Execution.
It has
full corporate power, authority and legal right to execute and deliver, and
to
perform its obligations under, this Guaranty and has taken all necessary
corporate, partnership or limited liability company, as the case may be,
action
to authorize the execution, delivery and performance of this
Guaranty.
(c) Legal,
Xxxxx and Binding Character.
This
Guaranty constitutes its legal, valid and binding obligation enforceable
in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting the enforcement of creditor's rights and general
principles of equity that restrict the availability of equitable or legal
remedies.
(d) Violations.
The
execution, delivery and performance of this Guaranty will not violate any
requirement of law applicable to it or any material contract, agreement or
instrument to it is a party or by which it or any of its property is bound
or
result in the creation or imposition of any mortgage, lien or other encumbrance
other than to the Purchasers on any of its property or assets pursuant to
the
provisions of any of the foregoing.
(e) Consents
or Approvals.
No
consent of any other person or entity (including, without limitation, any
creditor of the Guarantor) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing
or
declaration with, any governmental authority, that has not been previously
obtained, is required in connection with the execution, delivery, performance,
validity or enforceability of this Guaranty by the Guarantor.
Subsidiary
Guaranty - Page 5
(f) Litigation.
No
litigation, arbitration, investigation or administrative proceeding of or
before
any court, arbitrator or governmental authority, bureau or agency is currently
pending or, to the best of its knowledge, threatened (i) with respect to
this
Guaranty or any of the transactions contemplated by this Guaranty or (ii)
against or affecting it, or any of its property or assets, which, in each
of the
foregoing cases, if adversely determined, could reasonably be expected to
prevent, restrict or impair the transactions contemplated by the Bridge Loan
Documents or the performance by it of its obligations under the Bridge Loan
Documents.
(g) Financial
Benefit.
It has
derived or expects to derive a financial or other advantage from each and
every
loan, advance or extension of credit made under the Bridge Loan Documents
or
other Obligation incurred by the Company to the Purchasers.
6. Acceleration.
(a) If
any
breach of any covenant or condition beyond any applicable cure period or
other
Event of Default shall occur and be continuing under any agreement made by
the
Company or any of the Guarantor to the Purchasers any and all Obligations
shall
for purposes hereof, at the Purchasers' option, be deemed due and payable
without notice notwithstanding that any such Obligation is not then due and
payable by the Company as set forth in the other Bridge Loan
Documents.
(b) The
Guarantor will promptly notify the Purchasers of any default by the Guarantor
in
its performance or observance of any term or condition of any material agreement
to which the Guarantor is a party if the effect of such default is to cause,
or
permit the holder of any indebtedness under such agreement to cause, such
indebtedness in excess of $100,000, to become due prior to its stated maturity
and, if such an event occurs, the Purchasers shall have the right to accelerate
such Guarantor's obligations hereunder.
7. Payments
from Guarantors.
The
Purchasers, in their sole and absolute discretion, with or without notice
to the
Guarantor, may apply on account of the Obligations any payment from the
Guarantor or any other guarantors, or amounts realized from any security
for the
Obligations, or may deposit any and all such amounts realized in a non-interest
bearing cash collateral deposit account to be maintained as security for
the
Obligations.
8. Costs.
The
Guarantor shall pay on demand, all reasonable costs, fees and expenses
(including expenses for legal services of every kind) relating or incidental
to
the enforcement or protection of the rights of the Purchasers hereunder or
under
any of the Obligations.
9. No
Termination.
This is
a continuing irrevocable guaranty and shall remain in full force and effect
and
be binding upon the Guarantor, and each of the Guarantor's successors and
assigns, until all of the Obligations have been paid in full. If any of the
present or future Obligations are guarantied by persons, partnerships or
corporations in addition to the Guarantor, the death, release or discharge
in
whole or in part or the bankruptcy, merger, consolidation, incorporation,
liquidation or dissolution of one or more of them shall not discharge or
affect
the liabilities of any Guarantor under this Guaranty.
Subsidiary
Guaranty - Page 6
10. Recapture.
Anything in this Guaranty to the contrary notwithstanding, if the Purchasers
receive any payment or payments on account of the liabilities guaranteed
hereby,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver, or any other party under any Insolvency Law,
common law or equitable doctrine, then to the extent of any sum not finally
retained by the Purchasers, the Guarantor's obligations to the Purchasers
shall
be reinstated and this Guaranty shall remain in full force and effect (or
be
reinstated) until payment shall have been made to the Purchasers, which payment
shall be due on demand.
11. Books
and Records.
The
books and records of the Purchasers showing the account between the Purchasers
and the Company shall be admissible in evidence in any action or proceeding,
shall be binding upon the Guarantor for the purpose of establishing the items
therein set forth (absent manifest error) and shall (absent manifest error)
constitute prima facie proof thereof.
12. No
Waiver.
No
failure on the part of the Purchasers to exercise, and no delay in exercising,
any right, remedy or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by the Purchasers of any right, remedy
or
power hereunder preclude any other or future exercise of any other legal
right,
remedy or power. Each and every right, remedy and power hereby granted to
the
Purchasers or allowed it by law or other agreement shall be cumulative and
not
exclusive of any other, and may be exercised by the Purchasers at any time
and
from time to time.
13. Waiver
of Jury Trial.
THE
GUARANTOR 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, THE GUARANTOR 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. THE GUARANTOR (A) CERTIFIES THAT
NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE PURCHASERS HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT THE PURCHASERS WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE PURCHASERS HAVE
BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS
AND
CERTIFICATIONS CONTAINED HEREIN.
14. Governing
Law.
THIS
INSTRUMENT CANNOT BE CHANGED OR TERMINATED ORALLY, AND SHALL BE GOVERNED,
CONSTRUED AND INTERPRETED AS TO VALIDITY, ENFORCEMENT AND IN ALL OTHER RESPECTS
IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS WITHOUT
HAVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.
15. Severability.
To the
extent permitted by applicable law, any provision of this Guaranty which
is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Subsidiary
Guaranty - Page 7
16. Amendments,
Waivers.
No
amendment or waiver of any provision of this Guaranty nor consent to any
departure by the Guarantor therefrom shall in any event be effective unless
the
same shall be in writing executed by the Guarantor and the
Purchasers.
17. Notice.
All
notices and other communications required or permitted hereunder shall be
in
writing and shall be given in accordance with the provisions of Section 15
of
the Purchase Agreement.
18. Successors.
The
Purchasers may, from time to time, without notice to the Guarantor, sell,
assign, transfer or otherwise dispose of all or any part of the Obligations
and/or rights under this Guaranty. Without limiting the generality of the
foregoing, the Purchasers may assign, or grant participations to, one or
more
banks, financial institutions or other entities all or any part of any of
the
Obligations. In each such event, the Purchasers, their Affiliates and each
and
every immediate and successive purchaser, assignee, transferee or holder
of all
or any part of the Obligations shall have the right to enforce this Guaranty,
by
legal action or otherwise, for its own benefit as fully as if such purchaser,
assignee, transferee or holder were herein by name specifically given such
right. The Purchasers shall have an unimpaired right to enforce this Guaranty
for their benefit with respect to that portion of the Obligations which the
Purchasers have not disposed of, sold, assigned, or otherwise transferred.
Notwithstanding the foregoing, the consent of holders of at least a majority
of
the outstanding aggregate principal amount of the Notes shall be required
to
amend modify or waive any provision of this Guaranty
19. Release.
Nothing
except payment in full of the Obligations shall release the Guarantor from
liability under this Guaranty.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
Subsidiary
Guaranty - Signature Page
IN
WITNESS WHEREOF, this Guaranty has been executed by the Guarantor as of the
date
first set forth above.
| AXEDA SYSTEMS OPERATING COMPANY, INC. | ||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxxxxxxx | |
|
Name: Xxxxx X. Xxxxxxxxxx |
||
|
Title: Chief
Financial Officer
Address:
00
Xxxxxx Xxxx
Xxxxxxxxx,
XX 00000
|
||
|
Telephone:
000-000-0000
Facsimile:
508-337-9201
State
of Incorporation:
Massachusetts
|
||
