Negative Pledge Agreement

NEGATIVE PLEDGE AGREEMENT


This Negative Pledge Agreement is made as of August 16, 1998, by and between BLUESTONE SOFTWARE, INC., a Delaware corporation with a chief executive office located at 1000 Briggs Road, Mount Laurel, New Jersey 08054-4101 ("Borrower") and SILICON VALLEY BANK, a California-chartered bank, with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at Wellesley Office Park, 40 William Street, Suite 350, Wellesley, Massachusetts 02481, doing business under the name "Silicon Valley East" ("Bank").


In connection with the Loan and Security Agreement and the other Loan Documents, as defined in the Loan and Security Agreement, executed between Borrower and Bank dated December 8, 1997, as amended by a First Loan Modification Agreement executed herewith (the "Loan Documents"), Borrower agrees as follows:


1. Except for the granting of licenses by Borrower in the
ordinary course of business, Borrower shall not sell,
transfer, assign, mortgage, pledge, lease, grant a security
interest in, or encumber any of Borrower's Intellectual
Property (as defined below).


2. Borrower has not, and shall not, enter into a negative pledge
agreement, or similar agreement, affecting the rights of the
Intellectual Property with any other party.


3. It shall be an event of default under the Loan Documents (as
defined in the Loan and Security Agreement) between Borrower
and Bank if there is a breach of any term of this Negative
Pledge Agreement.


4. As used herein,


(a) "Intellectual Property" means:


(i) Any and all Copyrights;


(ii) Any and all trade secrets, and any and all
intellectual property rights in computer
software and computer software products now
or hereafter existing, created, acquired or
held;


(iii) Any and all design rights which may be
available to Borrower now or hereafter
existing, created, acquired or held;


(iv) All Mask Works or similar rights available
for the protection of semiconductor chips;


(v) All Patents;


(vi) Any Trademarks;


(vii) Any and all claims for damages by way of
past, present and future infringements of any
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