www.eXFILE.com 888-775-4789 --- NEXX SYSTEMS, INC.  FORM S-1


    EXHIBIT
10.14

     

     

    LOAN AND
SECURITY AGREEMENT

     

    THIS LOAN
AND SECURITY AGREEMENT is made and dated as of December 19, 2006, and is entered
into by and between NEXX SYSTEMS, INC., a Delaware corporation, and each of its
subsidiaries, (hereinafter collectively referred to as the “Borrower”), and
HERCULES TECHNOLOGY GROWTH CAPITAL, INC., a Maryland corporation
(“Lender”).

     

    RECITALS

     

    A.          Borrower
has requested Lender to make available to Borrower a loan in an aggregate
principal amount of up to Ten Million Dollars ($10,000,000); and

     

    B.           Lender
is willing to make the loan on the terms and conditions set forth in this
Agreement.

     

    AGREEMENT

     

    NOW,
THEREFORE, Borrower and Lender agree as follows:

     

    
      	
              SECTION
      1.  

            	
              DEFINITIONS
      AND RULES OF CONSTRUCTION

            


    

     

    1.1   Unless
otherwise defined herein, the following capitalized terms shall have the
following meanings:

     

    “Account”
has the meaning assigned in the UCC.

     

    “Account
Control Agreement(s)” means any agreement entered into by and among the Lender,
Borrower and a third party Bank or other institution (including a Securities
Intermediary) in which Borrower maintains a Deposit Account or Investment
Property and which is intended  to perfect Lender’s security interest
in any of the Collateral.

     

    “Advance”
means a Revolving Advance or Term Advance.

     

    “Advance
Date” means the funding date of any Advance.

     

    “Advance
Request” means a request for an Advance submitted by Borrower to Lender in
substantially the form of Exhibit
A.

     

    “Agreement”
means this Loan and Security Agreement, as the same may from time to time be
amended, modified, supplemented or restated from time to time in accordance with
the terms hereof.

     

    “Backlog”
means an amount equal to the face amount of valid purchase orders received by
Borrower from Borrower Products dated not more than 365 days before the date of
the Borrowing Base Certificate on which the Backlog is calculated.

     

    “Borrower
Products” means all products, software, service offerings, technical data or
technology currently being designed, manufactured or sold by Borrower or which
Borrower intends to sell, license, or distribute in the future including any
products or service offerings under development, collectively, together with all
products, software, service offerings, technical data or technology that have
been sold, licensed or distributed by Borrower since its incorporation or
acquired by Borrower following the date of this Agreement.

     

    “Borrowing
Base” means the sum of (i) an amount equal to up to 85% of Eligible Accounts
plus (ii) the lesser of $2,500,000 or up to 80% of Backlog.

     

    “Cash”
means all cash and liquid funds.

     

    “Closing
Date” means the date of this Agreement.

     

    
      
        
        

      

      
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    “Collateral”
means the property described in Section 3.

     

    “Contingent
Obligation” means, as applied to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to (i) any indebtedness,
lease, dividend, letter of credit or other obligation of another, including any
such obligation directly or indirectly guaranteed, endorsed, co-made or
discounted or sold with recourse by that Person, or in respect of which that
Person is otherwise directly or indirectly liable; (ii) any obligations with
respect to undrawn letters of credit, corporate credit cards or merchant
services issued for the account of that Person; and (iii) all obligations
arising under any interest rate, currency or commodity swap agreement, interest
rate cap agreement, interest rate collar agreement, or other agreement or
arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; provided, however, that the
term “Contingent Obligation” shall not include endorsements for collection or
deposit in the ordinary course of business.  The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.

     

    “Copyrights”
means all of Borrower’s copyrights, whether registered or unregistered, held
pursuant to the laws of the United States, any State thereof, or of any other
country.

     

    “Copyright
License” means any written agreement granting any right to use any Copyright or
Copyright registration, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.

     

    “Deposit
Accounts” means any “deposit accounts,” as such term is defined in the UCC, and
includes any checking account, savings account, or certificate of
deposit.

     

    “Eligible
Account” means an Account that arises in the ordinary course of Borrower’s
business that complies with Borrower’s representations and warranties set forth
in this Agreement and that are acceptable to Lender, in its reasonable
discretion.  Without limiting the generality of the foregoing,
Eligible Accounts shall not include the following:

     

    (a)           Accounts
that the account debtor has failed to pay within 90 days of invoice
date;

     

    (b)           Accounts
with respect to an account debtor, 25% of whose Accounts the account debtor has
failed to pay within 90 day of invoice date;

     

    (c)           Accounts
with respect to which Borrower is liable to the account debtor, to the extent of
such liability;

     

    (d)           Accounts
with respect to which the account debtor is the United States or any agency or
instrumentality of the United States; and

     

    (e)           Accounts
the collection of which Lender reasonably determines to be
doubtful.

     

    “Event of
Default” has the meaning given to it in Section 9.

     

    “Facility
Charge” means three quarters of one percent (0.75%) of the Maximum Loan
Amount.

     

    “Financial
Statements” has the meaning given to it in Section 7.1.

     

    “Fully
Diluted Capitalization” means, at any given time, the number of shares of
Borrower’s (i) common stock issued and outstanding, and (ii) common stock
ultimately issuable upon conversion, exercise or exchange of any outstanding
rights to purchase Borrower’s capital stock, including  preferred
stock, issued and outstanding options, warrants, employee stock plans and
convertible debt.

     

    
      
        
        

      

      
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    “GAAP”
means generally accepted accounting principles in the United States of America,
as in effect from time to time.

     

    “Guarantor”
means any subsidiary of the Borrower established after the date of this
Agreement.

     

    “Guaranty”
means a Guaranty in a form reasonably acceptable to Lender.

     

    “Indebtedness”
means indebtedness of any kind, including (a) all indebtedness for borrowed
money or the deferred purchase price of property or services, including
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations, and (d) all Contingent
Obligations.

     

    “Initial
Public Offering” means the first sale of the Borrower’s Common Stock in a firm
commitment underwritten offering of Borrower’s common stock pursuant to a
registration statement under the Securities Act of 1933 filed with and declared
effective by the Securities and Exchange Commission.

     

    “Intellectual
Property” means all Copyrights; Trademarks; Patents; Licenses; trade secrets and
inventions; Borrower’s applications therefor and reissues, extensions, or
renewals thereof; and Borrower’s goodwill associated with any of the foregoing,
together with Borrower’s rights to sue for past, present and future infringement
of Intellectual Property and the goodwill associated therewith.

     

    “Interest
Rate” means for any day, the prime rate as reported in The Wall Street Journal
plus 2.75% for Term Advances and plus 1.75% for Revolving Advances.

     

    “Investment”
means any beneficial ownership of (including stock, partnership or limited
liability company interests) of or in any Person, or any loan, advance or
capital contribution to any Person.

     

    “Joinder
Agreements” means for each Subsidiary, a completed and executed Joinder
Agreement in substantially the form attached hereto as Exhibit
G.

     

    “Lender”
has the meaning given to it in the preamble to this Agreement.

     

    “License”
means any Copyright License, Patent License, Trademark License or other license
of rights or interests.

     

    “Lien”
means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
any lease in the nature of a security interest, and the filing of any financing
statement (other than a precautionary financing statement with respect to a
lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.

     

    “Loan”
means the Advance or Advances made under this Agreement.

     

    “Loan
Documents” means this Agreement, the Notes, Account Control Agreements, Joinder
Agreements, all UCC Financing Statements, the Warrant, and any other documents
executed in connection with the Secured Obligations or the transactions
contemplated hereby, as the same may from time to time be amended, modified,
supplemented or restated.

     

    “Material
Adverse Effect” means a material adverse effect upon: (i) the business,
operations, properties, assets, prospects or financial condition of Borrower; or
(ii) the ability of Borrower to perform the Secured Obligations in accordance
with the terms of the Loan Documents; or (iii) the Collateral or Lender’s Liens
on the collateral or the priority of such Liens.

     

    “Maturity
Date” means February 1, 2010.

     

    
      
        
        

      

      
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    “Maximum
Loan Amount” means $10,000,000.

     

    “Maximum
Rate” shall have the meaning assigned to such term in Section 2.5.

     

    “Next
Event” means the closing of Borrower’s next round of private equity financing
which first becomes effective after the Closing Date.

     

    “Note”
means a Promissory Note in substantially the form of Exhibit
B.

     

    “Patent
License” means any written agreement granting any right with respect to any
invention on which a Patent is in existence or a Patent application is pending,
in which agreement Borrower now holds or hereafter acquires any
interest.

     

    “Patents”
means all of Borrower’s letters patent of, or rights corresponding thereto, in
the United States or in any other country, all registrations and recordings
thereof, and all applications for letters patent of, or rights corresponding
thereto, in the United States or any other country.

     

    “Permitted
Indebtedness” means: (a) Indebtedness of Borrower in favor of Lender arising
under this Agreement or any other Loan Document; (b) Indebtedness existing on
the Closing Date and disclosed in Schedule 1A; (c)
Indebtedness of up to [$1,500,000] outstanding at any time secured by a lien
described in clause (vi) of the defined term “Permitted Liens,” provided such
Indebtedness does not exceed the lesser of the cost or fair market value of the
equipment financed with such Indebtedness; (d) Indebtedness to trade creditors
incurred in the ordinary course of business, including Indebtedness incurred in
the ordinary course of business with corporate credit cards; (e) Indebtedness
that also constitutes a Permitted Investment; and (f) extensions,
refinancings and renewals of any items of Permitted Indebtedness, provided that
the principal amount is not increased or the terms modified to impose materially
more burdensome terms upon Borrower or its Subsidiary, as the case may
be.

     

    “Permitted
Investment” means: (a) Investments existing on the Closing Date disclosed in
Schedule 1B;
(b) (i) Marketable direct obligations issued or unconditionally guaranteed by
the United States of America or any agency or any State thereof maturing within
one year from the date of acquisition thereof, (ii) commercial paper maturing no
more than one year from the date of creation thereof and currently having rating
of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s
Investors Service, (iii) certificates of deposit issued by any bank with assets
of at least $500,000,000 maturing no more than one year from the date of
investment therein, and (iv) money market accounts; (c) Repurchases of stock
from former employees, directors, or consultants of Borrower under the terms of
applicable repurchase agreements at the original issuance price of such
securities in an aggregate amount not to exceed $500,000 in any fiscal year,
provided that no Event of Default has occurred, is continuing or would exist
after giving effect to the repurchases; (d) Investments accepted in connection
with Permitted Transfers; (e) Investments (including debt obligations) received
in connection with the bankruptcy or reorganization of customers or suppliers
and in settlement of delinquent obligations of, and other disputes with,
customers or suppliers arising in the ordinary course of Borrower’s business;
(f) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not affiliates, in
the ordinary course of business, provided that this subparagraph (f) shall not
apply to Investments of Borrower in any Subsidiary; (g) additional Investments
that do not exceed $750,000 in the aggregate; and (h) Joint ventures or
strategic alliances in the ordinary course of Borrower’s business consisting of
the nonexclusive licensing of technology, the development of technology or the
providing of technical support, provided that any cash Investments by Borrower
do not exceed $750,000 in the aggregate in any fiscal year.

     

    “Permitted
Liens” means any and all of the following: (i) Liens existing on the Closing
Date disclosed in Schedule 1C; (ii)
Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings; provided, that
Borrower maintains adequate reserves therefor in accordance with GAAP; (iii)
Liens securing claims or demands of materialmen, artisans, mechanics, carriers,
warehousemen, landlords and other like Persons arising in the ordinary course of
Borrower’s business and imposed without action of such parties; provided, that the
payment thereof is not yet required; (iv) Liens arising from judgments, decrees
or attachments in circumstances which do not constitute an Event of Default
hereunder; (v) the following deposits, to the extent made in the ordinary course
of business:  deposits under worker’s compensation, unemployment
insurance, social security and other similar laws, or to secure the performance
of bids, 

     

    
      
        
        

      

      
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    tenders
or contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure statutory obligations (other than liens arising under ERISA or
environmental liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds; (vi) purchase money liens and liens in
connection with capital leases on Equipment securing Indebtedness permitted in
clause (vi) of “Permitted Indebtedness”;  and (vii) Liens incurred in
connection with the extension, renewal or refinancing of the indebtedness
secured by Liens of the type described in clauses (i) through (vii) above; provided, that any
extension, renewal or replacement Lien shall be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness
being extended, renewed or refinanced (as may have been reduced by any payment
thereon) does not increase.

     

    “Permitted
Transfers” means (i) sales of Inventory in the normal course of business, (ii)
exclusive, semi-exclusive and non-exclusive licenses and similar arrangements
for the use of Intellectual Property in the ordinary course of business, or
(iii) dispositions of worn-out obsolete Equipment.

     

    “Person”
means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability
company, institution, other entity or government.

     

    “Preferred
Stock” means at any given time any equity security issued by Borrower that has
any rights, preferences or privileges senior to Borrower’s common
stock.

     

    “Prepayment
Event” means any (i) reorganization, recapitalization, consolidation or merger
(or similar transaction or series of related transactions) of Borrower or any
Subsidiary; (ii) sale or exchange of outstanding shares (or similar transaction
or series of related transactions) of Borrower or any Subsidiary in which the
holders of Borrower or Subsidiary’s outstanding shares immediately before
consummation of such transaction or series of related transactions do not,
immediately after consummation of such transaction or series of related
transactions, retain shares representing at least more than fifty percent (50%)
of the voting power of the surviving entity of such transaction or series of
related transactions (or the parent of such surviving entity if such surviving
entity is wholly owned by such parent), in each case without regard to whether
Borrower or Subsidiary is the surviving entity; (iii) sale or exchange of
outstanding shares (or similar transaction or series of related transactions) of
Borrower or any Subsidiary in which the shares issued after the Closing Date
would entitle the holders thereof to 30% or more of the proceeds that would be
distributed to holders of Preferred Stock assuming that proceeds available for
distribution are sufficient only to provide a distribution to holders of
Preferred Stock; or (iv) sale, lease, license or transfer of all or
substantially all of the assets of Borrower or any Subsidiary.

     

    “Receivables”
means (i) all of Borrower’s Accounts, Instruments, Documents, Chattel Paper,
Supporting Obligations, letters of credit, proceeds of any letter of credit, and
Letter of Credit Rights, and (ii) all customer lists, software, and business
records related thereto.

     

    “Revolving
Advance” means a cash advance made under Section 2.1(a).

     

    “Secured
Obligations” means Borrower’s obligation to repay to Lender the Loan and all
Advances (whether or not evidenced by any Note), together with all principal,
interest, fees, costs, professional fees and expenses, or other liabilities or
obligations for monetary amounts owed by Borrower to Lender however arising,
under this Agreement or the other Loan Documents, including the indemnity and
insurance obligations in Section 6 and including such amounts as may accrue or
be incurred before or after default or workout or the commencement of any
liquidation, dissolution, bankruptcy, receivership or reorganization by or
against Borrower, whether due or to become due, matured or unmatured, liquidated
or unliquidated, contingent or non-contingent, and all covenants and duties of
any kind or nature, present or future, in each case, arising under this
Agreement, the Notes, or any of the other Loan Documents, as the same may from
time to time be amended, modified, supplemented or restated, whether or not such
obligations are partially or fully secured by the value of
Collateral.

     

    “Subsidiary”
means an entity, whether corporate, partnership, limited liability company,
joint venture or otherwise, in which Borrower owns or controls 50% or more of
the outstanding voting securities, including each entity listed on Schedule 1
hereto.

     

    
      
        
        

      

      
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    “Term
Advance” means a cash advance made under Section 2.1(b).

     

    “Trademark
License” means any written agreement granting any right to use any Trademark or
Trademark registration, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.

     

    “Trademarks”
means all of the Borrower’s trademarks (registered, common law or otherwise) and
any applications in connection therewith, including registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof.

     

    “UCC”
means the Uniform Commercial Code as the same is, from time to time, in effect
in the State of California; provided, that in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to, Lender’s
Lien on any Collateral is governed by the Uniform Commercial Code as the same
is, from time to time, in effect in a jurisdiction other than the State of
California, then the term “UCC” shall mean the Uniform Commercial Code as in
effect, from time to time, in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority or remedies
and for purposes of definitions related to such provisions.  Unless
otherwise defined herein or in the other Loan Documents, terms that are defined
in the UCC and used herein or in the other Loan Documents shall, unless the
context indicates otherwise, have the meanings given to them in the
UCC.

     

    “Warrant”
means the warrant entered into in connection with the Loan.

     

    1.2 Unless
otherwise specified, all references in this Agreement or any Annex or Schedule
hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule” shall
refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule in
or to this Agreement.  Unless otherwise specifically provided herein,
any accounting term used in this Agreement or the other Loan Documents shall
have the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP,
consistently applied.

     

    
      	
              SECTION
      2.  

            	
              THE
      LOAN

            


    

     

    2.1   Advances.

     

    (a) Revolving Advances.
Subject to the terms and conditions of this Agreement, Lender will make Advances
to Borrower in minimum increments of $250,000 from the Closing Date through
December 15, 2009.  The aggregate outstanding Revolving Advances may
be up to the lesser of (i) the Borrowing Base and (ii) $5,000,000.  If
the outstanding Revolving Advances exceed that amount at any time, Borrower
shall on demand repay to Lender the amount of such excess in
cash.  Revolving Advances may be repaid and reborrowed at any time
through December 15, 2009.

     

    (b) Term
Advances.  Subject to the terms and conditions of this
Agreement, Lender will make Term Advances to Borrower in minimum increments of
$250,000 from the Closing Date through March 31, 2007.  The aggregate
outstanding Term Advances may be up to $5,000,000.

     

    2.2   Advance
Request.  To obtain an Advance, Borrower shall execute and
deliver an Advance Request (including a Borrowing Base Certificate in
substantially the form of Exhibit A-1) to
Lender.  Lender shall fund the Advance in the manner requested by the
Advance Request provided that each of the conditions precedent to such Advance
is satisfied as of the requested Advance Date.

     

    2.3   Interest.  The
principal balance of each Advance shall bear interest thereon from the Advance
Date, precomputed at the Interest Rate based on a year consisting of 360 days,
with interest computed daily based on the actual number of days in each
month.  The Interest Rate on the Advances shall float, so that if the
Prime Rate changes, the applicable Interest Rate will change effective on the
date that the Prime Rate changes.

     

    
      
        
        

      

      
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    2.4   Payment.  Borrower
will pay interest on each Revolving Advance on the first day of each month,
beginning the month after the Advance Date and continuing through December 15,
2009, at which time the entire principal balance and all accrued but unpaid
interest hereunder shall be due and payable.  Borrower shall repay the
aggregate principal balance on the Term Advance that is outstanding on September
30, 2007, in 30 equal monthly installments of principal and interest beginning
October 1, 2007 and continuing on the first business day of each month
thereafter.  The entire principal balance and all accrued but unpaid
interest hereunder, shall be due and payable on March 1, 2010; provided however,
that if Borrower maintains an EBITDA on a rolling four-quarter basis, equal to
85% of the Borrower’s board of director approved plan for fiscal year ending
2007, provided to Lender and attached hereto, then Borrower shall repay the
aggregate principal balance on the Term Advance that is outstanding on December
31, 2007 in 27 equal monthly installments of principal and interest beginning on
January 1, 2008 and continuing on the first business day of each month
thereafter.  The entire principal balance and all accrued but unpaid
interest hereunder remains due and payable on March 1, 2010.  Borrower
shall make all payments under this Agreement without setoff, recoupment or
deduction and regardless of any counterclaim or defense.

     

    2.5   Maximum
Interest.  Notwithstanding any provision in this Agreement, the
Notes, or any other Loan Document, it is the parties’ intent not to contract
for, charge or receive interest at a rate that is greater than the maximum rate
permissible by law that a court of competent jurisdiction shall deem applicable
hereto (which under the laws of the State of California shall be deemed to be
the laws relating to permissible rates of interest on commercial loans) (the
“Maximum Rate”).  If a court of competent jurisdiction shall finally
determine that Borrower has actually paid to Lender an amount of interest in
excess of the amount that would have been payable if all of the Secured
Obligations had at all times borne interest at the Maximum Rate, then such
excess interest actually paid by Borrower shall be applied as
follows:  first, to the payment
of principal outstanding on the Notes; second, after all
principal is repaid, to the payment of Lender’s accrued interest, costs,
expenses, professional fees and any other Secured Obligations; and third, after all
Secured Obligations are repaid, the excess (if any) shall be refunded to
Borrower.

     

    2.6   Default
Interest.  In the event any payment is not paid on the
scheduled Payment Date, an amount equal to five percent (5%) of the past due
amount shall be payable on demand. In addition, upon the occurrence and during
the continuation of an Event of Default hereunder, all Secured Obligations,
including principal, interest, compounded interest, and professional fees, shall
bear interest at a rate per annum equal to the rate set forth in Section 2.2
plus five percent (5%) per annum.  In the event any interest is not
paid when due hereunder, delinquent interest shall be added to principal and
shall bear interest on interest, compounded at the rate set forth in Section 2.3
or Section 2.6, as applicable.

     

    2.7   Prepayment.  At
its option, Borrower may prepay all, but not less than all, of the outstanding
Advances by paying the entire principal balance, all accrued interest, and all
interest that would have accrued had the Advances been outstanding through the
Maturity Date. Borrower shall prepay the outstanding amount of all principal and
accrued interest and unpaid interest upon the earlier to occur of a Prepayment
Event or within 90 days of the completion of an Initial Public
Offering.  Except in the event of an Initial Public Offering in which
Lender requires a prepayment (in which event no prepayment premium shall be
payable), Borrower shall pay a prepayment premium equal to 3.0% of the amount of
the Term Advances if prepayment is made on or before the first anniversary of
the Closing Date, 1.25% of the amount of the Term Advances if prepayment is made
after the first anniversary, but on or before the second anniversary of the
Closing Date, and 0.5% of the Term Advances if prepayment is made after the
second anniversary of the Closing Date.  If any Revolving Advances are
repaid with the proceeds of any funds lent to Borrower, Borrower shall pay a
prepayment premium equal to 3.0% of the amount of the Revolving Advances if
prepayment is made on or before the first anniversary of the Closing Date, 1.25%
of the amount of the Revolving Advances if prepayment is made after the first
anniversary, but on or before the second anniversary of the Closing Date, and
0.5% of the Revolving Advances if prepayment is made after the second
anniversary of the Closing Date.

     

    
      	
              SECTION
      3.  

            	
              SECURITY
      INTEREST

            


    

     

    3.1   As
security for the prompt, complete and indefeasible payment when due (whether on
the Payment Dates or otherwise) of all the Secured Obligations, Borrower grants
to Lender a security interest in all of Borrower’s personal property now owned
or hereafter acquired, including the following: (collectively, the
“Collateral”):  (a) Receivables; (b) Equipment;
(c) Fixtures; (d) General Intangibles; (e) Accounts;
(f) Inventory; (g) Investment Property; (h) Deposit Accounts;
(i) Cash; (j) Goods and other tangible and intangible personal
property of Borrower whether now or hereafter owned or existing, leased,
consigned by or to, or acquired by, Borrower and wherever 

     

    
      
        
        

      

      
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    located;
and (k) to the extent not otherwise included, all Proceeds of each of the
foregoing and all accessions to, substitutions and replacements for, and rents,
profits and products of each of the foregoing.

     

    
      	
              SECTION
      4.  

            	
              CONDITIONS
      PRECEDENT TO LOAN

            


    

     

    The
obligations of Lender to make the Loan hereunder are subject to the satisfaction
by Borrower of the following conditions:

     

    4.1   Initial
Advance.  On or prior to the Closing Date, Borrower shall have
delivered to Lender the following:

     

    (a) executed
originals of the Loan Documents and all other documents and instruments
reasonably required by Lender to effectuate the transactions contemplated hereby
or to create and perfect the Liens of Lender with respect to all Collateral, in
all cases in form and substance reasonably acceptable to Lender;

     

    (b) certified
copy of resolutions of Borrower’s board of directors evidencing approval of (i)
the Loans and other transactions evidenced by the Loan Documents; and (ii) the
Warrant and transactions evidenced thereby;

     

    (c) certified
copies of the Certificate of Incorporation and the Bylaws, as amended through
the Closing Date, of Borrower;

     

    (d) a
certificate of good standing for Borrower from its state of incorporation and
similar certificates from all other jurisdictions in which it does business and
where the failure to be qualified would have a Material Adverse
Effect;

     

    (e) an
opinion of Borrower’s outside counsel;

     

    (f) payment
of the Facility Charge and reimbursement of Lender’s current expenses
reimbursable pursuant to Section 11.11, which amounts may be deducted from the
initial Advance; and

     

    (g) such
other documents as Lender may reasonably request.

     

    4.2   All
Advances.  On each Advance Date:

     

    (a) Lender
shall have received (i) an Advance Request for the relevant Advance as required
by Section 2.3, and a Note, each duly executed by Borrower’s Chief Executive
Officer or Chief Financial Officer, and (ii) any other documents Lender may
reasonably request.

     

    (b) The
representations and warranties set forth in this Agreement and in Section 5 and
in the Warrant shall be true and correct in all material respects on and as of
the Advance Date with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate to an
earlier date.

     

    (c) Borrower
shall be in compliance with all the terms and provisions set forth herein and in
each other Loan Document on its part to be observed or performed, and at the
time of and immediately after such Advance no Event of Default shall have
occurred and be continuing.

     

    (d) Each
Advance Request shall be deemed to constitute a representation and warranty by
Borrower on the relevant Advance Date as to the matters specified in paragraphs
(b) and (c) of this Section and as to the matters set forth in the Advance
Request.

     

    4.3   No
Default.  As of the Closing Date and each Advance Date, (i) no
fact or condition exists that would (or would, with the passage of time, the
giving of notice, or both) constitute an Event of Default and (ii) no event that
has had or could reasonably be expected to have a Material Adverse Effect has
occurred and is continuing.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
      	
              SECTION
      5.  

            	
              REPRESENTATIONS
      AND WARRANTIES OF BORROWER

            


    

     

    Borrower
represents, warrants and agrees that:

     

    5.1   Corporate
Status.  Borrower is a corporation duly organized, legally
existing and in good standing under the laws of the State of Delaware, and is
duly qualified as a foreign corporation in all jurisdictions in which the nature
of its business or location of its properties require such qualifications and
where the failure to be qualified could reasonably be expected to have a
Material Adverse Effect.  Borrower’s present name, former names (if
any), locations, place of formation, tax identification number, organizational
identification number and other information are correctly set forth in Exhibit
C.

     

    5.2   Collateral.  Borrower
owns all right, title and interest in and to the Collateral, free of all Liens
whatsoever, except for Permitted Liens.  Borrower has the full power
and authority to grant and convey to Lender a Lien in the Collateral as security
for the Secured Obligations, free of all other Liens other than Permitted
Liens.

     

    5.3   Consents.  Borrower’s
execution, delivery and performance of the Notes, this Agreement and all other
Loan Documents, and Borrower’s execution of the Warrant, (i) have been duly
authorized by all necessary corporate action of Borrower, (ii) will not result
in the creation or imposition of any Lien upon the Collateral, other than
Permitted Liens and the Liens created by this Agreement and the other Loan
Documents, (iii) do not violate any provisions of Borrower’s Certificate of
Incorporation, bylaws, or any, law, regulation, order, injunction, judgment,
decree or writ to which Borrower is subject and (iv) except as described on
Schedule 5.3, do
not violate any contract or agreement or require the consent or approval of any
other Person.  The individual or individuals executing the Loan
Documents and the Warrant are duly authorized to do so.

     

    5.4   Material Adverse
Effect.  No event that has had or could reasonably be expected
to have a Material Adverse Effect has occurred and is continuing, and Borrower
is not aware of any event likely to occur that is reasonably expected to result
in a Material Adverse Effect.

     

    5.5   Actions Before Governmental
Authorities.  Except as described on Schedule 5.5,
there are no actions, suits or proceedings at law or in equity or by or before
any governmental authority now pending or, to the knowledge of Borrower,
threatened (as evidenced by any writing to Borrower) against or affecting
Borrower or any business, property or rights of Borrower (i) which involve any
Loan Document or (ii) as to which there is a reasonable possibility of an
adverse determination and which, if adversely determined, would reasonably be
expected to, individually or in the aggregate, result in a Material Adverse
Effect.

     

    5.6   Laws.  Borrower
is not in violation of any law, rule or regulation, or in default with respect
to any judgment, writ, injunction or decree of any governmental authority, where
such violation or default is reasonably expected to result in a Material Adverse
Effect.  Borrower is not in default in any manner under any provision
of any indenture or other agreement, contract or instrument evidencing
indebtedness, or any other material agreement, contract or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound and for which such default would reasonably be expected to result in a
Material Adverse Effect.

     

    5.7   Information
Correct.  No information, report, Advance Request, financial
statement, exhibit or schedule furnished, by or on behalf of Borrower to Lender
in connection with any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain any material misstatement of fact or
omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were, are
or will be made, not misleading.

     

    5.8   Tax
Matters.  Except as described on Schedule 5.8, (a)
Borrower has filed all federal, state and local tax returns that it is required
to file, (b) to Borrower’s knowledge, Borrower has duly paid or fully reserved
for all taxes or installments thereof (including any interest or penalties) as
and when due, which have or may become due pursuant to such returns, and (c)
Borrower has paid or fully reserved for any tax assessment received by Borrower
for the three (3) years preceding the Closing Date, if any (including any taxes
being contested in good faith and by appropriate proceedings).

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    5.9   Intellectual Property
Claims.  Borrower is the sole owner of, or otherwise has the
right to use, the Intellectual Property.  Except as described on Schedule 5.9, each of
the material Copyrights, Trademarks and Patents is valid and enforceable, and no
part of the Intellectual Property that is owned by Borrower has been judged
invalid or unenforceable, in whole or in part, and no claim has been made to
Borrower in writing that any part of the Intellectual Property violates the
rights of any third party except to the extent such claim would not reasonably
be expected to cause a Material Adverse Effect.  Exhibit D is a true,
correct and complete list of each of Borrower’s Patents, registered Trademarks,
registered Copyrights, and material agreements under which Borrower licenses
Intellectual Property from third parties (other than shrink-wrap software
licenses and other licenses which if terminated could not reasonably be expected
to result in a Material Adverse Effect), together with application or
registration numbers, as applicable, owned by Borrower or any Subsidiary.
Borrower is not in material breach of, nor has Borrower failed to perform any
material obligations under, any of the foregoing contracts, licenses or
agreements and, to Borrower’s knowledge, no third party to any such contract,
license or agreement is in material breach thereof or has failed to perform any
material obligations thereunder.

     

    5.10   Intellectual
Property.  Except as described on Schedule 5.10,
Borrower’s Intellectual Property constitutes all rights used in or necessary in
the operation or conduct of Borrower’s business as currently conducted and
proposed to be conducted by Borrower.  Except as described in Schedule 5.10,
without limiting the generality of the foregoing, Borrower has the right to
freely transfer, license or assign Intellectual Property without condition,
restriction or payment of any kind to any third party, and Borrower owns or has
the right to use, pursuant to valid licenses, all software development tools,
library functions, compilers and all other third-party software and other items
that are used in the design, development, promotion, sale, license, manufacture,
import, export, use or distribution of Borrower Products.

     

    5.11   Borrower
Products.  Except as described on Schedule 5.11, no
Intellectual Property owned by Borrower or Borrower Product is subject to any
actual or, to the knowledge of Borrower, threatened litigation, proceeding
(including any proceeding in the United States Patent and Trademark Office or
any corresponding foreign office or agency) or outstanding decree, order,
judgment, settlement agreement or stipulation that restricts in any manner
Borrower’s use, transfer or licensing thereof or that may affect the validity,
use or enforceability thereof. There is no decree, order, judgment, agreement,
stipulation, arbitral award or other provision entered into in connection with
any litigation or proceeding that obligates Borrower to grant licenses or
ownership interest in any future Intellectual Property related to the operation
or conduct of the business of Borrower or Borrower Products.  There is
no outstanding or, to the knowledge of Borrower, threatened, dispute or
disagreement of which Borrower is aware with respect to any contract, license or
agreement between Borrower and any third party related to the Intellectual
Property.  Borrower has not received any written notice or claim, or,
to the knowledge of Borrower, oral notice or claim, which challenges or
questions Borrower’s ownership in any Intellectual Property (or written notice
of any claim challenging or questioning the ownership in any licensed
Intellectual Property of the owner thereof) or suggesting that any third party
has any claim of legal or beneficial ownership with respect thereto nor, to
Borrower’s knowledge, is there a reasonable basis for any such
claim.  To its knowledge, neither Borrower’s use of its Intellectual
Property nor the production and sale of Borrower Products infringes the
intellectual property or other rights of others.

     

    5.12   Financial
Accounts.  Exhibit E is a true,
correct and complete list of (a) all banks and other financial institutions at
which Borrower or any Subsidiary maintains Deposit Accounts and (b) all
institutions at which Borrower or any Subsidiary maintains an account holding
Investment Property, and such exhibit correctly identifies the name, address and
telephone number of each bank or other institution, the name in which the
account is held, a description of the purpose of the account, and the complete
account number therefor.

     

    5.13   Employee
Loans.  Except as set forth in Schedule 5.13,
Borrower has no outstanding loans to any employee, officer or director of the
Borrower nor has Borrower guaranteed the payment of any loan made to an
employee, officer or director of the Borrower by a third party.

     

    5.14   Capitalization.  Borrower’s
capitalization is set forth on Schedule 5.14 annexed
hereto.  Borrower does not own any stock, partnership interest or
other equity securities of any Person, except for Permitted
Investments.  Attached as Schedule 5.14 hereto
is a true, correct and complete list of each Subsidiary, and all information set
forth on Schedule
5.14 is true, correct and complete.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    
      	
              SECTION
      6.  

            	
              INSURANCE;
      INDEMNIFICATION

            


    

     

    6.1   Coverage.  So
long as there are any Secured Obligations outstanding, Borrower shall cause to
be carried and maintained commercial general liability insurance, on an
occurrence form, against risks customarily insured against in Borrower’s line of
business.  Such risks shall include the risks of bodily injury,
including death, property damage, personal injury, advertising injury, and
contractual liability per the terms of the indemnification agreement found in
Section 6.4.  Borrower must maintain a minimum of Two Million
Dollars ($2,000,000.00) of commercial general liability insurance for each
occurrence.  Borrower has and agrees to maintain a minimum of
$2,500,000 of directors and officers’ insurance for each occurrence, and
$5,000,000 in the aggregate.  So long as there are any Secured
Obligations outstanding, Borrower shall also cause to be carried and maintained
insurance upon the Collateral, insuring against all risks of physical loss or
damage howsoever caused, in an amount not less than the full replacement cost of
the Collateral.  Borrower shall also carry and maintain a fidelity
insurance policy in an amount not less than $500,000.

     

    6.2   Certificates.  Borrower
shall deliver to Lender certificates of insurance that evidence Borrower’s
compliance with its insurance obligations in Section 6.1 and the obligations
contained in this Section 6.2.  Borrower’s insurance certificate shall
state Lender is an additional insured for commercial general liability, an
additional insured and a loss payee for all risk property damage insurance,
subject to the insurer’s approval, a loss payee for fidelity insurance, and a
loss payee for property insurance and additional insured for liability insurance
for any future insurance that Borrower may acquire from such
insurer.  Attached to the certificates of insurance will be additional
insured endorsements for liability and lender’s loss payable endorsements for
all risk property damage insurance and fidelity.  All certificates of
insurance will provide for a minimum of thirty (30) days advance written notice
to Lender of cancellation or any other change adverse to Lender’s
interests.  Any failure of Lender to scrutinize such insurance
certificates for compliance is not a waiver of any of Lender’s rights, all of
which are reserved.

     

    6.3   Indemnity.  Borrower
shall and does hereby indemnify and hold Lender, its officers, directors,
employees, agents, in-house attorneys, representatives and shareholders harmless
from and against any and all claims, costs, expenses, damages and liabilities
(including such claims, costs, expenses, damages and liabilities based on
liability in tort, including strict liability in tort), including reasonable
attorneys’ fees and disbursements and other costs of investigation or defense
(including those incurred upon any appeal), that may be instituted or asserted
against or incurred by Lender or any such Person as the result of credit having
been extended, suspended or terminated under this Agreement and the other Loan
Documents or the administration of such credit, or in connection with or arising
out of the transactions contemplated hereunder and thereunder, or any actions or
failures to act in connection therewith, or arising out of the disposition or
utilization of the Collateral, excluding in all cases claims resulting solely
from Lender’s gross negligence or willful misconduct. Borrower agrees to pay,
and to save Lender harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all excise, sales or other similar
taxes (excluding taxes imposed on or measured by the net income of Lender) that
may be payable or determined to be payable with respect to any of the Collateral
or this Agreement.

     

    
      	
              SECTION
      7.  

            	
              COVENANTS
      OF BORROWER

            


    

     

    Borrower
agrees as follows:

     

    7.1   Financial
Reports.  Borrower shall furnish to Lender the Compliance
Certificate in the form of Exhibit F
monthly within 25 days after the end of each month and the financial statements
listed hereinafter, each prepared in accordance with GAAP, consistently applied
(the “Financial Statements”):

     

    (a) as soon
as practicable (and in any event within 25 days) after the end of each month,
unaudited interim financial statements as of the end of such month (prepared on
a consolidated and consolidating basis, if applicable), including balance sheet
and related statements of income and cash flows accompanied by a report
detailing any material contingencies (including the commencement of any material
litigation by or against Borrower) or any other occurrence that would reasonably
be expected to have a Material Adverse Effect, all certified by Borrower’s Chief
Executive Officer or Chief Financial Officer;

     

    (b) as soon
as practicable (and in any event within 25 days) after the end of each
calendar  quarter, unaudited interim financial statements as of the
end of such calendar quarter (prepared on a 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    consolidated
and consolidating basis, if applicable), including balance sheet and related
statements of income and cash flows accompanied by a report detailing any
material contingencies (including the commencement of any material litigation by
or against Borrower) or any other occurrence that would reasonably be expected
to have a Material Adverse Effect, all certified by Borrower’s Chief Executive
Officer or Chief Financial Officer;

     

    (c) as soon
as practicable (and in any event within one hundred twenty (120) days) after the
end of each fiscal year, (i) unqualified audited financial statements as of the
end of such year (prepared on a consolidated and consolidating basis, if
applicable), including balance sheet and related statements of income and cash
flows, and setting forth in comparative form the corresponding figures for the
preceding fiscal year, certified by a firm of independent certified public
accountants selected by Borrower and reasonably acceptable to Lender,
accompanied by any management report from such accountants;

     

    (d) promptly
after the sending or filing thereof, as the case may be, copies of any proxy
statements, financial statements or reports that Borrower has made available to
holders of its Series C Preferred Stock and copies of any regular, periodic and
special reports or registration statements that Borrower files with the
Securities and Exchange Commission or any governmental authority that may be
substituted therefor, or any national securities exchange;

     

    (e) at the
same time and in the same manner as it gives to its directors, copies of all
notices, minutes, consents and other materials that Borrower provides to its
directors in connection with meetings of the Board of Directors, and within 30
days after each such meeting, minutes of such meeting; and

     

    (f) budgets,
operating plans and other financial information reasonably requested by
Lender.

     

    The
executed Compliance Certificate may be sent via facsimile to Lender at (866)
468-8916 or via e-mail to financialstatements@herculestech.com.  All
Financial Statements required to be delivered pursuant to clauses (a), (b) and
(c) shall be sent via e-mail to financialstatements@herculestech.com
with a copy to rliu@herculestech.com,
provided, that
if e-mail is not available or sending such Financial Statements via e-mail is
not possible, they shall be sent via facsimile to Lender at: (866) 468-8916,
attention Chief Credit Officer, reference NEXX SYSTEMS, INC.

     

    7.2   Management
Rights.  Borrower shall permit any representative that Lender
authorizes, including its attorneys and accountants, to inspect the Collateral,
examine and make copies and abstracts of the books of account and records of
Borrower at reasonable times and upon reasonable notice during normal business
hours.  In addition, any such representative shall have the right to
meet with management and officers of Borrower to discuss such books of account
and records.  In addition, Lender shall be entitled at reasonable
times and intervals to consult with and advise the management and officers of
Borrower concerning significant business issues affecting
Borrower.  Such consultations shall not unreasonably interfere with
Borrower’s business operations.  The parties intend that the rights
granted Lender shall constitute “management rights” within the meaning of 29
C.F.R Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or
participation by Lender with respect to any business issues shall not be deemed
to give Lender, nor be deemed an exercise by Lender of, control over Borrower’s
management or policies.

     

    7.3   Further
Assurances.  Borrower shall from time to time execute, deliver
and file, alone or with Lender, any financing statements, security agreements,
collateral assignments, notices, control agreements, or other documents to
perfect or give the highest priority to Lender’s Lien on the
Collateral.  Borrower shall from time to time procure any instruments
or documents as may be requested by Lender, and take all further action that may
be necessary or desirable, or that Lender may reasonably request, to perfect and
protect the Liens granted hereby and thereby.  In addition, and for
such purposes only, Borrower hereby authorizes Lender to execute and deliver on
behalf of Borrower and to file such financing statements, collateral
assignments, notices, control agreements, security agreements and other
documents without the signature of Borrower either in Lender’s name or in the
name of Lender as agent and attorney-in-fact for Borrower.  Borrower
shall protect and defend Borrower’s title to the Collateral and Lender’s Lien
thereon against all Persons claiming any interest adverse to Borrower or
Lender.

     

    7.4   Compromise of
Agreements.  Borrower shall not (a) grant any material
extension of the time of payment of any of the Receivables or General
Intangibles in excess of $500,000 in any one instance of $1,000,000 in the
aggregate, (b) to any material extent, compromise, compound or settle the same
for less than substantially the full 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    amount
thereof, (c) release, wholly or partly, any Person liable for the payment
thereof in excess of $150,000 in the aggregate, or (d) allow any credit or
discount whatsoever thereon other than trade discounts granted by Borrower in
the ordinary course of business of Borrower or as contemplated
above.

     

    7.5   Indebtedness.  Borrower
shall not create, incur, assume, guarantee or be or remain liable with respect
to any Indebtedness, or permit any Subsidiary so to do, other than Permitted
Indebtedness, or prepay any Indebtedness or take any actions which impose on
Borrower an obligation to prepay any Indebtedness.

     

    7.6   Collateral.  Borrower
shall at all times keep the Collateral and all other property and assets used in
Borrower’s business or in which Borrower now or hereafter holds any interest
free and clear from any Liens whatsoever (except for Permitted Liens), and shall
give Lender prompt written notice of any legal process affecting the Collateral,
such other property and assets, or any Liens thereon.  Borrower shall
cause its Subsidiaries to protect and defend such Subsidiary’s title to its
assets from and against all Persons claiming any interest adverse to such
Subsidiary, and  Borrower shall cause its Subsidiaries at all times to
keep such Subsidiary’s property and assets free and clear from any Liens
whatsoever (except for Permitted Liens), and shall give Lender prompt written
notice of any legal process affecting such Subsidiary’s assets.

     

    7.7   Investments.  Borrower
shall not directly or indirectly acquire or own, or make any Investment in or to
any Person, or permit any of its Subsidiaries so to do, other than Permitted
Investments and an acquisition of a corporation previously identified to Lender,
provided such acquisition is completed on terms reasonably acceptable to Lender
..

     

    7.8   Distributions.  Borrower
shall not, and shall not allow any Subsidiary to, (a) repurchase or redeem any
class of stock or other equity interest other than pursuant to employee,
director or consultant repurchase plans or other similar agreements, provided,
however, in each case the repurchase or redemption price does not exceed the
original consideration paid for such stock or equity interest, or (b) declare or
pay any cash dividend or make a cash distribution on any class of stock or other
equity interest, or (c) lend money to any employees, officers or directors or
guarantee the payment of any such loans granted by a third party in excess of
$250,000 in the aggregate or (d) waive, release or forgive any indebtedness owed
by any employees, officers or directors in excess of $100,000 in the
aggregate.

     

    7.9   Transfers.  Except
for Permitted Transfers, Borrower shall not voluntarily or involuntarily
transfer, sell, lease, license, lend or in any other manner convey any
equitable, beneficial or legal interest in any material portion of their
assets.

     

    7.10   Taxes.  Borrower
and its Subsidiaries shall pay when due all taxes, fees or other charges of any
nature whatsoever (together with any related interest or penalties) now or
hereafter imposed or assessed against Borrower, Lender or the Collateral or upon
Borrower’s ownership, possession, use, operation or disposition thereof or upon
Borrower’s rents, receipts or earnings arising therefrom.  Borrower
shall file on or before the due date therefor all personal property tax returns
in respect of the Collateral.  Notwithstanding the foregoing, Borrower
may contest, in good faith and by appropriate proceedings, taxes for which
Borrower maintains adequate reserves therefor in accordance with
GAAP.

     

    7.11   Corporate
Changes.  Neither Borrower nor any Subsidiary shall change its
corporate name, legal form or jurisdiction of formation without twenty (20)
days’ prior written notice to Lender.  Neither Borrower nor any
Subsidiary shall relocate its chief executive office or its principal place of
business unless: (i) it has provided prior written notice to Lender; and (ii)
such relocation shall be within the continental United
States.  Neither Borrower nor any Subsidiary shall relocate any item
of Collateral (other than (x) sales of Inventory in the ordinary course of
business, (y) relocations of equipment having an aggregate value of up to
$150,000 in any fiscal year, and (z) relocations of Collateral from a location
described on Exhibit C to another location described on Exhibit C) unless (i) it
has provided prompt written notice to Lender and (ii) such relocation is within
the continental United States.

     

    7.12   Payments.  Borrower
shall arrange for automatic debit and corresponding payment to Lender on each
Payment Date of all periodic obligations payable to Lender under each Note or
Advance. All payments to Lender shall be wired to Lender’s bank account at the
following address:

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    Hercules
Technology Growth Capital, Inc.

    C/O Union
Bank of California

    400
California Street, 2nd
Floor

    San
Francisco, CA  94104

    Acct.#
4720023798

    ABA#
122000496

     

    7.13   Deposit
Accounts.  Neither Borrower nor any Subsidiary shall maintain
any Deposit Accounts, or accounts holding Investment Property, except with
respect to which Lender has a perfected security interest in each such
account.

     

    
      	
              SECTION
      8.  

            	
              RIGHT
      TO PURCHASE STOCK

            


    

     

    8.1   Lender or
its assignee or nominee shall have the right, in its discretion, to purchase
shares of Borrower’s securities having an aggregate purchase price of up to
$500,000 in the Next Event on the same terms and conditions afforded to other
investors in the Next Event.

     

    
      	
              SECTION
      9.  

            	
              EVENTS
      OF DEFAULT

            


    

     

    The
occurrence of any one or more of the following events shall be an Event of
Default:

     

    9.1   Payments.  Borrower
fails to pay any amount due under this Agreement, the Notes or any of the other
Loan Documents on the due date; or

     

    9.2   Covenants.  Borrower
breaches or defaults in the performance of any covenant or Secured Obligation
under this Agreement, the Notes, or any of the other Loan Documents, and (a)
with respect to a default under any covenant under this Agreement (other than
under Sections 6, 7.5, 7.7, 7.8 or 7.9 such default continues for more than ten
(10) Business Days after the earlier of the date on which (i) Lender has given
notice of such default to Borrower and (ii) Borrower has actual knowledge of
such default or (b) with respect to a default under any of Sections 6,
7.5,  7.7, 7.8 or 7.9, the occurrence of such default; or

     

    9.3   Material Adverse
Effect.  A circumstance has occurred that has a Material
Adverse Effect.

     

    9.4   Other Loan
Documents.  The occurrence of any default under the Warrant,
any Loan Document, or any agreement between Borrower and Lender and such default
continues for more than thirty (30) days after the earlier of (a) Lender has
given notice of such default to Borrower, or (b) Borrower has actual knowledge
of such default; or

     

    9.5   Representations.  Any
representation or warranty made by Borrower in any Loan Document or in the
Warrant shall have been false or misleading in any material respect at the time
such representation or warranty was made; or

     

    9.6   Insolvency.  Borrower
(a) shall make an assignment for the benefit of creditors; or (b) shall admit in
writing its inability to pay its debts as they become due, or its inability to
pay or perform under the Loan Documents; or (c) shall file a voluntary petition
in bankruptcy; or (d) shall file any petition, answer, or document seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation pertinent to such circumstances; or (e) shall seek or consent to or
acquiesce in the appointment of any trustee, receiver, or liquidator of Borrower
or of all or any substantial part (i.e., 33-1/3% or more) of the assets or
property of Borrower; or (f) shall cease operations of its business as its
business has normally been conducted, or terminate substantially all of its
employees, or becomes insolvent; or (g) Borrower or its directors or majority
shareholders shall take any action initiating any of the foregoing actions
described in clauses (a) through (f); or either (a) thirty (30) days shall have
expired after the commencement of an involuntary action against Borrower seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation,
without such action being dismissed or all orders or proceedings thereunder
affecting the operations or the business of Borrower being stayed; or (b) a stay
of any such order or 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    proceedings
shall thereafter be set aside and the action setting it aside shall not be
timely appealed; or (c) Borrower shall file any answer admitting or not
contesting the material allegations of a petition filed against Borrower in any
such proceedings; or (d) the court in which such proceedings are pending shall
enter a decree or order granting the relief sought in any such proceedings; or
thirty (30) days shall have expired after the appointment, without the consent
or acquiescence of Borrower, of any trustee, receiver or liquidator of Borrower
or of all or any substantial part of the properties of Borrower without such
appointment being vacated; or

     

    9.7   Attachments;
Judgments.  Any portion of Borrower’s assets is attached or
seized, or a levy is filed against any such assets, or a judgment or judgments
is/are entered for the payment of money, individually or in the aggregate, of at
least $200,000, or Borrower is enjoined or in any way prevented by court order
from conducting any part of its business; or

     

    9.8   Other
Obligations.  Either (a) the occurrence of any default under
any agreement or obligation of Borrower involving any obligation in excess of
$200,000 or that, when aggregated with any other such defaults, would reasonably
be expected to have a Material Adverse Effect.

     

    
      	
              SECTION
      10.  

            	
              REMEDIES

            


    

     

    10.1   General.  Upon
and during the continuance of any one or more Events of Default, (i) Lender may,
at its option, accelerate and demand payment of all or any part of the Secured
Obligations and declare them to be immediately due and payable (provided, that upon
the occurrence of an Event of Default of the type described in Section 9.6, the
Notes and all of the Secured Obligations shall automatically be accelerated and
made due and payable, in each case without any further notice or act), and (ii)
Lender may notify any of Borrower’s account debtors to make payment directly to
Lender, compromise the amount of any such account on Borrower’s behalf and
endorse Lender’s name without recourse on any such payment for deposit directly
to Lender’s account.  Lender may exercise all rights and remedies with
respect to the Collateral under the Loan Documents or otherwise available to it
under the UCC and other applicable law, including the right to release, hold,
sell, lease, liquidate, collect, realize upon, or otherwise dispose of all or
any part of the Collateral and the right to occupy, utilize, process and
commingle the Collateral.  All Lender’s rights and remedies shall be
cumulative and not exclusive.

     

    10.2   Collection;
Foreclosure.  Upon the occurrence and during the continuance of
any Event of Default, Lender may, at any time or from time to time, apply,
collect, liquidate, sell in one or more sales, lease or otherwise dispose of,
any or all of the Collateral, in its then condition or following any
commercially reasonable preparation or processing, in such order as Lender may
elect.  Any such sale may be made either at public or private sale at
its place of business or elsewhere.  Borrower agrees that any such
public or private sale may occur upon ten (10) calendar days’ prior written
notice to Borrower.  Lender may require Borrower to assemble the
Collateral and make it available to Lender at a place designated by Lender that
is reasonably convenient to Lender and Borrower.  The proceeds of any
sale, disposition or other realization upon all or any part of the Collateral
shall be applied by Lender in the following order of priorities:

     

    First, to Lender in
an amount sufficient to pay in full Lender’s costs and professionals’ and
advisors’ fees and expenses as described in Section 11.12;

     

    Second, to Lender in
an amount equal to the then unpaid amount of the Secured Obligations (including
principal, interest, and the Default Rate interest), in such order and priority
as Lender may choose in its sole discretion; and

     

    Finally, after the
full, final, and indefeasible payment in Cash of all of the Secured Obligations,
to any creditor holding a junior Lien on the Collateral, or to Borrower or its
representatives or as a court of competent jurisdiction may direct.

     

    Lender
shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it complies with the obligations of a
secured party under the UCC.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    10.3   No
Waiver.  Lender shall be under no obligation to marshal any of
the Collateral for the benefit of Borrower or any other Person, and Borrower
expressly waives all rights, if any, to require Lender to marshal any
Collateral.

     

    10.4   Cumulative
Remedies.  The rights, powers and remedies of Lender hereunder
shall be in addition to all rights, powers and remedies given by statute or rule
of law and are cumulative.  The exercise of any one or more of the
rights, powers and remedies provided herein shall not be construed as a waiver
of or election of remedies with respect to any other rights, powers and remedies
of Lender.

     

    
      	
              SECTION
      11.  

            	
              MISCELLANEOUS

            


    

     

    11.1   Severability.  Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under such law, such provision shall
be ineffective only to the extent and duration of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

     

    11.2   Notice.  Except
as otherwise provided herein, any notice, demand, request, consent, approval,
declaration, service of process or other communication (including the delivery
of Financial Statements) that is required, contemplated, or permitted under the
Loan Documents or with respect to the subject matter hereof shall be in writing,
and shall be deemed to have been validly served, given, delivered, and received
upon the earlier of: (i) the day of transmission by facsimile or hand delivery
or deposit with an overnight express service or overnight mail delivery service;
or (ii) the third calendar day after deposit in the United States mails, with
proper first class postage prepaid, in each case addressed to the party to be
notified as follows:

     

    (a)   If to
Lender:

     

    HERCULES
TECHNOLOGY GROWTH CAPITAL, INC.

    Legal
Department

    Attention:  Chief
Legal Officer and Roy Liu

    400
Hamilton Avenue, Suite 310

    Palo
Alto, CA  94301

    Facsimile:  650-473-9194

    Telephone:  650-289-3068

     

    (b)   If to
Borrower:

     

    NEXX
SYSTEMS, INC.

    Attention:  Stanley
D. Piekos

    5
Suburban Park Drive

    Billerica,
MA 01821-3904

    Facsimile:  978-932-2045

    Telephone:  978-932-2000

     

    With a
copy
to                    
MINTZ LEVIN

    Attention:  Neil
H. Aronson, Esquire

    One
Financial Center

    Boston,
MA 02111

    Facsimile:  617-542-2241

    Telephone:  617-542-6000

     

    or to
such other address as each party may designate for itself by like
notice.  Any notice, demand, request, consent, approval, declaration,
service of process or other communication delivered to a party hereto that
otherwise complies with this Section 11 shall be
valid despite the failure to deliver to a non-party.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    11.3   Entire Agreement;
Amendments.  This Agreement, the Notes, and the other Loan
Documents constitute the entire agreement and understanding of the parties
hereto in respect of the subject matter hereof and thereof, and supersede and
replace in their entirety any prior proposals, term sheets, letters,
negotiations or other documents or agreements, whether written or oral, with
respect to the subject matter hereof or thereof (including Lender’s revised
proposal letter dated November 20, 2006.  None of the terms of this
Agreement, the Notes or any of the other Loan Documents may be amended except by
an instrument executed by each of the parties hereto.

     

    11.4   No Strict
Construction.  The parties hereto have participated jointly in
the negotiation and drafting of this Agreement.  In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.

     

    11.5   No
Waiver.  The powers conferred upon Lender by this Agreement are
solely to protect its rights hereunder and under the other Loan Documents and
its interest in the Collateral and shall not impose any duty upon Lender to
exercise any such powers.  No omission or delay by Lender at any time
to enforce any right or remedy reserved to it, or to require performance of any
of the terms, covenants or provisions hereof by Borrower at any time designated,
shall be a waiver of any such right or remedy to which Lender is entitled, nor
shall it in any way affect the right of Lender to enforce such provisions
thereafter.

     

    11.6   Survival.  All
agreements, representations and warranties contained in this Agreement, the
Notes and the other Loan Documents or in any document delivered pursuant hereto
or thereto shall be for the benefit of Lender and shall survive the execution
and delivery of this Agreement and the expiration or other termination of this
Agreement.

     

    11.7   Successors and
Assigns.  The provisions of this Agreement and the other Loan
Documents shall inure to the benefit of and be binding on Borrower and its
permitted assigns (if any).  Borrower shall not assign its obligations
under this Agreement, the Notes or any of the other Loan Documents without
Lender’s express prior written consent, and any such attempted assignment shall
be void and of no effect.  Lender may assign, transfer, or endorse its
rights hereunder and under the other Loan Documents without prior notice to
Borrower, and all of such rights shall inure to the benefit of Lender’s
successors and assigns.

     

    11.8   Governing
Law.  This Agreement, the Notes and the other Loan Documents
have been negotiated and delivered to Lender in the State of California, and
shall have been accepted by Lender in the State of
California.  Payment to Lender by Borrower of the Secured Obligations
is due in the State of California.  This Agreement, the Notes and the
other Loan Documents shall be governed by, and construed and enforced in
accordance with, the laws of the State of California, excluding conflict of laws
principles that would cause the application of laws of any other
jurisdiction.

     

    11.9   Consent to Jurisdiction and
Venue.  All judicial proceedings (to the extent that the
reference requirement of Section 11.10 is not applicable) arising in or under or
related to this Agreement, the Notes or any of the other Loan Documents may be
brought in any state or federal court located in the State of
California.  By execution and delivery of this Agreement, each party
hereto generally and unconditionally: (a) consents to nonexclusive personal
jurisdiction in Santa Clara County, State of California; (b) waives any
objection as to jurisdiction or venue in Santa Clara County, State of
California; (c) agrees not to assert any defense based on lack of jurisdiction
or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement, the Notes or the
other Loan Documents.  Service of process on any party hereto in any
action arising out of or relating to this Agreement shall be effective if given
in accordance with the requirements for notice set forth in Section 11.3, and
shall be deemed effective and received as set forth in Section
11.3.  Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of either party to bring
proceedings in the courts of any other jurisdiction.

     

    11.10   Mutual Waiver of Jury
Trial/Judicial Reference.

     

       
(a) Because
disputes arising in connection with complex financial transactions are most
quickly and economically resolved by an experienced and expert person and the
parties wish applicable state and federal laws to apply (rather than arbitration
rules), the parties desire that their disputes be resolved by a judge


     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    applying
such applicable laws.  EACH OF BORROWER AND LENDER SPECIFICALLY WAIVES
ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM,
CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY,
“CLAIMS”) ASSERTED BY BORROWER AGAINST LENDER OR ITS ASSIGNEE OR BY LENDER OR
ITS ASSIGNEE AGAINST BORROWER.  This waiver extends to all such
Claims, including Claims that involve Persons other than Borrower and Lender;
Claims that arise out of or are in any way connected to the relationship between
Borrower and Lender; and any Claims for damages, breach of contract, tort,
specific performance, or any equitable or legal relief of any kind, arising out
of this Agreement, any other Loan Document.

     

      
(b) If the
waiver of jury trial set forth in Section 11.10(a) is ineffective or
unenforceable, the parties agree that all Claims shall be resolved by reference
to a private judge sitting without a jury, pursuant to Code of Civil Procedure
Section 638, before a mutually acceptable referee or, if the parties cannot
agree, a referee selected by the Presiding Judge of the Santa Clara County,
California.  Such proceeding shall be conducted in Santa Clara County,
California, with California rules of evidence and discovery applicable to such
proceeding.

     

      
(c) In the
event Claims are to be resolved by judicial reference, either party may seek
from a court identified in Section 11.10, any prejudgment order, writ or other
relief and have such prejudgment order, writ or other relief enforced to the
fullest extent permitted by law notwithstanding that all Claims are otherwise
subject to resolution by judicial reference.

     

    11.11  Professional
Fees.  Borrower promises to pay Lender’s fees and expenses
necessary to finalize the loan documentation, including but not limited to
reasonable attorneys fees, UCC searches, filing costs, and other miscellaneous
expenses. In addition, Borrower promises to pay any and all reasonable
attorneys’ and other professionals’ fees and expenses incurred by Lender after
the Closing Date in connection with or related to:  (a) the Loan; (b)
the collection or enforcement of the Loan; (c) the amendment or modification of
the Loan Documents; (d) any waiver, consent, release, or termination under the
Loan Documents; (e) the protection, preservation, sale, lease, liquidation, or
disposition of Collateral or the exercise of remedies with respect to the
Collateral; (f) any legal, litigation, administrative, arbitration, or out of
court proceeding in connection with or related to Borrower or the Collateral,
and any appeal or review thereof; and (g) any bankruptcy, restructuring,
reorganization, assignment for the benefit of creditors, workout, foreclosure,
or other action related to Borrower, the Collateral, the Loan Documents,
including representing Lender in any adversary proceeding or contested matter
commenced or continued by or on behalf of Borrower’s estate, and any appeal or
review thereof.

     

    11.12  Confidentiality.  Lender
acknowledges that certain items of Collateral and information provided to Lender
by Borrower are confidential and proprietary information of Borrower, if and to
the extent such information is marked as confidential by Borrower at the time of
disclosure (the “Confidential Information”).  Accordingly, Lender
agrees that any Confidential Information it may obtain in the course of
acquiring, administering, or perfecting  Lender’s security interest in
the Collateral shall not be disclosed to any other person or entity in any
manner whatsoever, in whole or in part, without the prior written consent of
Borrower, except that Lender may disclose any such information:  (a)
to its own directors, officers, employees, accountants, counsel and other
professional advisors and to its affiliates if Lender in its sole discretion
determines that any such party should have access to such information in
connection with such party’s responsibilities in connection with the Loan or
this Agreement and, provided that such recipient of such Confidential
Information either (i) agrees to be bound by the confidentiality provisions of
this paragraph or (ii) is otherwise subject to confidentiality restrictions that
reasonably protect against the disclosure of Confidential Information; (b) if
such information is generally available to the public; (c) if required or
appropriate in any report, statement or testimony submitted to any governmental
authority having or claiming to have jurisdiction over Lender; (d) if required
or appropriate in response to any summons or subpoena or in connection with any
litigation, to the extent permitted or deemed advisable by Lender’s counsel; (e)
to comply with any legal requirement or law applicable to Lender; (f) to the
extent reasonably necessary in connection with the exercise of any right or
remedy under any Loan Document, including Lender’s sale, lease, or other
disposition of Collateral after default; (g) to any participant or assignee of
Lender or any prospective participant or assignee; provided, that such
participant or assignee or prospective participant or assignee agrees in writing
to be bound by this Section prior to disclosure; or (h) otherwise with the prior
consent of Borrower; provided, that any
disclosure made in violation of this Agreement shall not affect the obligations
of Borrower or any of its affiliates or any guarantor under this Agreement or
the other Loan Documents.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    11.13  Assignment of
Rights.  Borrower acknowledges and understands that Lender may
sell and assign all or part of its interest hereunder and under the Note(s) and
Loan Documents to any person or entity (an “Assignee”).  After such
assignment the term “Lender” as used in the Loan Documents shall mean and
include such Assignee, and such Assignee shall be vested with all rights, powers
and remedies of Lender hereunder with respect to the interest so assigned; but
with respect to any such interest not so transferred, Lender shall retain all
rights, powers and remedies hereby given.  No such assignment by
Lender shall relieve Borrower of any of its obligations
hereunder.  Lender agrees that in the event of any transfer by it of
the Note(s), it will endorse thereon a notation as to the portion of the
principal of the Note(s), which shall have been paid at the time of such
transfer and as to the date to which interest shall have been last paid
thereon.

     

    11.14  Revival of Secured
Obligations.  This Agreement and the Loan Documents shall
remain in full force and effect and continue to be effective if any petition is
filed by or against Borrower for liquidation or reorganization, if Borrower
becomes insolvent or makes an assignment for the benefit of creditors, if a
receiver or trustee is appointed for all or any significant part of Borrower’s
assets, or if any payment or transfer of Collateral is recovered from
Lender.  The Loan Documents and the Secured Obligations and Collateral
security shall continue to be effective, or shall be revived or reinstated, as
the case may be, if at any time payment and performance of the Secured
Obligations or any transfer of Collateral to Lender, or any part thereof is
rescinded, avoided or avoidable, reduced in amount, or must otherwise be
restored or returned by, or is recovered from, Lender or by any obligee of the
Secured Obligations, whether as a “voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment, performance, or transfer
of Collateral had not been made.  In the event that any payment, or
any part thereof, is rescinded, reduced, avoided, avoidable, restored, returned,
or recovered, the Loan Documents and the Secured Obligations shall be deemed,
without any further action or documentation, to have been revived and reinstated
except to the extent of the full, final, and indefeasible payment to Lender in
Cash.

     

    11.15  Counterparts.  This
Agreement and any amendments, waivers, consents or supplements hereto may be
executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so delivered shall be deemed an
original, but all of which counterparts shall constitute but one and the same
instrument.

     

    11.16  No Third Party
Beneficiaries.  No provisions of the Loan Documents are
intended, nor will be interpreted, to provide or create any third-party
beneficiary rights or any other rights of any kind in any person other than
Lender and Borrower unless specifically provided otherwise herein, and, except
as otherwise so provided, all provisions of the Loan Documents will be personal
and solely between the Lender and the Borrower.

     

    11.17  Specific
Performance.  The parties hereto hereby declare that it is
impossible to measure in money the damages which will accrue to Lender by reason
of Borrower’s failure to perform any of the obligations under this Agreement and
agree that the terms of this Agreement shall be specifically enforceable by
Lender.  If Lender institutes any action or proceeding to specifically
enforce the provisions hereof, any Person against whom such action or proceeding
is brought hereby waives the claim or defense therein that Lender has an
adequate remedy at law, and such Person shall not offer in any such action or
proceeding the claim or defense that such remedy at law exists.

     

    11.18  Publicity.  Lender
may use Borrower’s name and logo, and include a brief description of the
relationship between Borrower and Lender, in Lender’s marketing
materials.

     

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    IN
WITNESS WHEREOF, Borrower and Lender have duly executed and delivered this Loan
and Security Agreement as of the day and year first above written.

     

    BORROWER:                                     NEXX
SYSTEMS, INC.

     

    Signature:
/s/ Stanley D.
Piekos                               


     

    Print
Name: Stanley D.
Piekos                                  

     

    Title:
CFO                                                                    


     

     

    Accepted in Palo Alto,
California:

     

    LENDER:                                              HERCULES
TECHNOLOGY GROWTH CAPITAL, INC.

     

    Signature:
/s/ Scott
Harvey                                      


     

    Print
Name: Scott
Harvey                                         

     

    Title:
Chief Legal
Officer                                           

     

     

     

     

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    Table of Exhibits and
Schedules

     

     

    
      
        	
                Exhibit
      A:

              	
                Advance
      Request

              
	
                
                

                 

              	
                Attachment to Advance Request

              
	
                Exhibit A-1:

              	
                Borrowing Base Certificate

              
	
                Exhibit B:

              	
                Promissory Note

              
	
                Exhibit C:

              	
                Name, Locations, and Other Information for Borrower

              
	
                Exhibit D: 

              	
                Borrower’s Patents, Trademarks, Copyrights and
  Licenses

              
	
                Exhibit E:

              	
                Borrower’s Deposit Accounts and Investment Accounts

              
	
                Exhibit F:

              	
                Compliance Certificate

              
	
                Exhibit G:

              	
                Joinder Agreement

              
	
                Schedule 1

              	
                Subsidiaries

              
	
                Schedule 1A

              	
                Existing Permitted Indebtedness

              
	
                Schedule 1B

              	
                Existing Permitted Investments

              
	
                Schedule 1C

              	
                Existing Permitted Liens

              
	
                Schedule 5.3

              	
                Consents, Etc.

              
	
                Schedule 5.5

              	
                Actions Before Governmental Authorities

              
	
                Schedule 5.8

              	
                Tax Matters

              
	
                Schedule 5.9

              	
                Intellectual Property Claims

              
	
                Schedule 5.10

              	
                Intellectual Property

              
	
                Schedule 5.11

              	
                Borrower Products

              
	
                Schedule 5.12

              	
                Financial Accounts

              
	
                Schedule 5.13

              	
                Employee Loans

              
	
                Schedule 5.14

                 

              	
                Capitalization

                 

              


      

    

     

     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    Disclosure
Schedules

     to
Loan and Security Agreement

     dated
as of December 19, 2006

    between
NEXX Systems, Inc.

     and

    Hercules
Technology Growth Capital, Inc.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    


    Schedule 1                       
Subsidiaries

     

    None.

     

     

    Schedule 1A                     Existing Permitted
Indebtedness

     

    Lease
Agreement between the Borrower and Popular Leasing U.S.A., Inc. and assigned to
Wells Fargo Financial Leasing, Inc. for a Solaar S4 AA  Spectrometer.
(to paid in full in June 2007.  Monthly lease payment is $980.

     

    Real estate sublease with Newport
Corporation for 5 Suburban Park Drive, Billerica,
Massachusetts  01821-3904.

    


    The Company’s clean room is subject to
an Equipment Lease by and between the Borrower and Newport Corporation, dated
January 8, 2004 and an Asset Purchase Agreement by and between the Borrower and
Newport Corporation, dated January 8, 2004.

    


    Borrower
has a representative office in Singapore subject to an office lease by and
between the Borrower and NSC Executive Centre, dated 17 October 2006 that
expires 1 April 2007

    


     

    Schedule 1B   
                  Existing Permitted
Investments

     

    None

     

    Schedule 1C                      Existing Permitted
Liens

     

    UCC Financing Statements
Filed at Delaware Secretary of State’s Office

     

    
      	
              Secured Party

            	 	
              Filing Information

            	 	
              Collateral

            
	 	 	 	 	 
	
              Wells
      Fargo Financial Leasing, Inc.

            	 	
              34093282/4,
      as amended by 4203295/3

            	 	
              Specified
      Equipment

            
	 
      	 	 
      	 	 
      


    

    


     

    Other:  The
general security interest granted to Comerica Bank will be released in
conjunction with the consummation of this Loan Transaction.

     

    Schedule 5.3                      Consents,
Etc.

     

    Consent
of Board of Directors (which has been obtained as of the Closing
Date)

    Consent
of Stockholders under Investor Rights Agreement (which has been obtained as of
the Closing Date)

    


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    Schedule 5.5                     Actions Before Governmental
Authorities

     

    None

     

    Schedule 5.8                     Tax
Matters

     

    None

     

    Schedule 5.9                     Intellectual Property
Claims

     

    None

     

    Schedule 5.10                   Intellectual
Property

     

    Prohibitions:

     

    The Borrower's Restated
Certificate of Organization prohibits the Borrower from entering into
an exclusive license for the the Borrower's intellectual
property, without the consent of a majority of the Series A and B holders,
voting together as a single class, and the Series C holders, voting
together as a single class

     

    Licenses:

     

    See Item 3 to Exhibit D

    


    Schedule 5.11                   Borrower
Products

     

    None

     

    Schedule
5.12                 
 Accounts

     

    Comerica Bank

    11943 El Camino Road

    San Diego,
California  92130

    Checking Account Number
189-203-6391

    Money Market Account Number
189-203-6433

    


     

    Schedule 5.13                   Loans

     

    On
September 29, 2006, the Borrower entered into a loan arrangement with Stanley
Piekos whereby Mr. Piekos and a retirement account established for the benefit
of Mr. Piekos each acquired 140,625 shares of Common Stock  and each
issued a note to the Borrower for $112,500, secured in part by the shares of
Common Stock issued.  The notes provide for payments of principal and
interest through June 3, 2007.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    Schedule 5.14                                Capitalization

     

    (as
of 12/18/06)

    


    


    
      	
              CLASS

            	
              SHARES OUTSTANDING

            
	
              Series
      A Preferred Stock

            	
              1,550,000

            
	
              Series
      B Preferred Stock

            	
              7,669,880

            
	
              Series
      C Preferred Stock

            	
              8,216,011

            
	
              Common
      Stock

            	
              14,643,024

            
	
              Common
      Stock Options

            	
              2,680,447

            
	
              Common
      Stock Warrants

              Expiring 12/31/06 @
      $2.50

              Expiring   5/10/07 @
      $1.322

            	
               

              10,000

              10,000

            
	
              Series
      B Warrant

              Expiring 6/14/11 @
      $1.322

            	
              115,384

            
	
              TOTAL:

            	
              34,894,746

            


    

    


     

    The
Borrower has no subsidiaries.

     

     

     

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    EXHIBIT
A

     

    ADVANCE
REQUEST

     

    To:          Lender:                                                                           Date:           _________
__, 2006

    Hercules
Technology Growth Capital, Inc.

    400
Hamilton Avenue, Suite 310

    Palo
Alto, CA 94301

    Facsimile:  650-473-9194

    Attn:

     

    NEXX
SYSTEMS, INC. (“Borrower”) hereby requests from Hercules Technology Growth
Capital, Inc. (“Lender”) an Advance in the amount of _____________________
Dollars ($________________) on ______________, _____ (the “Advance Date”)
pursuant to the Loan and Security Agreement between Borrower and Lender (the
“Agreement”). Capitalized words and other terms used but not otherwise defined
herein are used with the same meanings as defined in the Agreement.

     

    Please:

     

    (a)           Issue
a check payable to Borrower    ________

     

    or

     

    (b)           Wire
Funds to Borrower’s account   ________

     

     

    
    

     

    
      	 	Bank:	 	 
	 	Address:	 	 
	 	 	 	 
	 	ABA
Number:	 	 
	 	Account
      Number:	 	 
	 	Account
    Name:	 	 


    

     

     

     

    Borrower
represents that the conditions precedent to the Advance set forth in the
Agreement are satisfied and shall be satisfied upon the making of such Advance,
including but not limited to:  (i) that no Material Adverse Effect;
(ii) that the representations and warranties set forth in the Agreement and in
the Warrant are and shall be true and correct in all material respects on and as
of the Advance Date with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate to an
earlier date; (iii) that Borrower is in compliance with all the terms and
provisions set forth in each Loan Document on its part to be observed or
performed; and (iv) that as of the Advance Date, no fact or condition exists
that would (or would, with the passage of time, the giving of notice, or both)
constitute an Event of Default under the Loan Documents.  Borrower
understands and acknowledges that Lender has the right to review the financial
information supporting this representation and, based upon such review in its
sole discretion, Lender may decline to fund the requested Advance.

     

    Borrower
hereby represents that Borrower’s corporate status and locations have not
changed since the date of this Agreement of, if the Attachment to this Advance
Request is completed, are as set forth in the Attachment to this Advance
Request.

     

    Borrower
agrees to notify Lender promptly before the funding of the Loan if any of the
matters  which  have been represented above shall not be
true and correct on the Borrowing Date and if Lender has received no such notice
before the Advance Date then the statements set forth above shall be deemed to
have been made and shall be deemed to be true and correct as of the Advance
Date.

     

    Executed
as of _____________, 2006.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    BORROWER:  
NEXX SYSTEMS, INC.

     

    SIGNATURE:   _____________________________________

    


    TITLE:              
Chief Executive Officer or Chief Financial Officer

    


    PRINT
NAME: _____________________________________

     

     

                                                               

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    ATTACHMENT
TO ADVANCE REQUEST

     

    Dated:
_______________________

     

     

     

    Borrower
hereby represents and warrants to Lender that Borrower’s current name and
organizational status is as follows:

     

    Name:                                                                                       
NEXX SYSTEMS, INC.

     

    Type of
organization:                                                             Corporation

     

    State of
organization:                                                             
Delaware

     

    Organization
file
number:                                                      
_____________________________

     

    Borrower
hereby represents and warrants to Lender that the street addresses, cities,
states and postal codes of its current locations are as follows:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    EXHIBIT
A-1

     

    BORROWING
BASE CERTIFICATE

     

    
      	
              NEXX
      SYSTEMS, INC.

               

              Commitment
      Amount:  $5,000,000 Revolver, $5,000,000 Term

            
	 
      


    

    


    
      	
              ACCOUNTS
      RECEIVABLE

            	 
      	 
      
	
              1.           Accounts
      Receivable Book Value as of ___

            	 
      	
              $___________

            
	 
      	 
      	 
      
	
              ACCOUNTS
      RECEIVABLE DEDUCTIONS (without duplication)

            	 
      	 
      
	
              2.           Amounts
      over 90 days due

            	
              $___________

            	 
      
	
              3.           Balance
      of 25% over 90 day accounts

            	
              $___________

            	 
      
	
              4.           Affiliate
      Accounts

            	
              $___________

            	 
      
	
              5.           US
      Government Accounts

            	
              $___________

            	 
      
	
              6.           Doubtful
      Accounts

            	
              $___________

            	 
      
	
              7.           TOTAL
      ACCOUNTS RECEIVABLE DEDUCTIONS

            	
              $___________

            	 
      
	
              8.           Eligible
      Accounts (#1 minus #7)

            	 
      	
              $___________

            
	
              9.           LOAN
      VALUE OF ACCOUNTS (85% of #8)

            	 
      	
              $___________

            
	 
      	 
      	 
      
	
              BACKLOG

            	 
      	 
      
	
              10.        Total
      Backlog as of ___________ < 365 days

            	
              $___________

            	 
      
	
              11.         Lesser
      of 80% of Backlog or $2,500,000

            	 
      	
              $___________

            
	 
      	 
      	 
      
	
              BALANCES

            	 
      	 
      
	
              12.         Maximum
      Revolving Loan Amount

            	 
      	
              $5,000,000

            
	
              13.         Total
      Funds Available (Lesser of #12 or #9 plus #11)

            	 
      	
              $___________

            
	
              14.         Present
      balance owing on Revolving Facility

            	 
      	
              $___________

            
	
              15.         Available
      under Revolving Facility (#13 minus #14)

            	 
      	
              $___________

            
	 
      	 
      	 
      
	
              TERM
      LOAN

            	 
      	 
      
	
              16.         Term
      Loan Amount

            	 
      	
              $5,000,000

            
	
              17.         Outstanding
      Term Advances

            	 
      	
              ($_________)

            
	
              18.         Available
      under Term Facility (#16 minus #17)

            	 
      	
              $___________

            
	 
      	 
      	 
      


    

    


     

    The
undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Hercules Technology Growth
Capital, Inc.

     

    
      	
              NEXX
      SYSTEMS, INC.

            	 
      
	 
      	 
      
	 
      	 
      
	
              By:   ______________________________________________

            	 
      
	
              Authorized
      Signer

            	 
      
	 
      	 
      


    

    


    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    EXHIBIT
B

     

    SECURED
PROMISSORY NOTE

     

    
    

     

    
      	
              $__,000,000
      Advance

            	
              Date:
      ________________, 20__

            
	 	
              Maturity
      Date: _________, 20__

            


    

     

    FOR VALUE
RECEIVED, NEXX SYSTEMS, INC., a Delaware corporation, for itself and each of its
Subsidiaries (the “Borrower”) hereby promises to pay to the order of Hercules
Technology Growth Capital, Inc., a Maryland corporation or the holder of this
Note (the “Lender”) at 400 Hamilton Avenue, Suite 310, Palo Alto, CA 94301 or
such other place of payment as the holder of this Secured Promissory Note (this
“Promissory Note”) may specify from time to time in writing, in lawful money of
the United States of America, the principal amount of _______________________
($__,000,000) or such other principal amount as Lender has advanced to Borrower,
together with interest at a floating rate set forth in the Loan Agreement as
defined below,.

     

    This
Promissory Note is the Note referred to in, and is executed and delivered in
connection with, that certain Loan and Security Agreement dated December 19,
2006, by and between Borrower and Lender (as the same may from time to time be
amended, modified or supplemented in accordance with its terms, the “Loan
Agreement”), and is entitled to the benefit and security of the Loan Agreement
and the other Loan Documents (as defined in the Loan Agreement), to which
reference is made for a statement of all of the terms and conditions
thereof.  All payments shall be made in accordance with the Loan
Agreement.  All terms defined in the Loan Agreement shall have the
same definitions when used herein, unless otherwise defined
herein.  An Event of Default under the Loan Agreement shall constitute
a default under this Promissory Note.  Reference to the Loan Agreement
shall not affect or impair the absolute and unconditional obligation of the
Borrowers to pay all principal and interest and premium, if any, under this
Promissory Note upon demand or as otherwise provided herein

     

    Borrower
waives presentment and demand for payment, notice of dishonor, protest and
notice of protest under the UCC or any applicable law.  Borrower
agrees to make all payments under this Promissory Note without setoff,
recoupment or deduction and regardless of any counterclaim or
defense.  This Promissory Note has been negotiated and delivered to
Lender and is payable in the State of California.  This Promissory
Note shall be governed by and construed and enforced in accordance with, the
laws of the State of California, excluding any conflicts of law rules or
principles that would cause the application of the laws of any other
jurisdiction.

     

    BORROWER
FOR ITSELF AND

    ON BEHALF
OF ITS
SUBSIDIARIES:                                              NEXX
SYSTEMS, INC.

     

    By:    
_____________________________

     

    Title:  _____________________________

     

    Name:  ____________________________

     

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

      
        EXHIBIT
C

         

      

       

    

    NAME,
LOCATIONS, AND OTHER INFORMATION FOR BORROWER

     

    1.      Borrower
represents and warrants to Lender that Borrower’s current name and
organizational status as of the Closing Date is as follows:

     

     

    
      	
              Name:

            	
              NEXX
      Systems, Inc.

            


    

     

    
      	
              Type
      of organization:

            	
              Corporation

            


    

     

    
      	
              State
      of organization:

            	
              Delaware

            


    

     

    
      	
              Organization
      file number:

            	
              3554269

            


    

     

    2.      Borrower
represents and warrants to Lender that for five (5) years prior to the Closing
Date, Borrower did not do business under any other name or organization or form
except the following:

     

    The Borrower previously had established
two subsidiaries which never conducted any business.  These were NEXX
Systems Packaging, LLC and NEXX Systems Telecom, LLC.   The
Borrower acquired All Wet Technologies, Inc. on April 17, 2003.  All
three subsidiaries were subsequently merged into the Borrower.

     

    Borrower’s
fiscal year ends on December 31

    Borrower’s
federal employer tax identification number is: 04-3568220

     

    3.      Borrower
represents and warrants to Lender that its chief executive office is located at
5 Suburban Office Park, Billerica, Massachusetts  01821.

     

    


     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    EXHIBIT
D

     

    PATENTS
OWNED BY BORROWER

    


    
      	
               

              Title

            	 	
              Patent

              Number

            	 	
               

              Date of Grant

            
	
              Method
      of and apparatus for handling thin and flat workpieces and the
      like

               

            	 	
              US
      6,174,011

            	 	
              01/16/01

            
	
              In-line
      sputter deposition system

            	 	
              US
      6,217,272

            	 	
              04/17/01

               

            
	
              Disk
      furnace for thermal processing

            	 	
              US
      6,234,788

            	 	
              05/22/01

               

            
	
              Method
      of and apparatus for controlling fluid flow and electric fields involved
      in the electroplating of substantially flat workpieces and the like and
      more generally controlling fluid flow in the processing of other workpiece
      surfaces as well

               

            	 	
              US
      6,251,250

            	 	
              06/26/01

            
	
              Multi-layer
      sputter deposition apparatus

            	 	
              US
      6,328,858

            	 	
              12/11/01

               

            
	
              Permanent
      magnet ECR plasma source with integrated multipolar magnetic
      confinement

               

            	 	
              US
      6,396,024

            	 	
              05/28/02

            
	
              Substrate
      processing pallet and related substrate processing method and
      machine

               

            	 	
              US
      6,530,733

            	 	
              03/11/03

            
	
              Method
      and apparatus for fluid sealing, while electrically contacting,
      wet-processed workpieces

               

            	 	
              US
      6,540,899

            	 	
              04/01/03

            
	
              Substrate
      processing pallet and related substrate processing method and
      machine

               

            	 	
              US
      6,682,288

            	 	
              01/27/04

            
	
              Substrate
      processing pallet and related substrate processing method and
      machine

               

            	 	
              US
      6,821,912

            	 	
              11/23/04

            


    

     

     

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    PATENT
APPLICATIONS OWNED BY BORROWER

    


    
      	
              Title

            	 	
              Application

              Number

            	 	
              Application

              Date

            
	
              Ultra-thin
      wafer handling system

            	 	
              US
      10/618,091

            	 	
              07/11/03

            
	 	 	 	 	 
	
              Method
      and apparatus for fluid processing a workpiece

               

            	 	
              US
      10/971,729

               

            	 	
              10/22/04

            
	
              Method
      and apparatus for fluid processing a workpiece

               

            	 	
              US
      10/971,530

               

            	 	
              10/22/04

            
	
              Method
      and apparatus for fluid processing a workpiece

               

            	 	
              US
      10/971,726

               

            	 	
              10/22/04

            
	
              Method
      and apparatus for fluid processing and drying a workpiece

               

            	 	
              US
      11/155,008

            	 	
              06/16/05

            
	
              Balancing
      Pressure to Improve a Fluid Seal

               

            	 	
              US
      11/265,543

            	 	
              11/02/05

            
	
              Method
      of and apparatus for handling thin and flat pieces and the
      like

               

            	 	
              Europe

              EP
      00911202.0

               

            	 	
              04/14/00

            
	
              Method
      and apparatus for fluid sealing, while electrically contacting,
      wet-processed workpieces, as in the electrodeposition of semiconductor
      wafers and the like and for other wet processing techniques and
      workpieces

               

            	 	
              Europe

              EP
      02703809.0

            	 	
              03/15/02

            
	
              Method
      and apparatus for fluid sealing, while electrically contacting,
      wet-processed workpieces, as in the electrodeposition of semiconductor
      wafers and the like and for other wet processing techniques and
      workpieces

               

            	 	
              Japan

              2002-579542

            	 	
              03/15/02

            
	
              Method
      and apparatus for fluid sealing, while electrically contacting,
      wet-processed workpieces, as in the electrodeposition of semiconductor
      wafers and the like and for other wet processing techniques and
      workpieces

               

            	 	
              China

              02810215.0

            	 	
              03/15/02

            
	
              Method
      and apparatus for fluid sealing, while electrically contacting,
      wet-processed workpieces, as in the electrodeposition of semiconductor
      wafers and the like and for other wet processing techniques and
      workpieces

               

            	 	
              Korea

              10-2003-7013050

            	 	
              03/15/02

            
	
              Method
      and apparatus for fluid processing a workpiece

               

            	 	
              Japan

              2006-185,521

               

            	 	
              10/22/04

            
	
              Method
      and apparatus for fluid processing a workpiece

            	 	
              Europe

              EP
      04796198.2

               

            	 	
              10/22/04

            
	
              Method
      and apparatus for fluid processing a workpiece

            	 	
              China

              200480037097.8

               

            	 	
              10/22/04

            


    

    


     

    


    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     3.    
Issued Patents to
which Nexx Systems, Inc. has rights

     

     

    
      	
              Patent
      No.

               

            	
              Issue
      Date

            	
              Inventors

            	
              Title

            	
              Status

            
	
              US
      6,225,592

            	
              05/01/01

            	
              Doughty

            	
              Method
      and apparatus for 

              launching
      microwave 

              energy
      into a plasma 

              processing
      chamber

               

            	
              Issued

              Licensed
      to NEXX Systems

               

            
	
              US
      6,163,006

            	
              12/19/00

            	
              Doughty

              Spencer

            	
              Permanent
      magnet ECR 

              plasma
      source with 

              magnetic
      field 

              optimization

               

            	
              Issued

               

              Licensed
      to NEXX Systems

            
	
              US
      5,869,802

            	
              02/09/99

            	
              Spencer

              Westmoreland

              Mantei

               

            	
              Plasma
      producing structure

            	
              Issued

               

              Sublicensed
      to NEXX Systems

            
	
              US
      5,196,670

            	
              03/23/93

            	
              Mantei

            	
              Magnetic
      plasma 

              producing
      device with

              adjustable
      resonance plane

            	
              Issued

               

              Sublicensed
      to NEXX Systems

            


    

    


    
      	
               
      

            	
              Patent
      and Know-How License Agreement by and between Applied Science and
      Technology, Inc., ASTeX PlasmaQuest Inc. and Nexx Systems, LLC dated
      August 7, 2001, granted a worldwide, exclusive, fully paid up, irrevocable
      and transferable license to Nexx Systems LLC for the above patents for a
      term of seventeen (17) years.

            


    

     

     

     

     

     

     

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    EXHIBIT
E

     

    BORROWER’S
DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS

     

    


     

    


     

    Comerica Bank

    11943 El Camino Road

    San Diego,
California  92130

    Checking Account Number
189-203-6391

    Money Market Account Number
189-203-6433

    


     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    EXHIBIT
F

     

    COMPLIANCE
CERTIFICATE

     

    Hercules
Technology Growth Capital, Inc.

    400
Hamilton Avenue, Suite 310

    Palo
Alto, CA 94301

     

    Reference
is made to that certain Loan and Security Agreement dated December 19, 2006 and
all ancillary documents entered into in connection with such Loan and Security
Agreement all as may be amended from time to time, (hereinafter referred to
collectively as the “Loan Agreement”) between Hercules Technology Growth
Capital, Inc (“Hercules”) as Lender and NEXX SYSTEMS, INC. (the “Company”) as
Borrower. All capitalized terms not defined herein shall have the same meaning
as defined in the Loan Agreement.

     

    The
undersigned is an Officer of the Company, knowledgeable of all Company financial
matters, and is authorized to provided certification of information regarding
the Company; hereby certifies that in accordance with the terms and conditions
of the Loan Agreement, the Company is in compliance for the period ending
___________ of all covenants, conditions and terms and hereby reaffirms that all
representations and warrants contained therein are true and correct on and as of
the date of this Compliance Certificate with the same effect as though made on
and as of such date, except to the extent such representations and warranties
expressly relate to an earlier date, after giving effect in all cases to any
standard(s) of materiality contained in the Loan Agreement as to such
representations and warranties.  Attached are the required documents
supporting the above certification.  The undersigned further certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (except for the absence of footnotes with respect to unaudited
financial statement and subject to normal year end adjustments) and are
consistent from one period to the next except as explained below.

     

    
      	
              REPORTING REQUIREMENT

            	 	
              REQUIRED

            	 	
              CHECK
      IF ATTACHED

            
	
              Interim
      Financial Statements

            	 	
              Monthly
      within 25 days

            	 	 
      
	
              Interim
      Financial Statements

            	 	
              Quarterly
      within 25 days

            	 	 
      
	
              Audited
      Financial Statements

            	 	
              FYE
      within 120 days

            	 	 
      


    

    


    Very
Truly Yours,

     

    NEXX
SYSTEMS, INC.

     

    By:      
____________________________

     

    Name:  ____________________________

     

    Title:    ____________________________

     

     

     

     

     

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    EXHIBIT
G

     

    FORM
OF JOINDER AGREEMENT

     

    This
Joinder Agreement (the “Joinder Agreement”) is made and dated as of _______,
20___, and is entered into by and between__________________, a ___________
corporation (“Subsidiary”), and HERCULES TECHNOLOGY GROWTH CAPITAL, INC., a
Maryland corporation, as a Lender.

     

    RECITALS

     

    A.           Subsidiary’s
Affiliate, NEXX SYSTEMS, INC. (“Company”) desires to enter into that certain
Loan and Security Agreement dated November __, 2006, with Lender, as such
agreement may be amended (the “Loan Agreement”), together with the other
agreements executed  and delivered in connection
therewith;

     

    B.           Subsidiary
acknowledges and agrees that it will benefit both directly and indirectly from
Company’s execution of the Loan Agreement and the other agreements executed and
delivered in connection therewith;

     

    AGREEMENT

     

    NOW
THEREFORE, Subsidiary and Lender agree as follows:

     

    
      	
              1.

            	
              The
      recitals set forth above are incorporated into and made part of this
      Joinder Agreement.  Capitalized terms not defined herein shall
      have the meaning provided in the Loan
Agreement.

            


    

     

    
      	
              2.

            	
              By
      signing this Joinder Agreement, Subsidiary shall be bound by the terms and
      conditions of the Loan Agreement the same as if it were the Borrower (as
      defined in the Loan Agreement) under the Loan Agreement, mutatis mutandis,
      provided however, that Lender shall have no duties, responsibilities or
      obligations to Subsidiary arising under or related to the Loan Agreement
      or the other agreements executed and delivered in connection
      therewith.  Rather, to the extent that Lender has any duties,
      responsibilities or obligations arising under or related to the Loan
      Agreement or the other agreements executed and delivered in connection
      therewith, those duties, responsibilities or obligations shall flow only
      to Company and not to Subsidiary or any other person or
      entity.  By way of example (and not an exclusive list): (a)
      Agent or a Lender’s providing notice to Company in accordance with the
      Loan Agreement or as otherwise agreed between Company and Lender shall be
      deemed provided to Subsidiary; (b) a Lender’s providing an Advance to
      Company shall be deemed an Advance to Subsidiary; and (c) Subsidiary shall
      have no right to request an Advance or make any other demand on Agent or a
      Lender.

            


    

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    [SIGNATURE
PAGE TO JOINDER AGREEMENT]

     

    SUBSIDIARY:

     

    _________________________________.

     

    By:                __________________________

    Name:           __________________________

    Title:             __________________________

          

    Address:      __________________________      
                      __________________________
                     
__________________________

    Telephone:   _________________________

    Facsimile:     
_________________________

     

    HERCULES
TECHNOLOGY GROWTH CAPITAL, INC.


    
       

      By:
__________________________

      Name:
________________________

      Title:
_________________________

       

    

    Address:

    400
Hamilton Avenue, Suite 310

    Palo
Alto, CA 94301

    Facsimile:  650-473-9194

    Telephone:  650-289-3060

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        38