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                                                                   Exhibit 10.34


                         INVENTORY, ACCOUNTS RECEIVABLE
                                       AND
                         INTANGIBLES SECURITY AGREEMENT


                                                       July 31, 1997
                                                --------------------------------
                                                                  DATE

         To secure the due payment and performance of all of the liabilities and
obligations hereunder of the undersigned, herein called "Borrower", to: Fleet
National Bank, hereinafter called "Bank", and all other liabilities and
obligations of Borrower to Bank of every name and nature whatsoever, direct or
indirect, absolute or contingent, now existing or hereafter arising or acquired,
including without limitation, the due payment and performance of all liabilities
and obligations under any and all notes, all hereinafter called "Obligations",
the Borrower hereby grants to Bank a continuing security interest in:

         (a)  All accounts, contracts, contract rights, notes, bills, drafts,
acceptances, general intangibles, choses in action, and all other debts,
obligations and liabilities, in whatever form, owing to Borrower from any
person, firm or corporation, or any other legal entity, whether now existing or
hereafter arising, now or hereafter received by or belonging or owing to
Borrower, for goods sold by it or for services rendered by it or however
otherwise same may have been established or created, all guarantees and
securities therefor, all right, title and interest of Borrower in the
merchandise or services which gave rise thereto, including the rights of
reclamation and stoppage in transit, all rights of an unpaid seller of
merchandise or services, and in the proceeds thereof, including, without
limitation, all proceeds of credit, fire or other insurance, and any tax
refunds.

         (b)  All goods, merchandise, raw materials, goods and work in process,
finished goods and other tangible personal property, now owned or hereafter
acquired and held for sale or lease, or furnished or to be furnished under
contract of service, or used or consumed in Borrower's business and in the
products and proceeds thereof, including, without limitation, all proceeds of
fire or other insurance. This portion of the collateral being sometimes referred
to as "inventory".

         All of the accounts and other property as set forth in (a) above and
inventory as set forth in (b) above and the other property described in the
Rider attached hereto are hereinafter referred to collectively as "Collateral".

         The Collateral and all proceeds and products thereof shall be security
for all Obligations. Until all Obligations have been fully satisfied, Bank's
security interest in the Collateral and all proceeds and products thereof, shall
continue in full force and effect and Bank will at all times after the
occurrence and during the continuance of an Event of Default (as defined in the
Letter Agreement of even date between Bank and Borrower) have the right to take
physical possession of the Inventory and to maintain such possession on
Borrower's premises or to remove the
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inventory or any part thereof to such other places as Bank may desire. If Bank
exercises Bank's right to take possession of the Inventory, Borrower shall, upon
Bank's demand, assemble the Inventory and make it available to Bank at a place
reasonably convenient to Bank.

         If Borrower shall fail to pay, when due, any of the Obligations or
shall fail to observe or perform any of the provisions of this Agreement or any
other agreement now or hereafter entered into between Bank and Borrower,
Borrower shall be in default hereunder. In the event of such default all
Obligations of Borrower to Bank shall, at the option of the Bank, and without
notice to or demand upon Borrower become and be immediately due and payable and
thereupon Bank may exercise any and all rights and remedies of a secured party
available under the Uniform Commercial Code and all other applicable law.

         Borrower represents, warrants and covenants that all inventory is and
will be owned by Borrower, free of all other liens and encumbrances, and shall
be kept by Borrower at One Corporation Way, Peabody, MA 01960 and the other
locations listed on Exhibit A hereto and that Borrower shall not (without Bank's
prior written approval) remove the Inventory therefrom except for the purposes
of sale in the ordinary course of business, and temporary removal for
demonstration and customer approval purposes.

         Except for sales made in the ordinary course of business, Borrower
shall not sell, encumber, grant a security interest in or dispose of or permit
the sale, encumbrance or disposal of any Collateral without Bank's prior written
consent. A sale in the ordinary course of business shall not include a transfer
in total or partial satisfaction of a debt.

         Borrower shall perform any and all steps requested by Bank to perfect
Bank's security interest in the Collateral, such as leasing warehouse to Bank or
its designee, placing and maintaining signs, appointing custodians, executing
and filing financing or continuation statements in form and substance
satisfactory to Bank. If any Inventory is in the possession or control of any of
Borrower's agents or processors, Borrower shall notify such agents or processors
of Bank's interest therein, and upon request instruct them to hold all such
Inventory for Bank's account and subject to Bank's instructions. A physical
listing of all Inventory, wherever located, shall be taken by Borrower whenever
requested by Bank, and a copy of each such physical listing shall be supplied to
Bank, Bank may examine and inspect the Inventory at any time.

         Borrower agrees to keep all the Inventory insured with coverage and
amounts not less than that usually carried by one engaged in a like business and
in any event not less than that required by Bank with loss payable to the Bank
and Borrower, as their interests may appear, hereby appointing Bank as attorney
for Borrower effective only upon the occurrence and during the continuance of an
Event of Default under the Letter Agreement in obtaining, adjusting, settling
and cancelling such insurance and endorsing any drafts. All premiums on such
insurance shall be paid by Borrower and the policies delivered to Bank. If
Borrower fails to do so, Bank may procure such insurance and charge the cost to
Borrower's loan account. As further assurance for the payment and performance of
the Obligations, Borrower hereby assigns to Bank


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all sums including returned or unearned premiums, which may become payable under
any policy of insurance on the Collateral and Borrower hereby directs each
insurance company issuing any such policy to make payment of such sums directly
to Bank.

         In the event of the same of the Collateral the proceeds thereof are
insufficient to pay all amounts to which Bank is legally entitled, Borrower will
be liable for the deficiency, together with interest thereon and the reasonable
fees of any attorney employed by Bank to collect such deficiency.

         Bank shall have the right to enforce any remedies hereunder
alternatively, successively or concurrently. A waiver of any default of Borrower
shall not be a waiver of any subsequent, similar or other default. No delay in
the exercise of any of Bank's rights or remedies hereunder shall constitute a
waiver of such right or remedy or of any other right or remedy.

         This Agreement shall not be construed to be in limitation of or in
substitution for any other grant of security interest from Borrower to Bank made
prior to or contemporaneously herewith, and no other such grant of a security
interest made subsequent to or contemporaneously herewith shall be construed to
be in limitation of or in substitution for this Agreement unless expressly and
specifically provided therein.

         This Agreement shall take effect as a sealed instrument, shall be
governed by and construed according to the laws of the Commonwealth of
Massachusetts, shall be binding upon the heirs, executors, administrators,
successors and assigns of Borrower and shall inure to the benefit of the
successors and assigns of Bank


FLEET NATIONAL BANK                         MICRION CORPORATION


By:    Thomas W. Davies                     By:  David M. Hunter
     -----------------------------              ---------------------------
     Its SVP                                Its Vice President, Finance
                                                   and Administration

                                            Address:     One Corporation Way
                                                         Peabody, MA  01960


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