Exhibit 10.1


 


Conformed Copy


 


AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT


 


THIS AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this “Agreement”)
dated as of the Effective Date between SILICON VALLEY BANK,
a California corporation, with its principal place of business at 3003 Tasman
Drive, Santa Clara, California 95054 and with a loan production office located
at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts 02462 (“Bank”), and AXCELIS TECHNOLOGIES, INC. and AXCELIS
TECHNOLOGIES CCS CORPORATION, each a Delaware corporation with
offices located at 108 Cherry Hill Drive, Beverly, Massachusetts 01915
(individually and collectively, jointly and severally “Borrower”),
provides the terms on which Bank shall lend to Borrower and Borrower shall
repay Bank.  This Agreement amends and
restates in its entirety that certain Loan and Security Agreement dated as of April 23,
2008 by and among Borrower and Bank. The parties agree as follows:


 


1              ACCOUNTING
AND OTHER TERMS


 


Accounting terms not defined in this Agreement shall
be construed following GAAP. 
Calculations and determinations must be made following GAAP.  Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in Section 13.  All other terms contained in this Agreement,
unless otherwise indicated, shall have the meaning provided by the Code to the
extent such terms are defined therein.


 


2              LOAN
AND TERMS OF PAYMENT


 


2.1          Promise to Pay.  Borrower hereby unconditionally promises to
pay Bank the outstanding principal amount of all Credit Extensions and accrued
and unpaid interest thereon as and when due in accordance with this Agreement.


 


2.1.1       Revolving Advances.


 


(a)           Availability.  Subject to the terms and conditions of this
Agreement and to deduction of Reserves, Bank shall make Advances not exceeding the Availability Amount.  Amounts borrowed under the Revolving
Line may be repaid and, prior to the Revolving Line Maturity Date, reborrowed,
subject to the applicable terms and conditions precedent herein.


 


(b)           Termination;
Repayment.  The Revolving Line
terminates on the Revolving Line Maturity Date, when the principal amount of
all Advances, the unpaid interest thereon, and all other Obligations relating
to the Revolving Line shall be immediately due and payable.


 


2.1.2       Letters of Credit Sublimit.


 


(a)           As part of the
Revolving Line and subject to the deduction of Reserves, Bank shall issue
Letters of Credit for Borrower’s account. 
Such aggregate amounts utilized hereunder shall at all times reduce the
amount otherwise available for Advances under the Revolving Line; provided,
however, Letters of Credit issued by the Bank for Borrower’s account prior to
the Effective Date, including any amounts drawn from time to time thereunder,
shall not reduce the amount available for Advances under the Revolving Line nor
be deemed Letters of Credit for purposes of this Agreement.  The face amount of outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve) may not exceed Two Million Five Hundred Thousand Dollars
($2,500,000.00) minus the aggregate amount of all Credit Extensions
outstanding from time to time under Sections 2.1.3 and 2.1.4 hereof.  If, on the Revolving Line Maturity Date (or
the effective date of any termination of this Agreement), there are any
outstanding Letters of Credit, then on such date Borrower shall provide to Bank
cash collateral in an amount equal to 105% of the face amount of all such
Letters of Credit plus all interest, fees, and costs due or to become due in
connection therewith (as estimated by Bank in its good faith business
judgment), to secure all of the Obligations relating to said Letters of
Credit.  All Letters of Credit shall be
in form and substance acceptable to Bank in its sole discretion and shall be
subject to the terms and conditions of Bank’s standard Application and Letter
of Credit Agreement (the “Letter of Credit
Application”).  Borrower 


 

















 


agrees to execute any further documentation in
connection with the Letters of Credit as Bank may reasonably request.  Borrower
further agrees to be bound by the regulations and interpretations of the issuer
of any Letters of Credit guarantied by Bank and opened for Borrower’s account
or by Bank’s interpretations of any Letter of Credit issued by Bank for
Borrower’s account, and Borrower understands and agrees except in the case of
gross negligence or willful misconduct by Bank that Bank shall not be liable
for any error, negligence, or mistake, whether of omission or commission, in
following Borrower’s instructions or those contained in the Letters of Credit
or any modifications, amendments, or supplements thereto.


 


(b)           The obligation of
Borrower to immediately reimburse Bank for drawings made under Letters of
Credit shall be absolute, unconditional, and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement, such Letters
of Credit, and the Letter of Credit Application.


 


(c)           Borrower may request
that Bank issue a Letter of Credit payable in a Foreign Currency.  If a demand for payment is made under any
such Letter of Credit, Bank shall treat such demand as an Advance to Borrower
of the equivalent of the amount thereof (plus fees and charges in connection
therewith such as wire, cable, SWIFT or similar charges) in Dollars at the
then-prevailing rate of exchange in San Francisco, California, for sales of the
Foreign Currency for transfer to the country issuing such Foreign Currency.


 


(d)           To guard against
fluctuations in currency exchange rates, upon the issuance of any Letter of
Credit payable in a Foreign Currency, Bank shall create a reserve (the “Letter of Credit Reserve”) under the Revolving Line in an
amount equal to ten percent (10%) of the face amount of such Letter of
Credit.  The amount of the Letter of
Credit Reserve may be adjusted by Bank from time to time to account for
fluctuations in the exchange rate.  The
availability of funds under the Revolving Line shall be reduced by the amount
of such Letter of Credit Reserve for as long as such Letter of Credit remains
outstanding.


 


2.1.3       Foreign Exchange Sublimit.  As part of the Revolving Line and subject to
the deduction of Reserves, Borrower may enter into foreign exchange contracts
with Bank under which Borrower commits to purchase from or sell to Bank a
specific amount of Foreign Currency (each, a “FX Forward
Contract”) on a specified date (the “Settlement
Date”).  FX Forward Contracts
shall have a Settlement Date of at least one (1) FX Business Day after the
contract date and shall be subject to a reserve of ten percent (10%) of each
outstanding FX Forward Contract in a maximum aggregate amount equal to Two
Hundred Fifty Thousand Dollars ($250,000.00) (the “FX Reserve”).
The aggregate amount of FX Forward Contracts at any one time shall not exceed
ten (10) times the amount of the FX Reserve minus the aggregate
amount of all Credit Extensions outstanding from time to time under Sections
2.1.2 and 2.1.4 hereof.  Any amounts
needed to fully reimburse Bank will be treated as Advances under the Revolving
Line and will accrue interest at the interest rate applicable to Advances.


 


2.1.4       Cash Management Services
Sublimit.  Borrower may use up to Two
Million Five Hundred Thousand Dollars ($2,500,000.00) of the Revolving Line minus
the aggregate amount of all Credit Extensions outstanding from time to time
under Sections 2.1.2 and 2.1.3 hereof, for Bank’s cash management services
which may include merchant services, direct deposit of payroll, business credit
card, and check cashing services identified in Bank’s various cash management
services agreements (collectively, the “Cash Management Services”).  Any amounts Bank pays on behalf of Borrower
for any Cash Management Services and not immediately reimbursed will be treated
as Advances under the Revolving Line and will accrue interest at the interest
rate applicable to Advances.


 


2.2          Overadvances. If, at any time, (i) the
sum of (a) the outstanding principal amount of any Advances (including any
amounts used for Cash Management Services), plus (b) the face
amount of any outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit and any Letter of Credit Reserve), plus (c) the
aggregate amount of any outstanding FX Forward Contracts exceeds (ii) the
lesser of either the Revolving Line or the Borrowing Base (the amount by which (i) exceeds
(ii) being an “Overadvance”),
Borrower shall immediately pay to Bank in cash such Overadvance.  Without limiting Borrower’s obligation to
repay Bank any amount of the Overadvance, Borrower agrees to pay Bank interest
on the outstanding amount of any Overadvance, on demand, at the Default Rate.


 


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2.3          Payment of Interest on
the Credit Extensions.


 


(a)           Interest Rate; Advances.  Subject to Section 2.3(b), the principal
amount outstanding under the Revolving Line shall accrue interest at a floating
per annum rate equal to the Prime Rate plus two percent (2.00%), which
interest shall be payable monthly, in arrears, in accordance with Section 2.3(f).


 


(b)           Default Rate.  Immediately upon the occurrence and during
the continuance of an Event of Default, Obligations shall bear interest at a
rate per annum which is three and one-half of one percent (3.50%) above the
rate that is otherwise applicable thereto (the “Default
Rate”).  Fees and expenses
which are required to be paid by Borrower pursuant to the Loan Documents
(including, without limitation, Bank Expenses) but are not paid when due shall
bear interest until paid at a rate equal to the highest rate applicable to the
Obligations; provided, however, no interest shall accrue on such fees and
expenses to the extent funds are available to be deducted by the Bank from
Borrower’s accounts if such deduction is not timely made by Bank at no fault of
Borrower.  Payment or acceptance of the
increased interest rate provided in this Section 2.3(b) is not a
permitted alternative to timely payment and shall not constitute a waiver of
any Event of Default or otherwise prejudice or limit any rights or remedies of
Bank.


 


(c)           Adjustments to
Interest Rate.  Changes to the
interest rate of any Credit Extension based on changes to the Prime Rate shall
be effective on the effective date of any change to the Prime Rate and to the
extent of any such change.  Bank shall
use its best efforts to give Borrower prompt notice of any such change in the
Prime Rate; provided, however, that any failure by Bank to provide Borrower
with notice hereunder shall not affect Bank’s right to make changes in the
interest rate based on changes in the Prime Rate.


 


(d)           Computation of
Interest.  Interest on the Credit
Extensions and all fees payable hereunder shall be computed on the basis of a
360-day year and the actual number of days elapsed in the period during which
such interest accrues.  In computing
interest on any Credit Extension, the date of the making of such Credit
Extension shall be included and the date of payment shall be excluded;
provided, however, that if any Credit Extension is repaid on the same day on
which it is made, such day shall be included in computing interest on such
Credit Extension.


 


(e)           Debit of Accounts.  Bank may debit any of Borrower’s deposit
accounts, including the Designated Deposit Account, for principal and interest
payments or any other amounts Borrower owes Bank when due.  These debits shall not constitute a set-off.
The provisions of the previous sentence shall not apply to deposit accounts
designated as, and exclusively used for, payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of Borrower’s
employees.


 


(f)            Interest Payment
Date.  Interest is payable monthly,
in arrears, on the last calendar day of each month.  All accrued but unpaid interest on the
Advances shall be due and payable on the Revolving Line Maturity Date.


 


(g)           Payments. All
payments (including prepayments) to be made by Borrower under any Loan Document
shall be made in immediately available funds in U.S. Dollars, without setoff or
counterclaim, before 12:00 p.m. Eastern time on the date when due.  Payments of principal and/or interest
received after 12:00 p.m. Eastern time are considered received at the
opening of business on the next Business Day. 
When a payment is due on a day that is not a Business Day, the payment
shall be due the next Business Day, and additional fees or interest, as
applicable, shall continue to accrue until paid.


 


2.4          Fees.  Borrower shall pay to Bank:


 


(a)           Commitment Fee.  A fully earned, non refundable commitment fee
of $250,000.00 on the Effective Date; and


 


(b)           Letter of Credit Fees.  Bank’s customary fees and expenses for the
issuance, modification or renewal of Letters of Credit, including, without
limitation, its customary fees upon the issuance, each anniversary of the
issuance, modification and the renewal of such Letter of Credit by Bank; and


 


(c)           Termination Fee.  In accordance with the terms of Section 12.1,
a termination fee; and


 


(d)           Unused Revolving
Line Facility Fee.  A fee (the “Unused Revolving Line Facility Fee”), payable monthly, in
arrears, on a calendar year basis, in an amount per annum equal to the Unused
Line Fee Percentage of 


 


3

















 


the average unused portion of the Revolving Line, as
reasonably determined by Bank.  The unused portion of the Revolving Line, for
the purposes of this calculation, shall include amounts reserved under the Cash
Management Services Sublimit for products provided and under the Foreign
Exchange Sublimit for FX Forward Contracts. 
Borrower shall not be entitled to any credit, rebate or repayment
of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to
this Section notwithstanding any termination of the Agreement, or
suspension or termination of Bank’s obligation to make loans and advances
hereunder; and


 


(e)           Bank Expenses.  All Bank Expenses (including reasonable
attorneys’ fees and expenses, plus expenses, for documentation and negotiation
of this Agreement) incurred through and after the Effective Date, when due.


 


2.5          Withholding.  Payments received by Bank from Borrower hereunder
will be made free and clear of any withholding taxes.  Specifically, however, if at any time any
governmental authority, applicable law, regulation or international agreement
requires Borrower to make any such withholding or deduction from any such  payment or other sum payment hereunder to
Bank, Borrower hereby covenants and agrees that the amount due from Borrower
with respect to such payment or other sum payable hereunder will be increased
to the extent necessary to ensure that, after the making of such required
withholding or deduction, Bank receives a net sum equal to the sum which it
would have received had no withholding or deduction been required and Borrower
shall pay the full amount withheld or deducted to the relevant governmental
authority.  Borrower will, upon request,
furnish Bank with proof satisfactory to Bank indicating that Borrower has made
such withholding payment provided, however, that Borrower need not make any
withholding payment if the amount or validity of such withholding payment is
contested in good faith by appropriate and timely proceedings and as to which
payment in full is bonded or reserved against by Borrower.  The agreements and obligations of Borrower
contained in this Section 2.5 shall survive the termination of this
Agreement.


 


3              CONDITIONS
OF LOANS


 


3.1          Conditions Precedent to
Initial Credit Extension.  Bank’s
obligation to make the initial Credit Extension is subject to the condition
precedent that Borrower shall consent to or have delivered, in form and substance
satisfactory to Bank, such documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate, including, without
limitation:


 


(a)           duly executed original
signatures to the Loan Documents to which it is a party;


 


(b)           its Operating Documents
and a good standing certificate of Borrower certified by the Secretary of State
of the State of Delaware as of a date no earlier than thirty (30) days prior to
the Effective Date;


 


(c)           completed Borrowing
Resolutions for Borrower;


 


(d)           certified copies, dated
as of a recent date, of financing statement searches, as Bank shall request,
accompanied by written evidence (including any UCC termination statements) that
the Liens indicated in any such financing statements either constitute Permitted
Liens or have been or, in connection with the initial Credit Extension, will be
terminated or released;


 


(e)           the Perfection
Certificates executed by Borrower and each Guarantor;


 


(f)            [intentionally
omitted];


 


(g)           a legal opinion of
Borrower’s counsel dated as of the Effective Date together with the duly
executed original signatures thereto;


 


(h)           the duly executed
original signatures to each Guaranty, each Guarantor Security Agreement,
and  the Pledge Agreements, together with
the completed Borrowing Resolutions for Guarantor;


 


(i)            evidence satisfactory
to Bank that the insurance policies required by Section 6.7 hereof are in
full force and effect, together with appropriate evidence showing loss payable
and/or additional insured clauses or endorsements in favor of Bank; and


 


4

















 


(j)            payment of the fees
and Bank Expenses then due as specified in Section 2.4 hereof.


 


3.2          Conditions Precedent to
all Credit Extensions.  Bank’s
obligations to make each Credit Extension, including the initial Credit
Extension, is subject to the following:


 


(a)           timely receipt of a
completed and executed Transaction Report; and


 


(b)           the representations and
warranties in Section 5 shall be true, accurate and complete in all
material respects on the date of the Transaction Report and on the Funding Date
of each Credit Extension; provided, however, that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific
date shall be true, accurate and complete in all material respects as of such
date, and no Default or Event of Default shall have occurred and be continuing
or result from the Credit Extension. 
Each Credit Extension is Borrower’s representation and warranty on that
date that the representations and warranties in Section 5 remain true,
accurate and complete in all material respects; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties expressly
referring to a specific date shall be true, accurate and complete in all
material respects as of such date; and


 


(c)           as determined in Bank’s
reasonable business judgment, there has not been a Material Adverse Change.


 


3.3          Covenant to Deliver.  Borrower agrees to deliver to Bank each item
required to be delivered to Bank under this Agreement as a condition to any
Credit Extension.  Borrower expressly
agrees that a Credit Extension made prior to the receipt by Bank of any such
item shall not constitute a waiver by Bank of Borrower’s obligation to deliver
such item, and any such Credit Extension in the absence of a required item
shall be made in Bank’s sole discretion.


 


3.4          Procedures for Borrowing.  Subject to the prior satisfaction of all
other applicable conditions to the making of an Advance set forth in this
Agreement, to obtain an Advance (other than Advances under Sections 2.1.2 or
2.1.4), Borrower shall notify Bank (which notice shall be irrevocable) by
electronic mail, facsimile, or telephone by 12:00 p.m. Pacific time on the
Funding Date of the Advance.  Together
with such notification, Borrower must promptly deliver to Bank by electronic
mail or facsimile a completed Transaction Report executed by a Responsible Officer
or his or her designee.  Bank shall
credit Advances to the Designated Deposit Account.  Bank may make Advances under this Agreement
based on instructions from a Responsible Officer or his or her designee or
without instructions if the Advances are necessary to meet Obligations which
have become due.  Bank may rely on any
telephone notice given by a person whom Bank believes is a Responsible Officer
or designee.


 


4              CREATION
OF SECURITY INTEREST


 


4.1          Grant of Security
Interest.  Borrower hereby grants
Bank, to secure the payment and performance in full of all of the Obligations,
a continuing security interest in, and pledges to Bank, the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof.  Borrower
represents, warrants, and covenants that the security interest granted herein
is and shall at all times continue to be a first priority perfected security
interest in the Collateral (subject only to Permitted Liens that may have
superior priority to Bank’s Lien under this Agreement or the Export-Import
Agreement).  If Borrower shall acquire a
commercial tort claim, Borrower shall promptly notify Bank in a writing signed
by Borrower of the general details thereof and upon request of Bank grant to
Bank in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance reasonably satisfactory to Bank.


 


Bank’s lien and
security interest in the Collateral shall continue until Borrower fully satisfies
its Obligations in cash.  Upon payment in
full in cash of the Obligations (except for contingent indemnification
obligations for which no claim has been made) and at such time as Bank’s obligation to make Credit
Extensions has terminated, Bank shall, at Borrower’s sole cost and expense,
release its Liens in the Collateral and all rights therein shall revert to
Borrower.


 


5

















 


Notwithstanding the foregoing, it is expressly
acknowledged and agreed that the security interest created in this Agreement
only with respect to Export-Related Accounts Receivable, Export-Related
Inventory and Export-Related General Intangibles (as such terms are defined in
the Export-Import Agreement) is subject to and subordinate to the security
interest granted to Bank in the Export-Import Agreement with respect to such
Export-Related Accounts Receivable, Export-Related Inventory and Export-Related
General Intangibles.


 


4.2          Authorization to File
Financing Statements.  Borrower hereby
authorizes Bank to file financing statements, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect Bank’s interest or rights
hereunder, including a notice that any disposition of the Collateral except as
permitted by the terms of this Agreement, by either Borrower or any other
Person, shall be deemed to violate the rights of Bank under the Code.  Such financing statements may indicate the
Collateral as “all assets of the Debtor” or words of similar effect, or as
being of an equal or lesser scope, or with greater detail, all in Bank’s
discretion, provided that such financing statements shall acknowledge the
rights of SEN under the SEN License.


 


5              REPRESENTATIONS
AND WARRANTIES


 


Borrower
represents and warrants as follows:


 


5.1          Due Organization,
Authorization; Power and Authority. 
Borrower and each of its Domestic Subsidiaries is validly existing and
in good standing as a Registered Organization in its jurisdiction of formation
and is qualified and licensed to do business and is in good standing in any
jurisdiction in which the conduct of its business or its ownership of property
requires that it be qualified except where the failure to do so could not
reasonably be expected to have a material adverse effect on Borrower’s business.  In connection with this Agreement, Borrower
has delivered to Bank completed certificates each signed by Borrower and
Guarantor, respectively, entitled “Perfection Certificate”.  Borrower represents and warrants to Bank that
(a) Borrower’s exact legal name is that indicated on the Perfection
Certificate and on the signature page hereof; (b) Borrower is an
organization of the type and is organized in the jurisdiction set forth in the
Perfection Certificate; (c) the Perfection Certificate accurately sets
forth Borrower’s organizational identification number or accurately states that
Borrower has none; (d) the Perfection Certificate accurately sets forth
Borrower’s place of business, or, if more than one, its chief executive office
as well as Borrower’s mailing address (if different than its chief executive
office); (e) Borrower (and each of its predecessors) has not, in the past
five (5) years, changed its jurisdiction of formation, organizational
structure or type, or any organizational number assigned by its jurisdiction;
and (f) all other information set forth on the Perfection Certificate
pertaining to Borrower and each of its Subsidiaries is accurate and complete (it being understood and agreed that Borrower
may from time to time update certain information in the Perfection Certificate
after the Effective Date to the extent permitted by one or more specific
provisions in this Agreement).  If
Borrower is not now a Registered Organization but later becomes one, Borrower
shall promptly notify Bank of such occurrence and provide Bank with Borrower’s
organizational identification number.


 


The execution, delivery
and performance by Borrower of the Loan Documents to which it is a party have
been duly authorized, and do not (i) conflict with any of Borrower’s organizational
documents, (ii) contravene, conflict with, constitute a default under or
violate any material Requirement of Law, (iii) contravene, conflict or
violate any applicable order, writ, judgment, injunction, decree, determination
or award of any Governmental Authority by which Borrower or any its
Subsidiaries or any of their property or assets may be bound or affected, (iv) require
any action by, filing, registration, or qualification with, or Governmental
Approval from, any Governmental Authority (except such Governmental Approvals
which have already been obtained and are in full force and effect or (v) constitute
an event of default under any material agreement by which Borrower is
bound.  Borrower is not in default under
any agreement to which it is a party or by which it is bound in which the
default could reasonably be expected to have a material adverse effect on
Borrower’s business.


 


5.2          Collateral.  Borrower has good title to, has rights in,
and the power to transfer each item of the Collateral upon which it purports to
grant a Lien hereunder, free and clear of any and all Liens except Permitted
Liens.  Borrower has no deposit accounts
other than the deposit accounts with Bank, the deposit accounts, if any,
described in the Perfection Certificate delivered to Bank in connection
herewith, or of which Borrower has given Bank notice and taken such actions as
are necessary to give Bank a perfected security interest therein.  The Accounts are bona fide, existing
obligations of the Account Debtors.


 


6

















 


The Collateral is not in the possession of any third
party bailee (such as a warehouse) except as otherwise provided in the
Perfection Certificate.  None of the
components of the Collateral shall be maintained at locations other than as
provided in the Perfection Certificate or as permitted pursuant to Section 7.2.  Borrower shall at all times during the term
of this Agreement maintain at least two-thirds of its Inventory (based upon the
fair market value of all Inventory) at Borrower’s 108 Cherry Hill Drive,
Beverly, Massachusetts location and at other locations of the Borrower for
which Bank has received a landlord’s waiver in form and substance reasonably
satisfactory to Bank.


 


All Inventory is in all material respects of good and
marketable quality, free from material defects.


 


Axcelis Technologies, Inc. and Axcelis
Technologies CCS Corporation, either individually or jointly, are the sole
owners of the intellectual property which Borrower owns or purports to own,
including, without limitation, the intellectual property set forth on the
Perfection Certificate, except for non-exclusive licenses granted to its
customers in the ordinary course of business. 
Each patent which Borrower owns or purports to own is valid and
enforceable and no part of the intellectual property has been judged invalid or
unenforceable, in whole or in part, and to the best of Borrower’s knowledge, no
claim has been made that any part of the intellectual property violates the
rights of any third party.


 


Except as noted on the Perfection Certificate,
Borrower is not a party to, nor is it bound by, any Restricted License.


 


5.3          Accounts Receivable;
Inventory.


 


(a)           For each Account with
respect to which Advances are requested, on the date each Advance is requested
and made, such Account shall be an Eligible Account.


 


(b)           All statements made and
all unpaid balances appearing in all invoices, instruments and other documents
evidencing the Eligible Accounts are and shall be true and correct and all such
invoices, instruments and other documents, and all of Borrower’s Books are
genuine and in all respects what they purport to be.  Whether or not an Event of Default has
occurred and is continuing, Bank may notify any Account Debtor owing Borrower
money of Bank’s security interest in such funds.  All sales and other transactions underlying
or giving rise to each Eligible Account shall comply in all material respects
with all applicable laws and governmental rules and regulations.  Borrower has no knowledge of any actual or
imminent Insolvency Proceeding of any Account Debtor whose accounts are
Eligible Accounts in any Transaction Report. 
To the best of Borrower’s knowledge, all signatures and endorsements on
all documents, instruments, and agreements relating to all Eligible Accounts
are genuine, and all such documents, instruments and agreements are legally
enforceable in accordance with their terms.


 


(c)           For any item of
Inventory, such Inventory (i) meets all applicable governmental standards;
(ii) has been manufactured in compliance with the Fair Labor Standards
Act; (iii) is not subject to any Liens, except the first priority Liens
granted in favor of Bank under this Agreement or any of the other Loan
Documents or Permitted Liens; and (iv) is located at (A) the
Headquarters Location which is (1) prior to the Real Estate Financing,
owned by Borrower or (2) after the Real Estate Financing, either owned by
Borrower or owned by the Special Subsidiary provided that Bank has received a
landlord’s waiver in form and substance reasonably satisfactory to Bank or (B) Borrower’s
33 Cherry Hill Drive, Beverly, Massachusetts or 54 Cherry Hill Drive, Beverly,
Massachusetts locations provided that Bank has received a landlord waiver for
the respective location in form and substance reasonably satisfactory to Bank.


 


5.4          Litigation.  There are no actions or proceedings pending
or, to the knowledge of the Responsible Officers, threatened in writing by or
against Borrower or any of its Subsidiaries involving more than, individually
or in the aggregate, One Million Dollars ($1,000,000) or that would reasonably
be expected to have a material adverse effect on Borrower’s business.


 


5.5          No Material Deviation in
Financial Statements.  All
consolidated financial statements for Borrower and any of its Subsidiaries
delivered to Bank fairly present in all material respects Borrower’s
consolidated financial condition and Borrower’s consolidated results of
operations.  There has not been any
material deterioration in Borrower’s consolidated financial condition since the
date of the most recent financial statements submitted to Bank.


 


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5.6          Solvency.  The fair salable value of Borrower’s assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities; Borrower is not left with unreasonably small capital after the
transactions in this Agreement; and Borrower is able to pay its debts
(including trade debts) as they mature.


 


5.7          Regulatory Compliance.  Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company
Act of 1940, as amended.  Borrower is not
engaged as one of its important activities in extending credit for margin stock
(under Regulations X, T and U of the Federal Reserve Board of Governors).  Borrower has complied in all material
respects with the Federal Fair Labor Standards Act.  Neither Borrower nor any of its Subsidiaries
is a “holding company” or an “affiliate” of a “holding company” or a “subsidiary
company” of a “holding company” as each term is defined and used in the Public
Utility Holding Company Act of 2005. 
Borrower has not violated any laws, ordinances or rules, the violation
of which could reasonably be expected to have a material adverse effect on its
business.  None of Borrower’s or any of
its Subsidiaries’ properties or assets has been used by Borrower or any
Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous
substance other than legally.  Borrower
and each of its Subsidiaries have obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all Government Authorities that are necessary to continue their respective
businesses as currently conducted except where the failure to make such
declarations, notices or filings could not reasonably be expected to have a
material adverse effect on Borrower’s business.


 


5.8          Subsidiaries;
Investments.  Borrower does not own
any stock, partnership interest or other equity securities except for Permitted
Investments.


 


5.9          Tax Returns and
Payments; Pension Contributions. 
Borrower and its Subsidiaries have timely filed all required tax returns
and reports, and have timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower or such
Subsidiary.  Borrower may defer payment
of any contested taxes, provided that Borrower (a) in good faith contests
its obligation to pay the taxes by appropriate proceedings promptly and
diligently instituted and conducted, (b) notifies Bank in writing of the
commencement of, and any material development in, the proceedings, and (c) posts
bonds or takes any other steps required to prevent the governmental authority
levying such contested taxes from obtaining a Lien upon any of the Collateral
that is other than a “Permitted Lien”. 
Borrower is unaware of any claims or adjustments proposed for any of
Borrower’s prior tax years which could result in additional taxes becoming due
and payable by Borrower.  Borrower has
paid all amounts necessary to fund all present pension, profit sharing and
deferred compensation plans in accordance with their terms, and Borrower has
not withdrawn from participation in, and has not permitted partial or complete
termination of, or permitted the occurrence of any other event with respect to,
any such plan which could reasonably be expected to result in any liability of
Borrower, including any liability to the Pension Benefit Guaranty Corporation
or its successors or any other governmental agency.


 


5.10        Use of Proceeds.  Borrower shall use the proceeds of the Credit
Extensions solely as working capital and to fund its general business requirements
and not for personal, family, household or agricultural purposes.


 


5.11        Full Disclosure.  No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank, as
of the date such representation, warranty, or other statement was made, taken
together with all such written certificates and written statements given to
Bank, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period
or periods covered by such projections and forecasts may differ from the
projected or forecasted results).


 


5.12        Designation of Obligations
as Designated Senior Indebtedness.  All
Obligations, including all principal, interest (including all interest accruing
after the commencement of any bankruptcy or similar proceeding, whether or not
a claim for post-petition interest is allowable as a claim in any such
proceeding), and all fees, costs, expenses and other amounts accrued or due
under this Agreement and otherwise shall at all times constitute “Designated
Senior Indebtedness” or a similar concept thereof for purposes of any
Indebtedness of the Borrower.


 


8

















 


6              AFFIRMATIVE
COVENANTS


 


Borrower shall do all of
the following:


 


6.1          Government Compliance.


 


(a)           Subject to Sections 7.2
and 7.3, maintain its and all its Subsidiaries’ legal existence and good
standing in their respective jurisdictions of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would
reasonably be expected to have a material adverse effect on Borrower’s
business.  Borrower shall comply, and
have each Subsidiary comply, with all laws, ordinances and regulations to which
it is subject, noncompliance with which could have a material adverse effect on
Borrower’s business.


 


(b)           Obtain all of the
Governmental Approvals necessary for the performance by Borrower of its
obligations under the Loan Documents to which it is a party and the grant of a
security interest to Bank in all of its property.  Borrower shall promptly provide copies of any
such obtained Governmental Approvals to Bank.


 


6.2          Financial Statements,
Reports, Certificates.


 


(a)           Borrower shall provide
Bank with the following:


 


(i)            upon each request for
a Credit Extension and, in all events, within thirty (30) days after the end of
each month a Transaction Report (and any schedules related thereto including,
but not limited to, a schedule of any litigation of the type described in Section 5.4
which may arise or be threatened from and after the Effective Date);


 


(ii)           within thirty (30) days
after the end of each month, (A) monthly accounts receivable agings, aged
by invoice date, (B) monthly accounts payable agings, aged by invoice
date, and outstanding or held check registers, if any, (C) monthly
reconciliations of accounts receivable agings for accounts under this Agreement
and the Export-Import Agreement (aged by invoice date), transaction reports and
general ledger, (D) monthly inventory reports for Inventory valued on a
first-in, first-out basis at the lower of cost or market (in accordance with
GAAP), Inventory backlog  reports, or
such other inventory reports as are requested by Bank in its good faith
business judgment and (E) a DRAM (Devices for Random Access Memory) report
as required by EXIM;


 


(iii)          within forty-five (45)
days after the end of each fiscal quarter of Borrower, a Compliance Certificate
signed by a Responsible Officer, certifying that as of the end of such quarter,
Borrower was in full compliance with all of the terms and conditions of this
Agreement, and setting forth calculations showing compliance with the financial
covenants set forth in this Agreement and such other information as Bank shall
reasonably request, including, without limitation, a statement that at the end
of such quarter there were no held checks;


 


(iv)          as soon as available,
and in any event within forty-five (45) days after the end of each fiscal
quarter of Borrower, quarterly unaudited financial statements, prepared on a consolidated
and consolidating basis, in a form reasonably satisfactory to Bank;


 


(v)           within sixty (60) days
after the end of each fiscal year of Borrower, (A) annual operating
budgets (including income statements, balance sheets and cash flow statements,
by quarter) for the then current fiscal year of Borrower, and (B) annual
financial projections for the then current fiscal year (on a quarterly basis)
as approved by Borrower’s board of directors, together with any related
business forecasts used in the preparation of such annual financial
projections, all prepared on a consolidated and consolidating  basis in a form reasonably satisfactory to
Bank;


 


(vi)          as soon as available,
and in any event within one hundred twenty (120) days following the end of
Borrower’s fiscal year, annual financial statements prepared on a consolidated
and consolidating  basis in a form
reasonably satisfactory to Bank, certified by, and with an unqualified opinion
of, independent certified public accountants acceptable to Bank;


 


9






 












 


(vii)         within
five (5) days of delivery, copies of all statements, reports and notices
made available to Borrower’s security holders or to any holders of Subordinated
Debt (which if filed with the Securities and Exchange Commission may be
provided by a link thereto on Borrower’s or another website on the Internet);


 


(viii)        prompt
report of any legal actions pending or threatened in writing against Borrower
or any of its Subsidiaries that could result in damages or costs to Borrower or
any of its Subsidiaries of, individually or in the aggregate, One Million
Dollars ($1,000,000) or more; and


 


(ix)           without
limiting and in addition to the foregoing, at any time any Credit Extensions
are outstanding, (i) a Transaction Report (and any schedules related
thereto) bi-weekly on the first Business Day of the related week and (ii) as
soon as available, and in any event within forty-five (45) days after the end
of each month, monthly unaudited financial statements, prepared on a
consolidated basis, in a form reasonably satisfactory to Bank, together with a
Compliance Certificate signed by a Responsible Officer.


 


(b)           within ten (10) days
after filing, all reports on Form 10-K, 10-Q and 8-K filed with the
Securities and Exchange Commission or a link thereto on Borrower’s or another
website on the Internet.


 


(c)           with the monthly
reporting provided pursuant to Section 6.2(a)(ii) above, written
notice of (i) any material change in the composition of the intellectual
property, (ii) the registration of any copyright (including any subsequent
ownership right of Borrower in or to any copyright), patent or trademark not
previously disclosed to Bank, or (iii) Borrower’s knowledge of an event
that materially adversely affects the value of the intellectual property.


 


(d)           within ten (10) days
after the end of each fiscal quarter of Borrower, copies of (i) actual
invoices representing not less than 10% of the quarter-ended accounts
receivable balance and (ii) actual export orders for not less than 10% of
the quarter-ended balance of Eligible EXIM Inventory (as defined in the
Export-Import Agreement).


 


6.3          Accounts Receivable.


 


(a)           Schedules and
Documents Relating to Accounts.  Borrower shall deliver to Bank Transaction
Reports, as provided in Section 6.2, on Bank’s standard forms; provided,
however, that Borrower’s failure to execute and deliver the same shall not
affect or limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor
shall Bank’s failure to advance or lend against a specific Account affect or
limit Bank’s Lien and other rights therein. 
If requested by Bank, Borrower shall furnish Bank with copies (or, at
Bank’s request, originals) of all contracts, orders, invoices, and other
similar documents, and all shipping instructions, delivery receipts, bills of
lading, and other evidence of delivery, for any goods the sale or disposition
of which gave rise to such Accounts.  In
addition, Borrower shall deliver to Bank, on its request, the originals of all
instruments, chattel paper, security agreements, guarantees and other documents
and property evidencing or securing any Accounts, in the same form as received,
with all necessary indorsements, and copies of all credit memos.


 


(b)           Disputes.  Borrower shall promptly notify Bank of all
disputes or claims relating to material Accounts.  Borrower may forgive (completely or
partially), compromise, or settle any Account for less than payment in full, or
agree to do any of the foregoing so long as (i) Borrower does so in good
faith, in a commercially reasonable manner, in the ordinary course of business,
in arm’s-length transactions, and reports the same to Bank in the regular
reports provided to Bank; (ii) no Default or Event of Default has occurred
and is continuing; and (iii) after taking into account all such discounts,
settlements and forgiveness, the total outstanding Advances will not exceed the
Availability Amount.


 


(c)           Collection of
Accounts.  Borrower shall have the
right to collect all Accounts, unless and until a Default or an Event of
Default has occurred and is continuing. 
Whether or not an Event of Default has occurred and is continuing,
Borrower shall hold all payments on, and proceeds of, Accounts in trust for
Bank, and Borrower shall immediately deliver all such payments and proceeds to
Bank in their original form, duly endorsed, to be applied to the Obligations
pursuant to the terms of Section 9.4 hereof.  All payments on, and proceeds of, Accounts
shall be deposited directly by the applicable Account Debtor into a lockbox
account, or such other “blocked account” as


 


10

















 


Bank may specify,
pursuant to a blocked account agreement in form and substance reasonably
satisfactory to Bank in its sole discretion.


 


(d)           Returns.  Provided no Event
of Default has occurred and is continuing, if any Account Debtor returns any
Inventory to Borrower, Borrower shall promptly (i) determine the reason
for such return, (ii) issue a credit memorandum to the Account Debtor in
the appropriate amount, and (iii) provide a copy of such credit memorandum
to Bank, upon request from Bank.  In the
event any attempted return occurs after the occurrence and during the
continuance of any Event of Default, Borrower shall hold the returned Inventory
in trust for Bank, and immediately notify Bank of the return of the
Inventory.


 


(e)           Verification.  Bank may, from time
to time, verify directly with the respective Account Debtors the validity,
amount and other matters relating to the Accounts, either in the name of
Borrower or Bank or such other name as Bank may choose.


 


(f)            No Liability.  Bank shall not be
responsible or liable for any shortage or discrepancy in, damage to, or loss or
destruction of, any goods, the sale or other disposition of which gives rise to
an Account, or for any error, act, omission, or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any
Account, or for settling any Account in good faith for less than the full
amount thereof, nor shall Bank be deemed to be responsible for any of Borrower’s
obligations under any contract or agreement giving rise to an Account.  Nothing herein shall, however, relieve Bank
from liability for its own gross negligence or willful misconduct.


 


6.4          Remittance of Proceeds.  Except as otherwise provided in Section 6.3(c),
deliver, in kind, all proceeds arising from the disposition of any Collateral
to Bank in the original form in which received by Borrower not later than the
following Business Day after receipt by Borrower, to be applied to the
Obligations pursuant to the terms of Section 9.4 hereof; provided that, if
no Default or Event of Default has occurred and is continuing, Borrower shall
not be obligated to remit to Bank the proceeds of the sale of worn out or
obsolete Equipment disposed of by Borrower in good faith in an arm’s length
transaction for an aggregate purchase price of One Hundred Thousand Dollars ($100,000.00) or less (for all such transactions
in any fiscal year).  Borrower agrees
that it will not commingle proceeds of Collateral with any of Borrower’s other
funds or property, but will hold such proceeds separate and apart from such
other funds and property and in an express trust for Bank.  Nothing in this Section 6.4 limits the
restrictions on disposition of Collateral set forth elsewhere in this
Agreement.


 


6.5          Taxes; Pensions. 
Timely file, and require each of its Subsidiaries to timely file, all
required tax returns and reports and timely pay, and require each of its
Subsidiaries to timely file, all foreign, federal, state and local taxes, assessments,
deposits and contributions owed by Borrower and each of its Subsidiaries,
except for deferred payment of any taxes contested pursuant to the terms of Section 5.9
hereof, and shall deliver to Bank, on demand, appropriate certificates
attesting to such payments, and pay all amounts necessary to fund all present
pension, profit sharing and deferred compensation plans in accordance with
their terms.


 


6.6          Access to Collateral;
Books and Records.  Upon reasonable
notice (provided no notice is required if an Event of Default has occurred and
is continuing), Bank, or its agents, shall have the right, with such frequency
as Bank shall determine necessary in its sole discretion (or at the direction
of EXIM Bank), to inspect the Collateral and the right to audit and copy
Borrower’s Books.  The foregoing
inspections and audits shall be at Borrower’s expense, and the charge therefor
shall be $850 per person per day (or such higher amount as shall represent Bank’s
then-current standard charge for the same), plus reasonable out-of-pocket
expenses; provided, however, that Bank shall conduct no more than four (4) such
audit(s) per fiscal year at Borrower’s expense in the event no Event of
Default has occurred and is continuing. 
In the event Borrower and Bank schedule an audit more than ten (10) days
in advance, and Borrower cancels or seeks to reschedules the audit with less
than ten (10) days written notice to Bank, then (without limiting any of
Bank’s rights or remedies), Borrower shall pay Bank a fee of $1,000 plus any
out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated
costs and expenses of the cancellation or rescheduling.


 


6.7          Insurance.  Keep its business and the Collateral insured
for risks and in amounts standard for companies in Borrower’s industry and
location and as Bank may reasonably request. 
Insurance policies shall be in a form, with companies, and in amounts
that are reasonably satisfactory to Bank. 
All property policies shall have a loss payable endorsement showing Bank
as loss payee and waive subrogation against Bank, and all liability policies


 


11

















 


shall show, or have endorsements showing, Bank as an
additional insured.  All policies (or the
loss payable and additional insured endorsements) shall provide that the
insurer shall endeavor to give Bank at least twenty (20) days notice before
canceling, amending, or declining to renew its policy.  At Bank’s request, Borrower shall deliver
certificates of insurance and/or copies of policies and evidence of all premium
payments.  Proceeds payable under any
property policy shall, at Bank’s option, be payable to Bank on account of the
Obligations.  Notwithstanding the
foregoing, (a)(x) so long as no Event of Default has occurred and is continuing,
Borrower shall have the option of applying the proceeds of any casualty policy
up to One Hundred Thousand Dollars ($100,000.00) with respect to any loss, but
not exceeding Two Hundred Fifty Thousand 
Dollars ($250,000.00) in the aggregate for all losses under all casualty
policies in any one year, toward the replacement or repair of destroyed or
damaged property; provided that any such replaced or repaired property (i) shall
be of equal or like value as the replaced or repaired Collateral and (ii) shall
be deemed Collateral in which Bank has been granted a first priority security
interest, and (b) after the occurrence and during the continuance of an
Event of Default, all proceeds payable under such casualty policy shall, at the
option of Bank, be payable to Bank on account of the Obligations.  If Borrower fails to obtain insurance as
required under this Section 6.7 or to pay any amount or furnish any
required proof of payment to third persons and Bank, Bank may make all or part
of such payment or obtain such insurance policies required in this Section 6.7,
and take any action under the policies Bank deems prudent.


 


6.8          Operating Accounts.


 


(a)           Maintain Borrower’s and
its Subsidiaries’ primary operating accounts, disbursement accounts, and other
deposit accounts and securities accounts in the United States with Bank and
Bank’s Affiliates, which accounts shall at all times contain at least 60% of
the dollar value of Borrower’s and its Subsidiaries’ consolidated world-wide
cash and Cash Equivalents (excluding cash and Cash Equivalents on deposit in
the ABN Amro Pledged Account in an amount not to exceed €4,000,000).


 


(b)           Provide Bank five (5) days
prior written notice before establishing any Collateral Account within the
United States at or with any bank or financial institution other than Bank or
Bank’s Affiliates.  For each Collateral
Account located within the United States that Borrower at any time maintains,
Borrower shall cause the applicable bank or financial institution (other than
Bank) at or with which any such Collateral Account is maintained to execute and
deliver a Control Agreement or other appropriate instrument with respect to
such Collateral Account to perfect Bank’s Lien in such Collateral Account in
accordance with the terms hereunder which Control Agreement may not be
terminated without the prior written consent of Bank.  The provisions of the previous sentence shall
not apply to deposit accounts exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of Borrower’s
employees and identified to Bank by Borrower as such, deposit accounts with the
Bank, or to the Borrower’s pledged depository account held by ABN Amro Bank
(the “ABN Amro Pledged Account”) to secure
the letters of credit and
bank guarantees issued in connection with value added tax recovery initiatives
of Axcelis Technologies GmbH, or to those Collateral Accounts
identified on Schedule 6.8(b) hereto, provided that (i) the
amounts on deposit in the ABN Amro Pledged Account shall not exceed €4,000,000
and (ii) the amounts on deposit in such Collateral Accounts shall not
exceed the maximum amounts indicated on Schedule 6.8(b).


 


6.9          Financial Covenants.


 


Maintain, to be tested as
of the last day of each quarter, unless otherwise noted, on a consolidated
basis with respect to Borrower and its Subsidiaries:


 


(a)           Adjusted Quick Ratio.  Borrower and its Subsidiaries, on a
consolidated basis, shall maintain at all times, a ratio of Quick Assets to
Current Liabilities minus Deferred Revenue of at least 1.5:1.0.


 


(b)           Maximum Quarterly
Net Losses.   Borrower and its
Subsidiaries, on a consolidated basis, shall not suffer any Net Loss in excess
of: (i) $13,000,000 for the fiscal quarter ending March 31, 2010; (ii) $8,500,000
for the fiscal quarter ending June 30, 2010; (iii) $8,500,000 for the
fiscal quarter ending September 30, 2010; and (iv) $5,000,000 for the
fiscal quarter ending December 31, 2010 and each fiscal quarter
thereafter.


 


(c)           Liquidity.  Borrower shall maintain at all times
unrestricted cash and Cash Equivalents at Bank plus the Availability Amount of
at least $30,000,000.


 


12

















 


6.10        Protection and
Registration of Intellectual Property Rights.


 


(a)           Borrower shall: (i) protect,
defend and maintain the validity and enforceability of its material
intellectual property; (ii) promptly advise Bank in writing of material
infringements of its intellectual property; and (iii) not allow any
intellectual property material to Borrower’s business to be abandoned,
forfeited or dedicated to the public without Bank’s written consent.  If Borrower (A) obtains any patent,
registered trademark or servicemark, registered copyright, registered mask
work, or any pending application for any of the foregoing, whether as owner,
licensee or otherwise, or (B) applies for any patent or the registration
of any trademark or servicemark, then Borrower shall provide written notice
thereof to Bank on a quarterly basis upon the delivery of the Compliance
Certificate for such period, and shall execute such intellectual property
security agreements and other documents and take such other actions as Bank
shall request in its good faith business judgment to perfect and maintain a
first priority perfected security interest in favor of Bank in such
property.  If Borrower decides to register
any copyrights or mask works in the United States Copyright Office, Borrower
shall: (x) provide Bank with at least fifteen (15) days prior written
notice of Borrower’s intent to register such copyrights or mask works together
with a copy of the application it intends to file with the United States
Copyright Office (excluding exhibits thereto); (y) execute an intellectual
property security agreement and such other documents and take such other
actions as Bank may request in its good faith business judgment to perfect and
maintain a first priority perfected security interest in favor of Bank in the
copyrights or mask works intended to be registered with the United States
Copyright Office; and (z) record such intellectual property security
agreement with the United States Copyright Office contemporaneously with filing
the copyright or mask work application(s) with the United States Copyright
Office.  Upon Bank’s request, Borrower
shall promptly provide to Bank copies of all applications that it files for
patents or for the registration of trademarks, servicemarks, copyrights or mask
works, together with evidence of the recording of the intellectual property
security agreement necessary for Bank to perfect and maintain a first priority
perfected security interest in such property. Provide written notice to Bank
within thirty (30) days of entering or becoming bound by any Restricted License
(other than over-the-counter software that is commercially available to the
public).  Borrower shall take such steps
as Bank requests to obtain the consent of, or waiver by, any person whose
consent or waiver is necessary for (i) any Restricted License to be deemed
“Collateral” and for Bank to have a security interest in it that might
otherwise be restricted or prohibited by law or by the terms of any such
Restricted License, whether now existing or entered into in the future, and (ii) Bank
to have the ability in the event of a liquidation of any Collateral to dispose
of such Collateral in accordance with Bank’s rights and remedies under this
Agreement and the other Loan Documents, including, without limitation the “Loan
Documents” as such term is defined in the Export-Import Agreement.


 


(b)           Borrower and Bank
hereby:  (i) acknowledge, confirm,
and reaffirm that the Consent and Agreement remains in full force and effect
and (ii) acknowledge and agree that (A) this Agreement and the
Export-Import Agreement, together, shall be deemed to be the “Loan Agreement”
under the terms of the Consent and Agreement, (B) the Guarantor Security
Agreement shall be deemed to be  the “Security Agreement”  under the
terms of the Consent and Agreement, (C) the IP Agreement shall be deemed
to be the “IP Security Agreement” under the terms of the Consent and Agreement
and (D) the Loan Documents shall be deemed to be the “Loan Documents” under
the terms of the Consent and Agreement.


 


6.11        Litigation Cooperation.  From the date hereof and continuing through
the termination of this Agreement, make available to Bank, without expense to
Bank, Borrower and its officers, employees and agents and Borrower’s books and
records, to the extent that Bank may deem them reasonably necessary to
prosecute or defend any third-party suit or proceeding instituted by or against
Bank with respect to any Collateral or relating to Borrower.


 


6.12        Further Assurances.  Execute any further instruments and take
further action as Bank reasonably requests to perfect or continue Bank’s Lien
in the Collateral or to effect the purposes of this Agreement.  Deliver to Bank,  within
five (5) days after the same are sent or received, copies of all
correspondence, reports, documents and other filings with any Governmental
Authority regarding compliance with or maintenance of Governmental Approvals or
Requirements of Law or that could reasonably be expected to have a material
effect on any of the Governmental Approvals or otherwise on the operations of
Borrower or any of its Subsidiaries.


 


6.13        Designated
Senior Indebtedness.     Borrower shall
designate all principal of, interest (including all interest accruing after the
commencement of any bankruptcy or similar proceeding, whether or not a claim
for post-petition interest is allowable as a claim in any such proceeding), and
all fees, costs, expenses and other amounts


 


13

















 


accrued or due under
this Agreement as “Designated Senior Indebtedness”, or such similar term, in
any future Subordinated Debt incurred by Borrower after the date hereof.


 


6.14        Creation/Acquisition of
Subsidiaries.  Notwithstanding and
without limiting the negative covenant contained in Section 7.3 hereof, in
the event Borrower or any Subsidiary creates or acquires any Subsidiary,
Borrower and such Subsidiary shall promptly notify Bank of the creation or
acquisition of such new Subsidiary and, at Bank’s request, in its sole
discretion, take all such action as may be reasonably required by Bank to cause
each such Subsidiary (other than the Special Subsidiary) to, in Bank’s sole
discretion, become a co-Borrower or Guarantor under the Loan Documents and
grant a continuing pledge and security interest in and to the assets of such
Subsidiary (substantially as described on Exhibit A hereto); and Borrower
shall grant and pledge to Bank a perfected security interest in the stock,
units or other evidence of ownership of each Subsidiary(other than the Special
Subsidiary).


 


7              NEGATIVE
COVENANTS


 


Borrower shall not
do any of the following without Bank’s prior written consent:


 


7.1          Dispositions.  Convey, sell, lease, transfer or otherwise
dispose of (collectively, “Transfer”), or
permit any of its Subsidiaries to Transfer, all or any part of its business or
property, except for Transfers (a) of Inventory in the ordinary course of
business; (b) of worn-out or obsolete Equipment; (c) in connection
with Permitted Liens and Permitted Investments; (d) of non-exclusive
licenses for the use of the property of Borrower or its Subsidiaries in the
ordinary course of business and (e) of the Headquarters Location to the
Special Subsidiary for purposes of effectuating the Real Estate Financing.


 


7.2             Changes in Business,
Management, Ownership, Control, or Business Locations.  (a) Engage in or permit any of its
Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrower and such Subsidiary, as applicable, or reasonably related
thereto; (b) liquidate or dissolve, other than the dissolution of the
Subsidiaries identified on Schedule 7.2 attached hereto; or (c) have a
material change in executive management (provided that Borrower shall have
ninety (90) days to retain a replacement reasonably acceptable to Bank) or
permit or suffer any Change in Control. 
Borrower shall not, without at least thirty (30) days prior written
notice to Bank: (1) add any new offices or business locations, including
warehouses (unless such new offices or business locations contain less than One
Million Dollars ($1,000,000.00) in Borrower’s assets or property or Borrower
obtains a landlord agreement or bailee agreement in form and substance
reasonably satisfactory to Bank), (2) change its jurisdiction of
organization, (3) change its organizational structure or type, (4) change
its legal name, or (5) change any organizational number (if any) assigned
by its jurisdiction of organization.


 


7.3          Mergers or Acquisitions.  Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person. 
A Subsidiary (other than a Domestic Subsidiary) may merge or consolidate
into another Subsidiary or into Borrower and a Domestic Subsidiary may merge
into another Domestic Subsidiary or into Borrower.


 


7.4          Indebtedness.  Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.


 


7.5          Encumbrance.  Create, incur, allow, or suffer any Lien on
any of its property, or assign or convey any right to receive income, including
the sale of any Accounts, or permit any of its Subsidiaries to do so, except
for Permitted Liens, permit any Collateral not to be subject to the first
priority security interest granted herein, or enter into any agreement,
document, instrument or other arrangement (except with or in favor of Bank)
with any Person which directly or indirectly prohibits or has the effect of
prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging,
granting a security interest in or upon, or encumbering any of Borrower’s or
any Subsidiary’s intellectual property, except as is otherwise permitted in Section 7.1
hereof and the definition of “Permitted Lien” herein.


 


7.6          Maintenance of
Collateral Accounts.  Maintain any
Collateral Account except pursuant to the terms of Section 6.8.(b) hereof.


 


14

















 


7.7          Distributions;
Investments.  (a) Pay any
dividends or make any distribution or payment or redeem, retire or purchase any
capital stock provided that (i) Borrower may convert any of its
convertible securities into other securities pursuant to the terms of such
convertible securities or otherwise in exchange thereof, and (ii) Borrower
may pay dividends solely in common stock; or (b) directly or indirectly
make any Investment other than Permitted Investments, or permit any of its
Subsidiaries to do so.


 


7.8          Transactions with
Affiliates.  Directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of
Borrower, except for (i) the sale or other transfer of the Headquarters
Location by Borrower to the Special Subsidiary in order to effectuate the Real
Estate Financing, (ii) the lease of the Headquarters Location by Borrower
from the Special Subsidiary entered into upon such sale, provided that the
lease payments payable by Borrower pursuant to such lease shall not exceed the
amount necessary to service the Indebtedness incurred by Special Subsidiary in
the Real Estate Financing and to pay the ordinary operating costs of the
Special Subsidiary and (ii) transactions that are in the ordinary course
of Borrower’s business, upon fair and reasonable terms that are no less
favorable to Borrower than would be obtained in an arm’s length transaction
with a non-affiliated Person.


 


7.9          Subordinated Debt.  Make or permit any payment on any
Subordinated Debt, except under the terms of the subordination, intercreditor,
or other similar agreement to which such Subordinated Debt is subject, or amend
any provision in any document relating to the Subordinated Debt which would
increase the amount thereof or adversely affect the subordination thereof to
Obligations owed to Bank.


 


7.10        Compliance.  Become an “investment company” or a company
controlled by an “investment company”, under the Investment Company Act of
1940, as amended, or undertake as one of its important activities extending
credit to purchase or carry margin stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System), or use the proceeds of any
Credit Extension for that purpose; fail to meet the minimum funding
requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as
defined in ERISA, to occur; fail to comply with the Federal Fair Labor
Standards Act or violate any other law or regulation, if the violation could
reasonably be expected to have a material adverse effect on Borrower’s
business, or permit any of its Subsidiaries to do so; withdraw or permit any
Subsidiary to withdraw from participation in, permit partial or complete
termination of, or permit the occurrence of any other event with respect to,
any present pension, profit sharing and deferred compensation plan which could
reasonably be expected to result in any liability of Borrower, including any
liability to the Pension Benefit Guaranty Corporation or its successors or any
other governmental agency.


 


8              EVENTS
OF DEFAULT


 


Any one of the
following shall constitute an event of default (an “Event of
Default”) under this Agreement:


 


8.1          Payment Default.  Borrower fails to (a) make any payment
of principal or interest on any Credit Extension on its due date, or (b) pay
any other Obligations within three (3) Business Days after such
Obligations are due and payable (which three (3) day grace period shall
not apply to payments due on the Revolving Line Maturity Date).  During the cure period, the failure to cure
the payment default is not an Event of Default (but no Credit Extension will be
made during the cure period);


 


8.2          Covenant Default.


 


(a) Borrower
fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.7, 6.8,
6.9, 6.12 or violates any covenant in Section 7; or


 


(b) Borrower fails
or neglects to perform, keep, or observe any other term, provision, condition,
covenant or agreement contained in this Agreement or any Loan Documents, and as
to any default (other than those specified in this Section 8) under such
other term, provision, condition, covenant or agreement that can be cured, has
failed to cure the default within ten (10) days after the occurrence
thereof; provided, however, that if the default cannot by its nature be cured
within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is
likely to be cured within a reasonable time, then Borrower shall have an
additional period (which shall not in any case exceed thirty (30) days) to
attempt to cure such default, and


 


15

















 


within such reasonable time period the failure to cure
the default shall not be deemed an Event of Default (but no Credit Extensions
shall be made during such cure period). 
Grace periods provided under this section shall not apply, among other
things, to financial covenants or any other covenants set forth in subsection (a) above;


 


8.3          Material Adverse Change.  A Material Adverse Change occurs;


 


8.4          Attachment; Levy;
Restraint on Business.  (a) (i) The
service of process seeking to attach, by trustee or similar process, any funds
of Borrower or of any entity under the control of Borrower (including a
Subsidiary) on deposit with Bank or any Bank Affiliate, or (ii) a notice
of lien, levy, or assessment is filed against any of Borrower’s assets by any
government agency, and the same under subclauses (i) and (ii) hereof
are not, within ten (10) days after the occurrence thereof, discharged or
stayed (whether through the posting of a bond or otherwise); provided, however,
no Credit Extensions shall be made during any ten (10) day cure period;
and (b) (i) any material portion of Borrower’s assets is attached,
seized, levied on, or comes into possession of a trustee or receiver, or (ii) any
court order enjoins, restrains, or prevents Borrower from conducting any
material part of its business;


 


8.5          Insolvency.  (a) Borrower is unable to pay its debts
(including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower
begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun
against Borrower and not dismissed or stayed within forty-five (45) days (but
no Credit Extensions shall be made while of any of the conditions described in
clause (a) exist and/or until any Insolvency Proceeding is dismissed);


 


8.6          Other Agreements.  There is a default in any agreement to which
Borrower or any Guarantor is a party with a third party or parties resulting in
a right by such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount in excess of Five Hundred
Thousand Dollars ($500,000.00) or that could have a material adverse effect on
Borrower’s or any Guarantor’s business.


 


8.7          Judgments.  One or more judgments, orders, or decrees for
the payment of money in an amount, individually or in the aggregate, of at
least Five Hundred Thousand  Dollars
($500,000.00) (not covered by independent third-party insurance as to which
liability has been accepted by such insurance carrier) shall be rendered
against Borrower and shall remain unsatisfied, unvacated, or unstayed for a
period of ten (10) days after the entry thereof (provided that no Credit
Extensions will be made prior to the satisfaction, vacation, or stay of such
judgment, order, or decree);


 


8.8          Misrepresentations.  Borrower or any Person acting for Borrower
makes any representation, warranty, or other statement now or later in this
Agreement, any Loan Document or in any writing delivered to Bank or to induce
Bank to enter this Agreement or any Loan Document, and such representation,
warranty, or other statement is incorrect in any material respect when made;


 


8.9          Subordinated Debt.  A default or breach occurs under any
agreement between Borrower and any creditor of Borrower that signed a
subordination, intercreditor, or other similar agreement with Bank, or any
creditor that has signed such an agreement with Bank breaches any terms of such
agreement;


 


8.10        Guaranty; Guarantor
Defaults.  (a) Any Guaranty of
any Obligations terminates or ceases for any reason to be in full force and
effect; (b) any Guarantor does not perform any obligation or covenant
under any Guaranty of the Obligations; (c) any circumstance described in
Sections 8.3, 8.4, 8.5, 8.7, or 8.8. occurs with respect to any Guarantor; (d) the
liquidation, winding up, or termination of existence of any Guarantor; (e) the
occurrence of any “Event of Default” under (and as defined in) any Guarantor
Security Agreement; or (f) the occurrence of any “Event of Default” under
(and as defined in) any Pledge Agreement executed and delivered by any
Guarantor;


 


8.11        EXIM Guarantee.  If the EXIM Guarantee ceases for any
reason to be in full force and effect, or if the EXIM Bank declares the EXIM
Guarantee void or revokes any obligations under the EXIM Guarantee;


 


8.12        EXIM Default.  After the effective date of the
Export-Import Agreement, the occurrence of an Event of Default under the
Export-Import Agreement or the EXIM Loan Documents.


 


16

















 


8.11        Governmental Approvals.  Any Governmental Approval shall have been (a) revoked,
rescinded, suspended, modified in an adverse manner or not renewed in the
ordinary course for a full term or (b) subject to any decision by a Governmental
Authority that designates a hearing with respect to any applications for
renewal of any of such Governmental Approval or that could result in the
Governmental Authority taking any of the actions described in clause (a) above,
and such decision or such revocation, rescission, suspension, modification or
non-renewal (i) has, or could reasonably be expected to have, a Material
Adverse Change, or (ii) adversely affects the legal qualifications of
Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension,
modification or non-renewal could reasonably be expected to affect the status
of or legal qualifications of Borrower or any of its Subsidiaries to hold any
Governmental Approval in any other jurisdiction.


 


9              BANK’S
RIGHTS AND REMEDIES


 


9.1          Rights and Remedies.  While an Event of Default occurs and
continues Bank may, without notice or demand, do any or all of the following:


 


(a)           declare all Obligations
immediately due and payable (but if an Event of Default described in Section 8.5
occurs all Obligations are immediately due and payable without any action by
Bank);


 


(b)           stop advancing money or
extending credit for Borrower’s benefit under this Agreement or under any other
agreement between Borrower and Bank;


 


(c)           demand that Borrower (i) deposits
cash with Bank in an amount equal to the aggregate amount of any Letters of
Credit remaining undrawn, as collateral security for the repayment of any
future drawings under such Letters of Credit, and Borrower shall forthwith
deposit and pay such amounts, and (ii) pay in advance all Letter of Credit
fees scheduled to be paid or payable over the remaining term of any Letters of
Credit; provided, however, if an Event of Default described in Section 8.5
occurs, the obligation of Borrower to cash collateralize all Letters of Credit
remaining undrawn shall automatically become effective without any action by
Bank;


 


(d)           terminate any FX
Forward Contracts;


 


(e)           settle or adjust
disputes and claims directly with Account Debtors for amounts on terms and in
any order that Bank considers advisable, notify any Person owing Borrower money
of Bank’s security interest in such funds, and verify the amount of such
account;


 


(f)            make any payments and do
any acts it considers necessary or reasonable to protect the Collateral and/or
its security interest in the Collateral. 
Borrower shall assemble the Collateral if Bank requests and make it
available as Bank designates.  Bank may
enter premises where the Collateral is located, take and maintain possession of
any part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Bank a license to enter and occupy any of
its premises, without charge, to exercise any of Bank’s rights or remedies;


 


(g)           apply to the
Obligations any (i) balances and deposits of Borrower it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of Borrower;


 


(h)           ship, reclaim, recover,
store, finish, maintain, repair, prepare for sale, advertise for sale, and sell
the Collateral.  Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to Bank’s benefit;


 


(i)            place a “hold” on any
account maintained with Bank and/or deliver a notice of exclusive control, any
entitlement order, or other directions or instructions pursuant to any Control
Agreement or similar agreements providing control of any Collateral;


 


17

















 


(j)            demand and receive
possession of Borrower’s Books; and


 


(k)           exercise all rights and
remedies available to Bank under the Loan Documents or at law or equity,
including all remedies provided under the Code (including disposal of the
Collateral pursuant to the terms thereof).


 


9.2          Power of Attorney.  Borrower hereby irrevocably appoints Bank as
its lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to:  (a) endorse
Borrower’s name on any checks or other forms of payment or security; (b) sign
Borrower’s name on any invoice or bill of lading for any Account or drafts
against Account Debtors; (c) settle and adjust disputes and claims about
the Accounts directly with Account Debtors, for amounts and on terms Bank determines
reasonable; (d) make, settle, and adjust all claims under Borrower’s
insurance policies; (e) pay, contest or settle any Lien, charge,
encumbrance, security interest, and adverse claim in or to the Collateral, or
any judgment based thereon, or otherwise take any action to terminate or
discharge the same; and (f) transfer the Collateral into the name of Bank
or a third party as the Code permits. 
Borrower hereby appoints Bank as its lawful attorney-in-fact to sign
Borrower’s name on any documents necessary to perfect or continue the
perfection of Bank’s security interest in the Collateral regardless of whether
an Event of Default has occurred until all Obligations have been satisfied in
full (except for contingent indemnification obligations for which no claim has
been made) and Bank is under no further obligation to make Credit Extensions
hereunder.  Bank’s foregoing appointment
as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled
with an interest, are irrevocable until all Obligations have been fully repaid
and performed and Bank’s obligation to provide Credit Extensions terminates.


 


9.3          Protective Payments.  If Borrower fails to obtain the insurance
called for by Section 6.7 or fails to pay any premium thereon or fails to
pay any other amount which Borrower is obligated to pay under this Agreement or
any other Loan Document, Bank may obtain such insurance or make such payment,
and all amounts so paid by Bank are Bank Expenses and immediately due and
payable, bearing interest at the then highest applicable rate, and secured by
the Collateral.  Bank will make
reasonable efforts to provide Borrower with notice of Bank obtaining such
insurance at the time it is obtained or within a reasonable time
thereafter.  No payments by Bank are
deemed an agreement to make similar payments in the future or Bank’s waiver of
any Event of Default.


 


9.4          Application of Payments
and Proceeds.  Borrower shall have no
right to specify the order or the accounts to which Bank shall allocate or
apply any payments required to be made by Borrower to Bank or otherwise
received by Bank under this Agreement when any such allocation or application
is not specified elsewhere in this Agreement. 
If an Event of Default has occurred and is continuing, Bank may apply any
funds in its possession, whether from Borrower account balances, payments,
proceeds realized as the result of any collection of Accounts or other
disposition of the Collateral, or otherwise, to the Obligations in such order
as Bank shall determine in its sole discretion. 
Any surplus shall be paid to Borrower by credit to the Designated
Deposit Account or to other Persons legally entitled thereto; Borrower shall
remain liable to Bank for any deficiency. 
If Bank, in its good faith business judgment, directly or indirectly
enters into a deferred payment or other credit transaction with any purchaser
at any sale of Collateral, Bank shall have the option, exercisable at any time,
of either reducing the Obligations by the principal amount of the purchase price
or deferring the reduction of the Obligations until the actual receipt by Bank
of cash therefor.


 


9.5          Bank’s Liability for
Collateral.  So long as Bank complies
with reasonable banking practices regarding the safekeeping of the Collateral
in the possession or under the control of Bank, Bank shall not be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss
or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman,
bailee, or other Person.  Borrower bears
all risk of loss, damage or destruction of the Collateral.


 


9.6          No Waiver; Remedies
Cumulative.  Bank’s failure, at any
time or times, to require strict performance by Borrower of any provision of
this Agreement or any other Loan Document shall not waive, affect, or diminish
any right of Bank thereafter to demand strict performance and compliance
herewith or therewith.  No waiver
hereunder shall be effective unless signed by Bank and then is only effective for
the specific instance and purpose for which it is given.  Bank’s rights and remedies under this
Agreement and the other Loan Documents are cumulative.  Bank has all rights and remedies provided
under the Code, by law, or in equity. 
Bank’s exercise of one right or remedy is not an election, and Bank’s
waiver of any Event of Default is not a continuing waiver.  Bank’s delay in exercising any remedy is not
a waiver, election, or acquiescence.


 


18

















 


9.7          Demand Waiver.  Borrower waives demand, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension, or renewal of
accounts, documents, instruments, chattel paper, and guarantees held by Bank on
which Borrower is liable.


 


9.8          Borrower Liability.  Either Borrower may, acting singly, request
Credit Extensions hereunder.  Each
Borrower hereby appoints the other as agent for the other for all purposes
hereunder, including with respect to requesting Credit Extensions
hereunder.  Each Borrower hereunder shall
be jointly and severally obligated to repay all Credit Extensions made
hereunder, regardless of which Borrower actually receives said Credit
Extension, as if each Borrower hereunder directly received all Credit
Extensions.  Each Borrower waives (a) any
suretyship defenses available to it under the Code or any other applicable law,
and (b) any right to require Bank to: (i) proceed against any
Borrower or any other person; (ii) proceed against or exhaust any
security; or (iii) pursue any other remedy.  Bank may exercise or not exercise any right
or remedy it has against any Borrower or any security it holds (including the
right to foreclose by judicial or non-judicial sale) without affecting any
Borrower’s liability.  Notwithstanding
any other provision of this Agreement or other related document, each Borrower
irrevocably waives all rights that it may have at law or in equity (including,
without limitation, any law subrogating Borrower to the rights of Bank under
this Agreement) to seek contribution, indemnification or any other form of
reimbursement from any other Borrower, or any other Person now or hereafter
primarily or secondarily liable for any of the Obligations, for any payment
made by Borrower with respect to the Obligations in connection with this
Agreement or otherwise and all rights that it might have to benefit from, or to
participate in, any security for the Obligations as a result of any payment
made by Borrower with respect to the Obligations in connection with this
Agreement or otherwise.  Any agreement
providing for indemnification, reimbursement or any other arrangement
prohibited under this Section shall be null and void.  If any payment is made to a Borrower in
contravention of this Section, such Borrower shall hold such payment in trust
for Bank and such payment shall be promptly delivered to Bank for application
to the Obligations, whether matured or unmatured.


 


10           NOTICES


 


All notices,
consents, requests, approvals, demands, or other communication (collectively, “Communication”)
by any party to this Agreement or any other Loan Document must be in writing
and be delivered or sent by facsimile at the addresses or facsimile numbers
listed below.  Bank or Borrower may
change its notice address by giving the other party written notice
thereof.  Each such Communication shall
be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the
U.S. mail, registered or certified mail, return receipt requested, with proper
postage prepaid; (b) upon transmission, when sent by facsimile
transmission (with such facsimile promptly confirmed by delivery of a copy by
personal delivery or United States mail as otherwise provided in this Section 10);
(c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid; or (d) when delivered, if hand-delivered
by messenger, all of which shall be addressed to the party to be notified and
sent to the address or facsimile number indicated below.  Advance requests made pursuant to Section 3.4
must be in writing and may be in the form of electronic mail, delivered to Bank
by Borrower at the e-mail address of Bank provided below and shall be deemed to
have been validly served, given, or delivered when sent (with such electronic
mail promptly confirmed by delivery of a copy by personal delivery or United
States mail as otherwise provided in this Section 10).  Bank or Borrower may change its address,
facsimile number, or electronic mail address by giving the other party written
notice thereof in accordance with the terms of this Section 10.


 


If to Borrower:                                                                   Axcelis
Technologies, Inc.


108 Cherry Hill Drive


Beverly, Massachusetts 01915


Attn: Stephen G. Bassett, Chief Financial Officer and
Executive Vice President


Fax: 978-787-4090


Email: Stephen.bassett@axcelis.com


 


19

















 


If to Borrower:                                                                   Axcelis
Technologies, Inc.


108 Cherry Hill Drive


Beverly, Massachusetts 01915


Attn: Lynnette C. Fallon, Executive Vice President
HR/Legal, General Counsel and Secretary


Fax: 978-787-4090


Email: lynnette.fallon@axcelis.com


 


With a copy to:                                                             Edward
Angell Palmer and Dodge LLP


111 Huntington Avenue


Boston, Massachusetts 02199


Attn: James I. Rubens, Esquire


Fax: 888-325-9130


Email: jrubens@eapdlaw.com


 


If to Bank:                                                                                         Silicon
Valley Bank


One Newton Executive Park, Suite 200


2221 Washington Street


Newton, Massachusetts 02462


Attn: Mark Sperling


Fax: 617.969.5478


Email: msperling@svbank.com


 


with a copy to:                                                                 Riemer &
Braunstein LLP


Three Center Plaza


Boston, Massachusetts 02108


Attn: Charles W. Stavros, Esquire


Fax: 617.880.3456


Email: CStavros@riemerlaw.com


 


11           CHOICE
OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE


 


Massachusetts law governs
the Loan Documents without regard to principles of conflicts of law.  Borrower and Bank each submit to the
exclusive jurisdiction of the State and Federal courts in Massachusetts; provided,
however, that nothing in this Agreement shall be deemed to operate to
preclude Bank from bringing suit or taking other legal action in any other
jurisdiction to realize on the Collateral or any other security for the
Obligations, or to enforce a judgment or other court order in favor of Bank.  Borrower expressly submits and consents in
advance to such jurisdiction in any action or suit commenced in any such court,
and Borrower hereby waives any objection that it may have based upon lack of
personal jurisdiction, improper venue, or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is deemed
appropriate by such court.  Borrower
hereby waives personal service of the summons, complaints, and other process
issued in such action or suit and agrees that service of such summons,
complaints, and other process may be made by registered or certified mail
addressed to Borrower at the address set forth in Section 10 of this
Agreement and that service so made shall be deemed completed upon the earlier
to occur of Borrower’s actual receipt thereof or three (3) days after
deposit in the U.S. mails, proper postage prepaid. NOTWITHSTANDING ANYTHING TO
THE CONTRARY SET FORTH HEREINABOVE, BANK SHALL SPECIFICALLY HAVE THE RIGHT TO
BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK’S RIGHTS AGAINST
BORROWER OR ITS PROPERTY.


 


TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR
RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED
UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.  EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS
COUNSEL.


 


20
















 


12           GENERAL
PROVISIONS


 


12.1        Termination Prior to
Revolving Line Maturity Date.  This
Agreement may be terminated prior to the Revolving Line Maturity Date by
Borrower, effective three (3) Business Days after written notice of
termination is given to Bank. 
Notwithstanding any such termination, Bank’s lien and security interest
in the Collateral shall continue until Borrower fully satisfies its Obligations
in cash (except for contingent indemnification obligations for which no claim
has been made).  If such termination is
at Borrower’s election (regardless of whether any Default or Event of Default
then exists) or at Bank’s election due to the occurrence and continuance of an
Event of Default (except for, and excluding, an Event of Default caused by an
Event of Default under the Export-Import Agreement), Borrower shall pay to
Bank, in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to Two Hundred Thousand Dollars
($200,000.00) (i.e., one percent (1.00%) of the Revolving Line).


 


12.2        Right of Set-Off.  Borrower hereby grants to Bank a Lien and a
right of setoff as security for all Obligations to Bank, whether now existing
or hereafter arising upon and against all deposits, credits, collateral and
property, now or hereafter in the possession, custody, safekeeping or control
of Bank or any entity under the control of Bank (including a subsidiary of
Bank) or in transit to any of them.  At
any time after the occurrence and during the continuance of an Event of Default,
without demand or notice, Bank may setoff the same or any part thereof and
apply the same to any liability or Obligation of Borrower even though unmatured
and regardless of the adequacy of any other collateral securing the
Obligations.  ANY AND ALL RIGHTS TO
REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER,
ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.


 


12.3        Successors and Assigns.  This Agreement binds and is for the benefit
of the successors and permitted assigns of each party.  Borrower may not assign this Agreement or any
rights or obligations under it without Bank’s prior written consent (which may
be granted or withheld in Bank’s discretion). 
Bank has the right, without the consent of or notice to Borrower, to
sell, transfer, negotiate, or grant participation in all or any part of, or any
interest in, Bank’s obligations, rights, and benefits under this Agreement and
the other Loan Documents; provided, however, that prior to the occurrence of an
Event of Default, any such assignment or participation may only be made to an
Eligible Assignee.


 


12.4        Indemnification.  Borrower agrees to indemnify, defend and hold
Bank and its directors, officers, employees, agents, attorneys, or any other
Person affiliated with or representing Bank (each, an “Indemnified
Person”) harmless against:  (a) all
obligations, demands, claims, and liabilities (collectively, “Claims”) claimed or asserted by any other party in
connection with the transactions contemplated by the Loan Documents; and (b) all
losses or expenses (including Bank Expenses) in any way suffered, incurred, or
paid by such Indemnified Person as a result of, following from, consequential
to, or arising from transactions between Bank and Borrower (including
reasonable attorneys’ fees and expenses), except for Claims and/or losses
directly caused by such Indemnified Person’s gross negligence or willful
misconduct.


 


12.5        Time of Essence.  Time is of the essence for the performance of
all Obligations in this Agreement.


 


12.6        Severability of Provisions.  Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.


 


12.7        Correction of Loan
Documents.  Bank may correct patent
errors and fill in any blanks in this Agreement and the other Loan Documents
consistent with the agreement of the parties.


 


12.8        Amendments in Writing;
Waiver; Integration.  No purported
amendment or modification of any Loan Document, or waiver, discharge or
termination of any obligation under any Loan Document, shall be enforceable or
admissible unless, and only to the extent, expressly set forth in a writing
signed by the party against which enforcement or admission is sought.  Without limiting the generality of the
foregoing, no oral promise or statement, nor any action, inaction, delay,
failure to require performance or course of conduct shall operate as, or
evidence, an amendment, supplement or waiver or have any other effect on any
Loan Document.  Any waiver 


 


21

















 


granted shall be limited to the specific circumstance
expressly described in it, and shall not apply to any subsequent or other
circumstance, whether similar or dissimilar, or give rise to, or evidence, any
obligation or commitment to grant any further waiver.  The Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or
agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of the Loan Documents merge into the Loan
Documents.


 


12.9        Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, are an original, and all taken together,
constitute one Agreement.


 


12.10      Survival.  All covenants, representations and warranties
made in this Agreement continue in full force until this Agreement has
terminated pursuant to its terms and all Obligations (other than inchoate
indemnity obligations and any other obligations which, by their terms, are to
survive the termination of this Agreement) have been satisfied.  The obligation of Borrower in Section 12.2
to indemnify Bank shall survive until the statute of limitations with respect
to such claim or cause of action shall have run.


 


12.11      Confidentiality.  In handling any confidential information,
Bank shall exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made: (a) to
Bank’s Subsidiaries or Affiliates; (b) to prospective transferees or
purchasers of any interest in the Credit Extensions (provided, however, Bank
shall use commercially reasonable efforts to obtain such prospective transferee’s
or purchaser’s agreement to the terms of this provision); (c) as required
by law, regulation, subpoena, or other order; (d) to Bank’s regulators or
as otherwise required in connection with Bank’s examination or audit; (e) as
Bank considers appropriate in exercising remedies under the Loan Documents; and
(f) to third-party service providers of Bank so long as such service
providers have executed a confidentiality agreement with Bank with terms no
less restrictive than those contained herein. 
Confidential information does not include information that either: (i) is
in the public domain or in Bank’s possession when disclosed to Bank, or becomes
part of the public domain after disclosure to Bank; or (ii) is disclosed
to Bank by a third party, if Bank does not know that the third party is
prohibited from disclosing the information.


 


Bank may use confidential
information for any purpose, including, without limitation, for the development
of client databases, reporting purposes, and market analysis, so long as Bank
does not disclose Borrower’s identity or the identity of any person associated
with Borrower unless otherwise expressly permitted by this Agreement.  The provisions of the immediately preceding
sentence shall survive the termination of this Agreement.


 


12.12      Electronic Execution of
Documents.  The words “execution,” “signed,”
“signature” and words of like import in any Loan Document shall be deemed to
include electronic signatures or the keeping of records in electronic form,
each of which shall be of the same legal effect, validity and enforceability as
a manually executed signature or the use of a paper-based recordkeeping
systems, as the case may be, to the extent and as provided for in any
applicable law, including, without limitation, any state law based on the
Uniform Electronic Transactions Act.


 


12.13      Captions.  The headings used in this Agreement are for
convenience only and shall not affect the interpretation of this Agreement.


 


12.14      Construction of Agreement.  The parties mutually acknowledge that they and
their attorneys have participated in the preparation and negotiation of this
Agreement.  In cases of uncertainty this
Agreement shall be construed without regard to which of the parties caused the
uncertainty to exist.


 


12.15      Relationship.  The relationship of the parties to this
Agreement is determined solely by the provisions of this Agreement.  The parties do not intend to create any
agency, partnership, joint venture, trust, fiduciary or other relationship with
duties or incidents different from those of parties to an arm’s-length
contract.


 


12.16      Third Parties.  Nothing in this Agreement, whether express or
implied, is intended to: (a) confer any benefits, rights or remedies under
or by reason of this Agreement on any persons other than the express parties to
it and their respective permitted successors and assigns; (b) relieve or
discharge the obligation or liability of any person not an express party to
this Agreement; or (c) give any person not an express party to this
Agreement any right of subrogation or action against any party to this
Agreement.


 


22

















 


12.17      Borrower Agreement;
Cross-Collateralization; Cross-Default; Conflicts.  Both this Agreement and the EXIM Borrower
Agreement shall continue in full force and effect, and all rights and remedies
under this Agreement and the EXIM Borrower Agreement are cumulative.  The term “Obligations” as used in this
Agreement and in the EXIM Borrower Agreement shall include without limitation
the obligation to pay when due all loans made pursuant to the EXIM Borrower
Agreement and the Export-Import Agreement (the “Exim Loans”)
and all interest thereon and the obligation to pay when due all Advances made
pursuant to the terms of this Agreement and all interest thereon.  Without limiting the generality of the
foregoing, the security interest granted herein covering all “Collateral” as
defined in this Agreement and as defined in the Borrower Agreement shall secure
all Exim Loans and all Advances and all interest thereon, and all other
Obligations.  Any Event of Default under
this Agreement shall also constitute a default under the EXIM Borrower
Agreement, and any default under the EXIM Borrower Agreement shall also
constitute an Event of Default under this Agreement.  In the event Bank assigns its rights under this
Agreement and/or under any note evidencing Exim Loans and/or its rights under
the EXIM Borrower Agreement and/or under any note evidencing Advances, to any
third party, including, without limitation, the Exim Bank, whether before or
after the occurrence of any Event of Default, Bank shall have the right (but
not any obligation), in its sole discretion, to allocate and apportion
Collateral to the EXIM Borrower Agreement and/or note assigned and to specify
the priorities of the respective security interests in such Collateral between
itself and the assignee, all without notice to or consent of the
Borrowers.  Should any term of the
Agreement conflict with any term of the EXIM Borrower Agreement, the more
restrictive term in either agreement shall govern Borrower.


 


13           DEFINITIONS


 


13.1        Definitions.  As used in the Loan Documents, the word “shall”
is mandatory, the word “may” is permissive, the word “or” is not exclusive, the
words “includes” and “including” are not limiting, the singular includes the
plural, and numbers denoting amounts that are set off in brackets are negative.
As used in this Agreement, the following terms have the following meanings:


 


“ABN Amro Pledged Account”
is defined in Section 6.8.


 


“Account” is any
“account” as defined in the Code with such additions to such term as may hereafter
be made, and includes, without limitation, all accounts receivable and other
sums owing to Borrower.


 


“Account Debtor”
is any “account debtor” as defined in the Code with such additions to such term
as may hereafter be made.


 


“Advance” or “Advances” means an advance (or advances) under the Revolving
Line.


 


“Affiliate” of
any Person is a Person that owns or controls directly or indirectly the Person,
any Person that controls or is controlled by or is under common control with
the Person, and each of that Person’s senior executive officers, directors,
partners and, for any Person that is a limited liability company, that Person’s
managers and members.


 


“Agreement” is
defined in the preamble hereof.


 


“Availability Amount”
is (a) the lesser of (i) the Revolving Line minus any amounts
outstanding under the Export-Import Agreement or (ii) the amount available under
the Borrowing Base minus (b) the
amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit) plus an amount equal to the Letter of Credit Reserve, minus (c) the
FX Reserve, minus (d) any amounts used for Cash Management Services, and
minus (e) the outstanding principal balance of any Advances.  The aggregate amount of all Advances
(including, without limitation, the Dollar equivalent amount of all outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit plus an
amount equal to the Letter of Credit Reserve), any outstanding FX Reserve and
any amounts used for Cash Management Services) under this Agreement outstanding
at any time together with all Credit Extensions made pursuant to the
Export-Import Agreement outstanding at any time shall not exceed Twenty Million
Dollars ($20,000,000).


 


“Bank” is
defined in the preamble hereof.


 


23

















 


“Bank Expenses”
are all audit fees and expenses, costs, and expenses (including reasonable
attorneys’ fees and expenses) for preparing, amending, negotiating,
administering, defending and enforcing the Loan Documents (including, without
limitation, those incurred in connection with appeals or Insolvency
Proceedings) or otherwise incurred with respect to Borrower.


 


“Borrower”
is defined in the preamble hereof


 


“Borrower’s Books”
are all Borrower’s books and records including ledgers, federal and state tax
returns, records regarding Borrower’s assets or liabilities, the Collateral,
business operations or financial condition, and all computer programs or
storage or any equipment containing such information.


 


“Borrowing Base”
is 80% of Eligible Accounts, as determined by Bank from Borrower’s most recent
Transaction Report; provided, however, that Bank may, following
any Collateral inspection or audit conducted by or on behalf of Bank, decrease
the foregoing percentage in its good faith business judgment based on events,
conditions, contingencies, or risks which, as reasonably determined by Bank
after consultation with Borrower, may adversely affect Collateral.


 


“Borrowing Resolutions”
are, with respect to any Person, those resolutions adopted by such Person’s
Board of Directors (or other applicable governing body) and delivered by such
Person to Bank approving the Loan Documents to which such Person is a party and
the transactions contemplated thereby, together with a certificate executed by
its secretary on behalf of such Person certifying that (a) such Person has
the authority to execute, deliver, and perform its obligations under each of
the Loan Documents to which it is a party, (b) that attached to such
certificate is a true, correct, and complete copy of the resolutions then in
full force and effect authorizing and ratifying the execution, delivery, and
performance by such Person of the Loan Documents to which it is a party, (c) the
name(s) of the Person(s) authorized to execute the Loan Documents on
behalf of such Person, together with a sample of the true signature(s) of
such Person(s), and (d) that Bank may conclusively rely on such
certificate unless and until such Person shall have delivered to Bank a further
certificate canceling or amending such prior certificate.


 


“Business Day”
is any day other than a Saturday, Sunday or other day on which banking
institutions in the Commonwealth of Massachusetts are authorized or required by
law or other governmental action to close, except that if any determination of
a “Business Day” shall relate to an FX Forward Contract, the term “Business Day”
shall mean a day on which dealings are carried on in the country of settlement
of the foreign (i.e., non-Dollar) currency. is any day that is not a Saturday,
Sunday or a day on which Bank is closed.


 


“Cash Equivalents” means (a) marketable
direct obligations issued or unconditionally guaranteed by the United States or
any agency or any State thereof having maturities of not more than one (1) year
from the date of acquisition; (b) commercial paper maturing no more than
one (1) year after its creation and having the highest rating from either
Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.;
(c) Bank’s certificates of deposit issued maturing no more than one (1) year
after issue.


 


“Cash Management Services” is
defined in Section 2.1.4.


 


“Change in Control” means any event, transaction, or occurrence as a result of which (a) any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as an amended (the “Exchange Act”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of Borrower, is or becomes a beneficial owner (within the meaning Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of Borrower, representing twenty-five percent (25%) or more of the combined voting power of Borrower’s then outstanding securities; or (b) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the Board of Directors of Borrower (together with any new directors whose election by the Board of Directors of Borrower was approved by a vote of at least two-thirds of the directors then still in office who either were directions at the beginning of such period  or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in office.
 
“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the Commonwealth of Massachusetts; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the 


 


24















 
definition of such term contained in Article or Division 9 shall govern; provided further, 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, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the Commonwealth of Massachusetts, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes on the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.
 


“Collateral” is
any and all properties, rights and assets of Borrower described on Exhibit A.


 


“Collateral Account”
is any Deposit Account, Securities Account, or Commodity Account.


 


“Commodity Account”
is any “commodity account” as defined in the Code with such additions to such
term as may hereafter be made.


 


“Compliance Certificate”
is that certain certificate in the form attached hereto as Exhibit B.


 


“Consent and Agreement”
means the Consent and Agreement dated as of March 30, 2009 by and among
the Bank, SEN, Sumitomo Heavy Industries, Ltd. (solely for purposes of Section 2(b) thereunder),
the Borrower and certain of Borrower’s Subsidiaries named therein.


 


“Contingent Obligation”
is, for any Person, any direct or indirect liability, contingent or not, of
that Person for (a) any indebtedness, lease, dividend, letter of credit or
other obligation of another such Person as an obligation directly or indirectly
guaranteed, endorsed, co-made, discounted or sold with recourse by that Person,
or for which that Person is directly or indirectly liable; (b) any
obligations for undrawn letters of credit for the account of that Person; and (c) all
obligations from any interest rate, currency or commodity swap agreement,
interest rate cap or collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; but “Contingent Obligation” does not
include endorsements in the ordinary course of business.  The amount of a Contingent Obligation is the
stated or determined amount of the primary obligation for which the Contingent
Obligation is made or, if not determinable, the maximum reasonably anticipated
liability for it determined by the Person in good faith; but the amount may not
exceed the maximum of the obligations under any guarantee or other support
arrangement.


 


“Control Agreement”
is any control agreement entered into among the depository institution at which
Borrower maintains a Deposit Account or the securities intermediary or
commodity intermediary at which Borrower maintains a Securities Account or a
Commodity Account, Borrower, and Bank pursuant to which Bank obtains control
(within the meaning of the Code) over such Deposit Account, Securities Account,
or Commodity Account.


 


“Credit Extension”
is any Advance, EXIM Loan, Letter of Credit, FX Forward Contract, amount
utilized for Cash Management Services, or any other extension of credit by Bank
for Borrower’s benefit.


 


“Current Liabilities”
are all obligations and liabilities of Borrower and its Subsidiaries to Bank
(other than obligations and liabilities which are 100% cash secured), plus,
without duplication, the aggregate amount of Borrower’s and its Subsidiaries’ consolidated
Total Liabilities that mature within one (1) year.


 


“Default”
means any event which with notice or passage of time or both, would constitute
an Event of Default.


 


“Default Rate”
is defined in Section 2.3(b).


 


“Deferred Revenue”
is all amounts received or invoiced by Borrower in advance of services to be
performed under contracts and/or delivery of products and not yet recognized as
revenue.


 


“Deposit
Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.


 


“Designated Deposit Account”
is Borrower’s deposit account, account number 330609227, maintained with Bank.


 


25

















 


“Dollars,”  “dollars” and “$” each mean
lawful money of the United States.


 


“Domestic Subsidiary”
means a Subsidiary organized under the laws of the United States or any state
or territory thereof or the District of Columbia.


 


“Effective Date”
is the date Bank executes this Agreement as indicated on the signature page hereof.


 


“Eligible Accounts”
means Accounts which arise in the ordinary course of Borrower’s business that
meet all Borrower’s representations and warranties in Section 5.3.  Bank reserves the right at any time after the
Effective Date to adjust any of the criteria set forth below and to establish
new criteria in its good faith business judgment.   Without limiting the fact that the
determination of which Accounts are eligible for borrowing is a matter of Bank’s
good faith judgment, the following (“Minimum Eligibility
Requirements”) are the minimum requirements for an Account to be an
Eligible Account and, unless Bank agrees otherwise in writing, Eligible
Accounts shall not include:


 


(a)           Accounts that the
Account Debtor has not paid within ninety (90) days of invoice date regardless
of invoice payment period terms;


 


(b)           Accounts owing from
an Account Debtor, fifty percent (50%) or more of whose Accounts have not been
paid within ninety (90) days of invoice date;


 


(c)           Accounts billed in the
United States and owing from an Account Debtor which does not have its
principal place of business in the United States or Canada;


 


(d)           Accounts billed and
payable outside of the United States;


 


(e)           Accounts owing from an
Account Debtor to the extent that Borrower is indebted or obligated in any
manner to the Account Debtor (as creditor, lessor, supplier or otherwise -
sometimes called “contra” accounts, accounts payable, customer deposits or
credit accounts), with the exception of customary credits, adjustments and/or
discounts given to an Account Debtor by Borrower in the ordinary course of its
business;


 


(f)            Accounts for which the
Account Debtor is Borrower’s Affiliate (or a company in which Borrower or its
Affiliates have greater than a 20% ownership interest), officer, employee, or agent;


 


(g)           Accounts with credit
balances over ninety (90) days from invoice date;


 


(h)           Accounts owing from an
Account Debtor, including Affiliates, whose total obligations to Borrower
exceed twenty-five (25%) of all Accounts, for the amounts that exceed that
percentage, unless Bank, on a case-by-case basis and in its sole discretion,
otherwise approves any such Account;


 


(i)            Accounts owing from an
Account Debtor which is a United States government entity or any department,
agency, or instrumentality thereof unless Borrower has assigned its payment
rights to Bank and the assignment has been acknowledged under the Federal
Assignment of Claims Act of 1940, as amended;


 


(j)            Accounts for
demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other
terms if Account Debtor’s payment may be conditional;


 


(k)           Accounts for which an
Account Debtor has not been invoiced or where goods or services have not yet
been rendered to the Account Debtor (sometimes called memo billings or
pre-billings);


 


(l)            Accounts subject to
contractual arrangements between Borrower and an Account Debtor where payments
shall be scheduled or due according to completion or fulfillment requirements
and where the Account Debtor has a right of offset for damages suffered as a
result of Borrower’s failure to perform in accordance with the contract
(sometimes called contracts accounts receivable, progress billings, milestone
billings, or fulfillment contracts);


 


26

















 


(m)          Accounts owing from an
Account Debtor the amount of which may be subject to withholding based on the
Account Debtor’s satisfaction of Borrower’s complete performance (but only to
the extent of that portion of the amount withheld which exceeds ten percent
(10%) of the Account; sometimes called retainage billings);


 


(n)           Accounts subject to
trust provisions, subrogation rights of a bonding company, or a statutory
trust;


 


(o)           Accounts owing from an
Account Debtor that have been invoiced for goods that have not been shipped to
the Account Debtor unless Bank, Borrower, and the Account Debtor have entered
into an agreement acceptable to Bank in its sole discretion wherein the Account
Debtor acknowledges that (i) it has title to and has ownership of the
goods wherever located, (ii) a bona fide sale of the goods has occurred,
and (iii) it owes payment for such goods in accordance with invoices from
Borrower (sometimes called “bill and hold” accounts);


 


(p)           Accounts
owing from an Account Debtor with respect to which Borrower has received
Deferred Revenue (but only to the extent of such Deferred Revenue);


 


(q)           Accounts for which the
Account Debtor has not been invoiced;


 


(r)            Accounts that
represent non-trade receivables or that are derived by means other than in the
ordinary course of Borrower’s business;


 


(s)           Accounts for which
Borrower has permitted Account Debtor’s payment to extend beyond 90 days;


 


(t)            Accounts subject to
chargebacks or others payment deductions taken by an Account Debtor (but only
to the extent the chargeback is determined invalid and subsequently collected
by Borrower);


 


(u)           Accounts in which the
Account Debtor disputes liability or makes any claim (but only up to the
disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business; and


 


(v)           Accounts for which Bank
in its good faith business judgment determines collection to be doubtful or
otherwise ineligible.


 


“Eligible Assignee”
shall mean any commercial bank, insurance company, investment or mutual fund or
other entity that is an “accredited investor” (as defined in Regulation D under
the Securities Act) and which extends credit or buys loans as one of its
businesses; provided that any direct competitor of the Borrower shall
not be an Eligible Assignee.


 


“Eligible EXIM Inventory”
is defined in the Export-Import Agreement.


 


“Equipment” is
all “equipment” as defined in the Code with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures,
goods, vehicles (including motor vehicles and trailers), and any interest in
any of the foregoing.


 


“ERISA” is the
Employee Retirement Income Security Act of 1974, and its regulations.


 


“EXIM Loan” is
defined in Section 12.17.


 


“EXIM Borrower Agreement”
is that certain Export-Import Bank of the United States Working Capital
Guarantee Program Borrower Agreement, dated as of the date hereof, executed by
Borrower and acknowledged by Bank.


 


“EXIM Loan Documents”
are all documents and agreements executed in connection with the Export-Import
Agreement, including, without limitation, the EXIM Borrower Agreement and the
EXIM Promissory Note (as defined in the Export-Import Agreement), as each may
be amended from time to time.


 


27

















 


“Export-Import Agreement”
is that certain Export-Import Loan and Security Agreement, dated as of the date
hereof, by and between Borrower and Bank.


 


“Event of Default”
is defined in Section 8.


 


“Foreign Currency”
means lawful money of a country other than the United States.


 


“Foreign Subsidiary”
means any Subsidiary which is not a Domestic Subsidiary.


 


“Funding Date”
is any date on which a Credit Extension is made to or on account of Borrower
which shall be a Business Day.


 


“FX Business Day”
is any day when (a) Bank’s Foreign Exchange Department is conducting its
normal business and (b) the Foreign Currency being purchased or sold by
Borrower is available to Bank from the entity from which Bank shall buy or sell
such Foreign Currency.


 


“FX Forward Contract”  is defined in Section 2.1.3.


 


“FX Reserve”  is defined in Section 2.1.3.


 


“GAAP” is
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.


 


“General Intangibles”
is all “general intangibles” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation, all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, trademarks, service marks
and, to the extent permitted under applicable law, any applications therefor,
whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights,
goodwill, franchise agreements, purchase orders, customer lists, route lists,
telephone numbers, domain names, claims, income and other tax refunds, security
and other deposits, options to purchase or sell real or personal property,
rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man,
property damage, and business interruption insurance), payments of insurance
and rights to payment of any kind.


 


“Governmental
Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.


 


“Governmental Authority”
is any nation or government, any state or other political subdivision thereof,
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative functions of or pertaining to government, any securities
exchange and any self-regulatory organization.


 


“Guarantor”  is any present or future guarantor of the Obligations,
including Fusion Technology International, Inc., Fusion Investments, Inc.,
High Temperature Engineering Corporation, 
Axcelis  Technologies (Israel), Inc.
and all present or future Domestic Subsidiaries.


 


“Guarantor Security
Agreement(s)”  is each
Amended and Restated Security Agreement executed and delivered by a Guarantor
to Bank to secure the Guaranty of such Guarantor.


 


“Guaranty(ies)”
is any guaranty of the Obligations executed and delivered by a Guarantor to
Bank.


 


“Headquarters Location”
is  108 Cherry Hill Drive, Beverly,
Massachusetts.


 


28

















 


“Indebtedness”
is (a) indebtedness for borrowed money or the deferred price of property
or services, such as reimbursement and other obligations for surety bonds and
letters of credit, (b) obligations evidenced by notes, bonds, debentures
or similar instruments, (c) capital lease obligations, and (d) Contingent
Obligations.


 


“Indemnified Person”
is defined in Section 12.4.


 


“Insolvency Proceeding” is any
proceeding by or against any Person under the United States Bankruptcy Code, or
any other bankruptcy or insolvency law, including assignments for the benefit
of creditors, compositions, extensions generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.


 


“Inventory” is
all “inventory” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without
limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.


 


“Investment” is
any beneficial ownership interest in any Person (including stock, partnership
interest or other securities), and any loan, advance or capital contribution to
any Person.


 


“IP Agreement”
is that certain Amended and Restated Intellectual Property Security Agreement
executed and delivered by Borrower and Guarantors to Bank of even date
herewith.


 


“Letter of Credit”
means a standby letter of credit issued by Bank or another institution based
upon an application, guarantee, indemnity or similar agreement on the part of
Bank as set forth in Section 2.1.2.


 


“Letter of Credit Application”
is defined in Section 2.1.2(a).


 


“Letter of Credit Reserve”
has the meaning set forth in Section 2.1.2(d).


 


“Lien” is a
claim, mortgage, deed of trust, levy, charge, pledge, security interest or
other encumbrance of any kind, whether voluntarily incurred or arising by
operation of law or otherwise against any property.


 


“Loan Documents”
are, collectively, this Agreement, the Perfection Certificate, the IP
Agreement, the Pledge Agreements, the EXIM Loan Documents, the Guarantor
Security Agreements, each Guaranty, any note, or notes executed by Borrower or
any Guarantor, and any other present or future agreement executed or delivered
by Borrower or any Guarantor and/or for the benefit of Bank in connection with
this Agreement, all as amended, restated, or otherwise modified.


 


“Material Adverse Change”
is (a) a material impairment in the perfection or priority of Bank’s Lien
in the Collateral or in the value of such Collateral; (b) a material
adverse change in the business, operations, or condition (financial or
otherwise) of Borrower, taken as a whole; or (c) a material impairment of
the prospect of repayment of any portion of the Obligations or (d) Bank
determines, based upon information available to it and in its reasonable
judgment, that there is a reasonable likelihood that Borrower shall fail to
comply with one or more of the financial covenants in Section 6 during the
next succeeding financial reporting period.


 


“Net Loss”
means, as calculated on a consolidated basis for Borrower and its Subsidiaries
for any period as at any date of determination, the net loss, after provision
for taxes, of Borrower and its Subsidiaries for such period taken as a single
accounting period as determined in accordance with GAAP.


 


“Obligations”
are Borrower’s obligation to pay when due any debts, principal, interest, Bank
Expenses and other amounts Borrower owes Bank now or later, whether under this
Agreement, the EXIM Loan Documents, the Export-Import Agreement, the Loan
Documents, or otherwise, including, without limitation, all obligations
relating to letters of credit (including reimbursement obligations for drawn
and undrawn letters of credit), cash management services, and foreign exchange
contracts, if any, and including interest accruing after Insolvency Proceedings
begin and debts, liabilities, or obligations of Borrower  assigned to Bank, and the performance of
Borrower’s duties under the Loan Documents.


 


29
















 


“Operating Documents”
are, for any Person, such Person’s formation documents, as certified with the
Secretary of State of such Person’s state of formation on a date that is no
earlier than 30 days prior to the Effective Date, and, (a) if such Person
is a corporation, its bylaws in current form, (b) if such Person is a
limited liability company, its limited liability company agreement (or similar
agreement), and (c) if such Person is a partnership, its partnership
agreement (or similar agreement), each of the foregoing with all current
amendments or modifications thereto.


 


“Overadvance” is
defined in Section 2.2.


 


“Perfection Certificate”
is defined in Section 5.1.


 


“Permitted Indebtedness”
is:


 


(a)           Borrower’s Indebtedness
to Bank under this Agreement and the other Loan Documents, including, without
limitation, the Export-Import Agreement;


 


(b)           Indebtedness existing
on the Effective Date and shown on the Perfection Certificate;


 


(c)           Subordinated Debt;


 


(d)           unsecured Indebtedness
to trade creditors incurred
in the ordinary course of business;


 


(e)           unsecured Indebtedness with respect to surety bonds,
letters of credit and/or and similar instruments in connection with value added
tax recovery initiatives of Axcelis Technologies GmbH incurred in
the ordinary course of business;


 


(f)            Indebtedness owing
from (i) one Borrower to another Borrower; (ii) any Borrower to any
Subsidiary; and (iii) except for trade indebtedness incurred in the
ordinary course of business consistent with past practice, any Subsidiary to
any Borrower in an aggregate amount of up to $1,000,000, provided that, in each
case, such Indebtedness is incurred in the ordinary course of business of such
Borrower or Subsidiary and pursuant to an arms-length transaction;


 


(g)           Indebtedness owing by
Borrower or the Special Subsidiary pursuant to the Real Estate Financing
provided that (i) such Indebtedness does not exceed $30,000,000 in the
aggregate outstanding at any time, (ii) such Indebtedness is subject to
the terms of an intercreditor agreement in form and substance acceptable to
Bank and (iii) no Event of Default exists immediately prior to the
incurrence of such Indebtedness or results after giving effect to the
incurrence thereof; and


 


(h)           extensions,
refinancings, modifications, amendments and restatements of Permitted
Indebtedness referenced in items (a) through (d) and (f) and (g) above,
provided that the principal amount thereof is not increased or the terms
thereof are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.


 


“Permitted Investments”
are:


 


(a)           Investments shown on
the Perfection Certificate and existing on the Effective Date;


 


(b)           Cash Equivalents;


 


(c)           Investments
consisting of the endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of Borrower;


 


(d)           Investments consisting
of deposit accounts maintained with Bank and subject to Bank’s first priority
Lien;


 


30

















 


(e)           Investments of Subsidiaries
in or to Borrower or any Guarantor and Investments of one Borrower in or to
another Borrower;


 


(f)            Investments consisting
of (i) travel advances and employee relocation loans and other employee
loans and advances in the ordinary course of business, and (ii) loans to
employees, officers or directors relating to the purchase of equity securities
of Borrower or its Subsidiaries pursuant to employee stock purchase plans or
agreements approved by Borrower’s Board of Directors (or other applicable governing
body);


 


(g)           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
business;


 


(h)           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 paragraph (h) shall not apply to Investments
of Borrower in any Subsidiary; and


 


(i)            Money market funds
that (i) comply with the criteria set forth in Rule 2a-7 under the
Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by
Moody’s and (iii) have portfolio assets of at least $500,000,000.00;


 


(j)            Other equity and debt
investments that are consistent with the investment policy of the Borrower
dated as of March 2003, a copy of which has been delivered to Bank;


 


(k)           Subject to Section 6.6
hereof, Investments of Borrower and its Domestic Subsidiaries consisting of
deposit accounts held with foreign financial institutions; provided,
that the aggregate dollar value of all such deposit accounts does not exceed 5%
of the dollar value of all unrestricted cash of Borrower and its Domestic
Subsidiaries; and


 


(l)            Investments of
Borrower after the Effective Date (i) in Subsidiaries existing on the
Effective Date not to exceed $1,000,000.00 in the aggregate and (ii) in
the Special Subsidiary consisting solely of the ownership of the capital stock
of the Special Subsidiary.


 


“Permitted Liens”
are:


 


(a)           Liens existing on the
Effective Date and shown on the Perfection Certificate or arising under this
Agreement and the other Loan Documents;


 


(b)           Liens for taxes, fees,
assessments or other government charges or levies, either not delinquent or
being contested in good faith and for which Borrower maintains adequate
reserves on its Books, provided that no notice of any such Lien has been
filed or recorded under the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations adopted thereunder;


 


(c)           purchase
money Liens (i) on Equipment acquired or held by Borrower incurred for
financing the acquisition of the Equipment securing no more than $1,000,000 in
the aggregate amount outstanding, or (ii) existing on Equipment when
acquired, if the Lien is confined to the property and improvements and
the proceeds of the Equipment;


 


(d)           Liens incurred in the
extension, renewal or refinancing of the indebtedness secured by Liens described
in (a) through (c), but any extension, renewal or replacement Lien
must be limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness may not increase;


 


(e)           leases or subleases of
real property granted in the ordinary course of business, and leases,
subleases, non-exclusive licenses or sublicenses of property (other than real
property or intellectual property) granted in the ordinary course of Borrower’s
business, if such leases, subleases, licenses and sublicenses do not
prohibit granting Bank a security interest;


 


31

















 


(f)            non-exclusive license
of intellectual property granted to third parties in the ordinary course of
business;


 


(g)           the SEN License;


 


(h)           Liens securing the Real
Estate Financing provided that the Lien is limited to a mortgage Lien
encumbering the Headquarters Location and related fixtures; and


 


(i)            Liens arising from
attachments or judgments, orders, or decrees in circumstances not constituting
an Event of Default under Sections 8.4 and 8.7.


 


“Person” is any
individual, sole proprietorship, partnership, limited liability company, joint
venture, company, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate,
entity or government agency.


 


“Pledge Agreement(s)”
those certain Pledge Agreements executed and delivered by Borrower and Fusion
Technology International, Inc. in favor of Bank.


 


“Prime Rate” is
the greater of (i) four percent (4.00%) and (ii) Bank’s most recently
announced “prime rate,” even if it is not Bank’s lowest rate.


 


“Quick Assets”
is, on any date, Borrower’s and its Subsidiaries’ consolidated world-wide cash
and Cash Equivalents, Accounts, and investments with Bank with maturities of
fewer than 12 months determined according to GAAP.


 


“Real Estate Financing”
is a mortgage loan financing transaction between Borrower or the Special
Subsidiary and an unaffiliated third-party lender whereby such unaffiliated third-party
lender provides real estate financing secured solely by a mortgage Lien on the
Headquarters Location and related fixtures.


 


“Registered Organization”
is any “registered organization” as defined in the Code with such additions to
such term as may hereafter be made


 


“Requirement
of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.


 


“Reserves”
means, as of any date of determination, upon notice to and after consultation
with Borrower,  such amounts as Bank may
reasonably from time to time establish and revise in its good faith business
judgment, reducing the amount of Advances and other financial accommodations
which would otherwise be available to Borrower to reflect events, conditions,
contingencies or risks which, as determined by Bank in its good faith business
judgment, do or may adversely affect in any material way (i) the assets,
business or prospects of Borrower or any Guarantor, or (ii) the security
interests and other rights of Bank in the Collateral (including the
enforceability, perfection and priority thereof).


 


“Responsible Officer”
is any of the Chief Executive Officer, President, Chief Financial Officer and
General Counsel.


 


“Restricted License”
is any material license or other agreement, excluding the SEN License, with
respect to which Borrower is the licensee (a) that prohibits or otherwise
restricts Borrower from granting a security interest in Borrower’s interest in
such license or agreement or any other property, or (b) for which a
default under or termination of could interfere with the Bank’s right to sell
any Collateral.


 


“Revolving
Line” is an Advance or Advances (including, without limitation,
Advances made pursuant to the Export-Import Agreement) in an amount equal to
Twenty Million Dollars ($20,000,000).


 


32

















 


“Revolving Line Maturity Date”
is March 11, 2011.


 


“Securities Account”
is any “securities account” as defined in the Code with such additions to such
term as may hereafter be made.


 


“SEN” means SEN
Corporation, a Japanese company.


 


“SEN License”
means that certain License Agreement dated March 30, 2009 by and between
the Borrower and SEN.


 


“Settlement Date”  is defined in Section 2.1.3.


 


“Special Subsidiary”
is a Subsidiary of Borrower formed and operated as a special purpose entity for
the sole purposes of (i) owning the Headquarters Location, (ii) entering
into the Real Estate Financing and (iii) leasing the Headquarters Location
to Borrower.


 


“Subordinated Debt”
is indebtedness incurred by Borrower subordinated to all of Borrower’s now or
hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or
other similar agreement in form and substance satisfactory to Bank entered into
between Bank and the other creditor), on terms acceptable to Bank.


 


“Subsidiary”
means, with respect to any Person, any Person of which more than 50.0% of the
voting stock or other equity interests (in the case of Persons other than
corporations) is owned or controlled directly or indirectly by such Person or
one or more of Affiliates of such Person.


 


“Total Liabilities”
is on any day, obligations that should, under GAAP, be classified as
liabilities on the consolidated balance sheet of Borrower and its Subsidiaries,
including all Indebtedness, but excluding all other Subordinated Debt.


 


“Transaction Report”
is that certain report of transactions and schedule of collections in the form
attached hereto as Exhibit C.


 


“Transfer” is
defined in Section 7.1.


 


“Unused Line Fee Percentage”
is one and seven-eighths percent (1.875%).


 


“Unused Revolving Line
Facility Fee” is defined in Section 2.4(d).


 


[Signature page follows.]


 


33

















 


IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the Effective Date.


 


BORROWER:


 


AXCELIS TECHNOLOGIES, INC.


 


 


	
  By:

  	
  /s/ Mary G. Puma

  	
   

  
	
   

  	
  Mary G. Puma,
  President

  	
   

  



 


 


AXCELIS TECHNOLOGIES CCS CORPORATION


 


 


	
  By:

  	
  /s/ Mary G. Puma

  	
   

  
	
   

  	
  Mary G. Puma,
  President

  	
   

  



 


 


BANK:


 


SILICON VALLEY BANK


 


	
  By

  	
  /s/
  Mark Sperling

  	
   

  
	
  Name:
  Mark Sperling

  	
   

  
	
  Title: Vice President

  	
   

  



 


 


Effective Date: March 12,
2010


 


1

















 


EXHIBIT A – COLLATERAL DESCRIPTION


 


The Collateral consists
of all of Borrower’s right, title and interest in and to the following personal
property:


 


All goods, Accounts, Equipment, Inventory, contract
rights or rights to payment of money, leases, license agreements, franchise
agreements, General Intangibles, commercial tort claims, documents, instruments
(including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, letters of credit rights (whether or not
the letter of credit is evidenced by a writing), securities, and all other
investment property, supporting obligations, and financial assets, whether now
owned or hereafter acquired, wherever located; and


 


all Borrower’s Books relating to the foregoing, and
any and all claims, rights and interests in any of the above and all
substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of
any or all of the foregoing.


 


Notwithstanding the foregoing,
the “Collateral” does not include more than 66% of the presently existing and
hereafter arising issued and outstanding shares of capital stock owned by
Borrower of any Foreign Subsidiary which shares entitle the holder thereof to
vote for directors or any other matter.


 


The security interest granted by Debtor to Secured
Party in the Axcelis Licensed Intellectual Property (as defined in the SEN
License) is subject to the license granted to SEN Corporation pursuant to the
terms of the SEN License in accordance with that certain Consent and
Agreement dated as of March 30, 2009 among the Debtor, the Secured Party,
SEN Corporation and others.


 


1
















 


EXHIBIT B - COMPLIANCE CERTIFICATE


 


	
  TO:

  	
   

  	
  SILICON VALLEY BANK

  	
  Date:

  	
   

  
	
  FROM:

  	
   

  	
  Axcelis Technologies, Inc. and Axcelis Technologies CCS Corporation

  	
   

  	
   

  



 


The undersigned authorized officer of Axcelis
Technologies, Inc. and Axcelis Technologies CCS Corporation (“Borrower”)
certifies that under the terms and conditions of the Loan and Security
Agreement between, inter alia, Borrower and Bank (the “Agreement”), (1) Borrower
is in complete compliance for the period ending
                              
with all required covenants except as noted below, (2) there are no Events
of Default, (3) all representations and warranties in the Agreement are
true and correct in all material respects on this date except as noted below;
provided, however, that such materiality qualifier shall not be applicable to
any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be true,
accurate and complete in all material respects as of such date, (4) Borrower,
and each of its Domestic Subsidiaries, has timely filed all required tax
returns and reports, and Borrower has timely paid all foreign, federal, state
and local taxes, assessments, deposits and contributions owed by Borrower
except as otherwise permitted pursuant to the terms of Section 5.9 of the
Agreement, and (5) no Liens have been levied or claims made against
Borrower or any of its Domestic Subsidiaries relating to unpaid employee
payroll or benefits of which Borrower has not previously provided written
notification to Bank.  Attached are the
required documents supporting the certification.  The undersigned certifies that these are
prepared in accordance with GAAP consistently applied from one period to the
next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no
borrowings may be requested at any time or date of determination that Borrower
is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is
delivered.  Capitalized terms used but
not otherwise defined herein shall have the meanings given them in the Agreement.


 


Please indicate compliance status
by circling Yes/No under “Complies” column.


 


	
  Reporting
  Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly consolidated
  and consolidating and financial statements with Compliance Certificate

  	
   

  	
  Quarterly within 45
  days

  	
   

  	
  Yes   No

  
	
  Annual financial
  statement (CPA Audited) + CC

  	
   

  	
  FYE within 120 days

  	
   

  	
  Yes   No

  
	
  10-Q, 10-K and 8-K

  	
   

  	
  Within 10 days after
  filing with SEC

  	
   

  	
  Yes   No

  
	
  A/R & A/P
  Agings (including EXIM), Inventory reports

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes   No

  
	
  Transaction Report 

  	
   

  	
  Monthly within 30 days
  (bi-weekly if borrowing)

  	
   

  	
  Yes   No

  
	
  Monthly consolidated
  financial statements

  	
   

  	
  Monthly within 45 days
  (if borrowing)

  	
   

  	
  Yes   No

  



 


The following
Intellectual Property was registered (or a registration application submitted)
after the Effective Date (if no registrations, state “None”)


 


 


	
  Financial
  Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain, tested on a
  quarterly (unless otherwise indicated) basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Adjusted Quick Ratio,
  at all times (tested quarterly )

  	
   

  	
  1.5:1.0

  	
   

  	
     :1.0

  	
   

  	
  Yes   No

  
	
  Maximum Net Losses, as
  of the last day of each quarter

  	
   

  	
  (i) $13,000,000
  for the fiscal quarter ending March 31, 2010; (ii) $8,500,000 for
  the fiscal quarter ending June 30, 2010; (iii) $8,500,000 for the
  fiscal quarter ending September 30, 2010; and (iv) $5,000,000 for
  the fiscal quarter ending December 

  	
   

  	
  $

  	
   

  	
  Yes   No

  



 


1

















 


	
   

  	
   

  	
  31, 2010 and each
  fiscal quarter thereafter

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Liquidity (at all
  times)

  	
   

  	
  $30,000,000

  	
   

  	
  $

  	
   

  	
  Yes   No

  



 


The
following financial covenant analys[is][es] and information set forth in
Schedule 1 attached hereto are true and accurate as of the date of this
Certificate.


 


2

















 


Schedule
2 attached hereto sets forth all applications for any patent or the
registration of any trademark or servicemark made by Borrower since the date of
the last Compliance Certificate delivered to Bank.


 


The
following are the exceptions with respect to the certification above:  (If no exceptions exist, state “No exceptions
to note.”)


 


 


 


	
  AXCELIS TECHNOLOGIES, INC.

  	
   

  	
  BANK
  USE ONLY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Received
  by:

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
  Name:

  	
   

  	
   

  	
  Date:

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Verified:

  	
   

  
	
  AXCELIS TECHNOLOGIES CCS CORPORATION

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  Compliance
  Status: 

  	
  Yes     No

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
						



 


3

















 


Schedule 1 to Compliance Certificate


 


Financial Covenants of Borrower


 


In the
event of a conflict between this Schedule and the Loan Agreement, the terms of
the Loan Agreement shall govern.


 


Dated:
                                   


 


I.              Adjusted Quick Ratio
(Section 6.9(a))


 


	
  Required:

  	
  1.5:1.0

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Actual:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


 


	
  A.

  	
   

  	
  World-wide consolidated
  Unrestricted cash and Cash Equivalents

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Accounts

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Investments at Bank

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Quick Assets (line A
  plus line B plus line C)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Aggregate
  value of Obligations to Bank (other than cash secured obligations)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Aggregate
  value of liabilities of Borrower and its Subsidiaries (including all
  Indebtedness) that matures within one (1) year

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G.

  	
   

  	
  Deferred
  Revenue

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  Current
  Liabilities (the sum of lines E and F, minus line G)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
   

  	
  Quick
  Ratio (line D divided by line H)

  	
   

  	
   

  	
   

  



 


Is
line I equal to or greater than 1.50:1:00?


 


	
   

  	
   

  	
  o No, not in compliance

  	
  o Yes, in compliance

  	
   

  	
   

  	
   

  



 


II.            Maximum Net Losses
(Section 6.9(b))


 


	
  Required:

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Actual:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  A.

  	
   

  	
  Aggregate value of
  Borrower losses

  	
   

  	
  $             

  	
   

  



 


Is line A less than or
equal to $        ?


 


	
   

  	
   

  	
  o No, not in compliance

  	
  o Yes, in compliance

  	
   

  	
   

  	
   

  



 


II.            Liquidity (Section 6.9(c))


 


	
  Required:

  	
  $30,000,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Actual:

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  A.

  	
   

  	
  Aggregate Cash and Cash
  Equivalents at Bank

  	
   

  	
  $             

  	
   

  



 


4

















 


	
  B.

  	
   

  	
  Availability Amount

  	
   

  	
  $             

  	
   

  
	
  C.

  	
   

  	
  Liquidity (the sum of
  lines A and B)

  	
   

  	
  $             

  	
   

  



 


Is line C less than or
equal to $30,000,000?


 


	
   

  	
   

  	
  o No, not in compliance

  	
  o Yes, in compliance

  	
   

  	
   

  	
   

  



 


5

















 


Schedule 2 to Compliance Certificate


 


Additional Patents and Trademarks


 


6

















 


EXHIBIT C — TRANSACTION REPORT


 


7

















 


Schedule 6.8(b)


 


	
  Institution Name

  	
   

  	
  Account Number (if applicable)
  / Maximum Amount

  
	
   

  	
   

  	
   

  
	
  Beverly
  National Bank

  	
   

  	
  2-8000171-20;
  Amount not to exceed $30,000

  
	
   

  	
   

  	
   

  
	
  Bank
  of America, N.A.

  	
   

  	
  400923.1;
  Amount (value) not to exceed $2,000

  
	
   

  	
   

  	
   

  
	
  United
  States Patent and Trademark Office

  	
   

  	
  Amount
  not to exceed $85,000 (used solely for the payment of various fees to USPTO)

  



 


8

















 


Schedule 7.2


 


	
  1.

  	
  Matrix Europe, N.V. (Belgium)

  
	
  2.

  	
  Axcelis Technologies,
  B.V. (Netherlands)

  



 


9