Document:

Exhibit 10.1

 

EXECUTION VERSION

 

LOAN
AND SECURITY AGREEMENT

 

THIS 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.  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 hereunder 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, Bank shall issue or have issued 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. The face amount of outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit and any
Letter of Credit Reserve) may not exceed Ten Million Dollars ($10,000,000.00) 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, 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, 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 One Million Dollars ($1,000,000.00)
(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 Ten Million Dollars ($10,000,000.00) 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 Contract 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.

 

2.3                               Payment
of Interest on the Credit Extensions.

 

(a)                                  Interest
Rate; Advances.  Each Advance
shall bear interest on the outstanding principal amount thereof from the date
when made, continued or converted until paid in full at a rate per annum equal
to either (i) the Prime Rate plus the Prime Rate Margin (as such
term is defined in the LIBOR Supplement) or (ii) the LIBOR Rate plus
the LIBOR Rate Margin (as such term is defined in the LIBOR Supplement).  On and after the expiration of any Interest
Period (as such term is defined in the LIBOR Supplement) applicable to any
LIBOR Advance outstanding on the date of occurrence of an Event of Default or
acceleration of the Obligations, the Effective Amount of such LIBOR Advance
shall, during the continuance of such Event of Default or after acceleration,
bear

 

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interest at a rate per annum equal to aggregate of the
Prime Rate plus the Prime Rate Margin plus the Default Rate.  Pursuant to the terms hereof, interest on
each Advance shall be paid in arrears on each Interest Payment Date (as such term
is defined in the LIBOR Supplement). 
Interest shall also be paid on the date of any prepayment of any Advance
pursuant to the Loan Agreement for the portion of any Advance so prepaid and
upon payment (including prepayment) in full thereof.  All accrued but unpaid interest on the
Advances shall be due and payable on the Revolving Line Maturity Date.

 

(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”). 
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)                                  Prime
Rate Advances.  Each change in the
interest rate of the Prime Rate Advances based on changes in the Prime Rate
shall be effective on the effective date of such change and to the extent of
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 of
the Prime Rate Advances based on changes in the Prime Rate.

 

(d)                                 LIBOR
Advances. The interest rate applicable to each LIBOR Advance shall be
determined in accordance with Section 5.1 of the LIBOR Supplement.  Subject to Sections 5 and 6 of the LIBOR
Supplement, such rate shall apply during the entire Interest Period applicable
to such LIBOR Advance, and interest calculated thereon shall be payable on the
Interest Payment Date applicable to such LIBOR Advance.

 

(e)                                  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.

 

(f)                                    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.

 

(g)                                 Payments.
Payments of principal and/or interest received after 12:00 noon 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 is due the next Business Day and additional
fees or interest, as applicable, shall continue to accrue..

 

2.4                               Fees.  Borrower shall pay to Bank:

 

(a)                                  Commitment
Fee.  A fully earned, non refundable
commitment fee of $500,000.00 (receipt of which Bank hereby acknowledges); 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 the average unused portion of the
Total Commitment, as reasonably determined by Bank.  The
unused portion of the Total Commitment, for the purposes of this calculation,
shall include amounts reserved under the Cash Management

 

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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.

 

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)                                 either
(i) an Acknowledgement/Ratification duly executed by the Trustee under the
Indenture in favor of Bank confirming that the Obligations constitute “Designated
Senior Indebtedness” as defined in the Indenture or (ii) evidence that
Borrower’s indebtedness under the Convertible Senior Subordinated Notes has
been or, upon the application of the proceeds of the initial Credit Extension
to be made hereunder will be, satisfied in full and that the Indenture has been
terminated; provided  that, in order to satisfy this subsection
3.1(d) by compliance with clause (ii) hereof then, after giving
effect to such initial Credit Extension (x) no Default or Event of Default
shall then exist and (y) Borrower shall have provided evidence
satisfactory to Bank that it shall remain in pro forma compliance with the
financial covenants set forth in Section 6.9 at all times during the
ninety (90) day period following the date of the initial Credit Extension;

 

(e)                                  a
payoff letter or some other evidence of the termination of that certain
Revolving Credit Agreement, dated as of October 3, 2003, by and among
Axcelis Technologies, Inc. the financial institutions party thereto and
ABN Amro Bank, N.V., as agent;

 

(f)                                    evidence
that (i) the Liens securing Indebtedness owed by Borrower to ABN Amro
Bank, N.V., as agent and The Equitable-Crow Braker Center Austin Company have
been or will be terminated and (ii) the documents and/or filings
evidencing the perfection of such Liens, including without limitation any
financing statements and/or control agreements, have or will, concurrently with
the initial Credit Extension, be terminated.

 

(g)                                 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;

 

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

 

(i)                                     a
landlords’ consent executed by the landlords of Borrower’s 33 Cherry Hill
Drive, Beverly, Massachusetts and 54 Cherry Hill Drive, Beverly, Massachusetts
locations in favor of Bank;

 

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

 

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

 

(l)                                     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

 

(m)                               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)                                  except
as otherwise provided in Section 3 of the LIBOR Supplement, (i) for
Advances, timely receipt of a completed and executed Notice of Borrowing and, (ii) for
any other Credit Extension, 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
Notice of Borrowing 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.  In addition to and
supplemental of the requirements set forth in Section 3 of the LIBOR
Supplement, 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).  If Borrower shall acquire a commercial tort
claim,

 

5

 

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.

 

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.

 

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. is the sole owner of
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 is presumed 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 bound by, any material license or other
agreement 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.  Borrower shall
provide written notice to Bank within thirty (30) days of entering or becoming
bound by any such license or agreement (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 (x) all
such licenses or agreements 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 license or agreement, whether now existing or
entered into in the future, and (y) 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.

 

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 consisting of Eligible Inventory in any Transaction
Report, such Inventory (i) consists either of raw materials, or of
finished goods, in good, new, and salable condition, which is not perishable,
returned, consigned, obsolete, not sellable, damaged, or defective, and is not
comprised of demonstrative or custom inventory, works in progress, packaging or
shipping materials, or supplies; (ii) meets all applicable governmental
standards; (iii) has been manufactured in compliance with the Fair Labor
Standards Act; (iv) is not subject to any Liens, except the first priority
Liens granted or in favor of Bank under this Agreement or any of the other Loan
Documents or Permitted Liens; and (v) is located at Borrower’s 108 Cherry
Hill Drive, Beverly, Massachusetts location owned by Borrower or, provided that
Bank has received landlord’s waivers in form and substance reasonably
satisfactory to Bank, at Borrower’s 33 Cherry Hill Drive, Beverly,
Massachusetts and 54 Cherry Hill Drive, Beverly, Massachusetts locations.  In addition, in the event the Sale and
Leaseback Transaction occurs, Borrower shall concurrently therewith furnish
Bank the waiver and agreement required by Section 7.1 which

 

7

 

shall include, inter alia, a landlord’s waiver
reasonably satisfactory to Bank with respect to Borrower’s 108 Cherry Hill
Drive, Beverly, Massachusetts location.

 

5.4                               Litigation.  As of the Effective Date, except as disclosed
to Bank in writing, 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 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.

 

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 has timely
filed all required tax returns and reports, and has 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

 

8

 

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” under the terms
of the Indenture and any similar agreement.

 

5.13                        Specific
Representation Regarding Matrix Integrated Systems Acquisition Corporation.  The sole assets of Matrix Integrated Systems
Acquisition Corporation, a wholly-owned Subsidiary of Axcelis Technologies, Inc.,
consist of (a) tangible assets having an aggregate fair market value of
not more than $50,000.00, (b) goodwill and (c) intellectual property
which is immaterial to the business of the Borrower and/or its Subsidiaries.

 

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 (aged by invoice date),
transaction reports and general ledger, and (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;

 

(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;

 

9

 

(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 (in a manner reasonably
satisfactory to Bank) basis;

 

(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 (in a manner
reasonably satisfactory to Bank) basis; and

 

(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 (in a manner reasonably
satisfactory to Bank)  basis, certified
by, and with an unqualified opinion of, independent certified public
accountants acceptable to Bank.

 

(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)                                  Prompt
written notice of (i) any material change in the composition of the
intellectual property or (ii) Borrower’s knowledge of an event that
materially adversely affects the value of the intellectual property.

 

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
lesser of the Revolving Line or the Borrowing Base.

 

(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 proceeds of Accounts shall be deposited
by Borrower into a lockbox account, or such other “blocked account” as Bank may
specify, pursuant to a blocked account agreement in such form as Bank may
specify; provided, however, in the event (i) Borrower
maintains or exceeds $50,000,000 in (A) Borrower’s unrestricted cash plus
Cash Equivalents on deposit at Bank plus (B) unused availability under the
Revolving Line, as determined by Bank with reference to the Availability Amount
and (ii) no Default or Event of Default has occurred and is continuing,
then all payments on, and proceeds of, Accounts shall be transferred by Bank to
an operating account of Borrower maintained at Bank.

 

10

 

(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, 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 $750 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 two (2) 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 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 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 

 

11

 

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
(i) not less than 60% of the dollar value of all Unrestricted Cash of Borrower
and its Subsidiaries with banks or financial institutions located within the
United States; and (ii) Borrower’s and its Domestic Subsidiaries’ primary
operating accounts, disbursement accounts, and other deposit accounts and
securities accounts with Bank and Bank’s Affiliates, which accounts shall
represent at least 51% of the dollar value of all of Borrower’s and its
Subsidiaries’ operating and other deposit accounts and securities accounts at
all banks or financial institutions.

 

(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.  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, or to the Borrower’s
pledged time deposit maintained with ABN Amro Bank to secure the letters of credit 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 the amounts on deposit in such Collateral Accounts shall not exceed the
maximum amounts indicated on Schedule 6.8(b).

 

(c)           Notwithstanding
(i) the requirement in Section 6.8(a) that all of Borrower’s and
its Domestic Subsidiaries’ primary operating accounts, disbursement accounts,
and other deposit accounts and securities accounts be maintained with Bank and
Bank’s Affiliates; or (ii) the requirement in Section 6.8(b) that
Borrower shall cause any bank or financial institution (other than Bank) at or
with which any 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; Bank
agrees that Borrower shall have ninety (90) days from the Effective Date (or
such longer period as Bank may agree to in writing) to close all of Borrower’s
and its Domestic Subsidiaries’ primary operating accounts, disbursement
accounts, and other deposit accounts and securities accounts located with banks
or financial institutions other than Bank and Bank’s Affiliates; provided,
however, that with respect to Account No. 5800355702 maintained
with LaSalle Bank (the “Existing Lockbox Account”),
Borrower shall cause such account to be closed within 120 days from the
Effective Date (or such longer period as Bank may agree to in writing) provided
that, at all times prior to such closure, Borrower shall cause all deposits in
the Existing Lockbox Account to be swept on a daily basis and deposited into a
lockbox account, or such other “blocked account”, maintained with Bank; provided
further, that at all times from and after the Effective Date, Borrower
shall maintain sufficient deposits with Bank and Bank’s Affiliates to comply
with the minimum dollar value requirements set forth in clauses (i) and (ii) of
Section 6.8(a).

 

6.9          Financial Covenants.

 

(a)           Liquidity.  (i) At all times until Borrower
furnishes Bank with evidence satisfactory to Bank that Borrower, on a
consolidated basis, has achieved Net Income of at least $1.00 for two
consecutive fiscal quarters, Borrower shall maintain the greater of (A) $50,000,000
or (B) two times (2x) the amount of all outstanding Credit 

 

12

 

Extensions (including all amounts outstanding under
the Receivables Purchase Facility), of (x) unrestricted cash and Cash
Equivalents at Bank plus (y) unused availability under the Revolving Line,
as determined by Bank with reference to the Availability Amount set forth
herein; and (ii) at all times thereafter, Borrower shall maintain at least
$40,000,000 of (A) unrestricted cash and Cash Equivalents at Bank plus (B) unused
availability under the Revolving Line, as determined by Bank with reference to
the Availability Amount set forth herein; provided  that, in no
event shall the minimum liquidity covenant be reduced to $40,000,000 until
after such time as the Convertible Senior Subordinated Notes have been
satisfied in full and the Indenture has been terminated.

 

(b)           Maximum Losses.  As of the last day of each applicable fiscal
quarter, on a consolidated basis, Borrower shall not suffer any loss in excess
of: (i) $17,500,000 for the fiscal quarter ended March 31, 2008; (ii) $7,500,000
for the fiscal quarter ended June 30, 2008; and (iii) $2,500,000 for
the fiscal quarter ended September 30, 2008.

 

(c)           Profitability.  As of the last day of each applicable fiscal
quarter, on a consolidated basis, Borrower shall maintain a minimum positive
Net Income of $1 for each fiscal quarter following the fiscal quarter ended September 30,
2008.

 

6.10        Protection
and Registration of Intellectual Property Rights.  Borrower shall: (a) protect, defend and
maintain the validity and enforceability of its material intellectual property;
(b) promptly advise Bank in writing of material infringements of its
intellectual property; and (c) 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 (i) 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 (ii) 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.

 

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 accrued or due under this Agreement
as “Designated Senior Indebtedness”, or such similar term, in any future 

 

13

 

Subordinated Debt
incurred by Borrower after the date hereof, if such Subordinated Debt contains
such term or similar term and if the effect of such designation is to grant to
Bank the same or similar rights as granted to Bank as a holder of “Designated
Senior Indebtedness” under the Indenture and any similar agreement.

 

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) in the event no Default or Event of
Default has occurred and is continuing, the Sale Leaseback Transaction, provided
that (i) not less than seventy-five percent (75%) of the proceeds of
the Sale Leaseback Transaction shall be maintained at Bank at all times,
provided, however, subject to the terms of Section 7.9, such proceeds may
be used to retire Borrower’s indebtedness under the Convertible Senior
Subordinated Notes and (ii) Borrower shall have received a waiver and
agreement from the buyer/lessor under the Sale Leaseback Transaction in form
and substance annexed hereto as Exhibit 7.1.  Concurrently with the consummation of the
Sale Leaseback Transaction in accordance with the forgoing, Bank shall provide
a discharge of the Negative Pledge.

 

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.

 

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 

 

14

 

(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 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.  (a) 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;
provided, however, Borrower acknowledges and agrees that no payments will be
made on account of the Convertible Senior Subordinated Notes in the event any
Default or Event of Default then exists or would occur after giving effect to
any such payment having been made, or (b) 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 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;

 

15

 

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 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; or

 

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.

 

16

 

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;

 

(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;

 

(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 

 

17

 

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.

 

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.

 

10           NOTICES

 

All notices, consents,
requests, approvals, demands, or other communication by any party to this
Agreement or any other Loan Document must be in writing and 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,
first class, registered or certified mail return receipt requested, with proper
postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (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, facsimile number, or email
address indicated below.  Bank or
Borrower may change its mailing or electronic mail address or facsimile number
by giving the other party written notice thereof in accordance with the terms
of this Section 10.

 

18

 

	
  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

  
	
   

  	
   

  
	
  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: Michael Tramack

  
	
   

  	
  Fax: 617.969.5478

  
	
   

  	
  Email: mtramack@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.

 

19

 

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.

 

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; provided that the Receivables Purchase
Facility shall automatically, without further action, terminate upon the
termination of this Agreement. 
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, 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 (i) two
percent (2%) of the Total Commitment if such termination occurs on or prior to
the first anniversary of the Effective Date, and (ii) one percent (1%) of
the Total Commitment if such termination occurs after the first anniversary of
the Effective Date but prior to the second anniversary of the Effective Date.

 

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”) asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or
Bank Expenses incurred, or paid by such Indemnified Person from, following, 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.

 

20

 

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; Integration.  All amendments to this Agreement must be in
writing and signed by both Bank and Borrower. 
This Agreement and 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 this Agreement and the Loan Documents merge into this
Agreement and 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.

 

13           DEFINITIONS

 

13.1        Definitions.  As used in this Agreement, the following
terms have the following meanings:

 

“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.  For avoidance of
doubt, Borrower and Bank agree that SEN Corporation, an SHI and Axcelis
Company, is not an Affiliate hereunder.

 

“Agreement” is
defined in the preamble hereof.

 

21

 

“Availability Amount”
is (a) the lesser of (i) the Revolving Line 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.

 

“Bank” is
defined in the preamble hereof.

 

“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.

 

“Bankruptcy-Related
Defaults” is defined in Section 9.1.

 

“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, without duplication, the sum of the following: (a) 80% of Eligible
Accounts, plus (b) 80% of Eligible Foreign L/C Accounts, plus (c) 65%
of Eligible Foreign Accounts, plus (d) the lesser of 25% of the value of
Borrower’s Eligible Inventory (valued at the lower of cost or wholesale fair
market value) or $5,000,000, but in no event shall amounts advanced against
Eligible Inventory exceed 25% of the aggregate Credit Extensions, all 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 percentages and
amount 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 a LIBOR Advance, the term “Business Day” shall
also mean a day on which dealings are carried on in the London interbank
market, and 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.

 

22

 

“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 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.

 

“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.

 

“Convertible Senior Subordinated Notes”
are the 4.25% Senior Subordinated Notes due 2009 issued under the Indenture in
the approximate amount of $75,000,000 as of the Effective Date.

 

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

 

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

 

23

 

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

 

“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.

 

“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, including, without
limitation, SEN Corporation, an SHI and Axcelis Company), 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;

 

24

 

(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);

 

(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)           [Intentionally omitted]

 

(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 Foreign Accounts”
are Accounts for which the Account Debtor does not have its principal place of
business in the United States and do not satisfy the criteria of clauses (c) and
(d) of the definition of Eligible Accounts, but which are otherwise
Eligible Accounts but do not constitute Eligible Foreign L/C Accounts, and
which Bank has, on a case-by-case basis in its sole discretion, approved in
writing.

 

“Eligible Foreign L/C
Accounts” are Accounts for which the Account Debtor does not have
its principal place of business in the United States and do not satisfy the
criteria of clauses (c) and (d) of the definition of Eligible
Accounts, but which are otherwise Eligible Accounts, and which Accounts are
supported by letter(s) of credit acceptable to Bank, as determined on a
case-by-case basis in its sole discretion.

 

25

 

“Eligible Inventory”
means Inventory that meets all of Borrower’s representations and warranties in Section 5.3
and is otherwise acceptable to Bank in all respects.

 

“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.

 

“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 all present or future Domestic Subsidiaries (with the exception of
Matrix Integrated Systems Acquisition Corporation).

 

26

 

“Guarantor Security
Agreement(s)”  is each
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.

 

“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 12.3.

 

“Indenture” is that certain
Indenture dated as of May 2, 2006 entered into between Axcelis
Technologies, Inc. and U.S. Bank National Association, as Trustee, as
supplemented from time to time.

 

“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 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).

 

“LIBOR Supplement”
means the LIBOR Supplement attached hereto as Exhibit D and
specifically incorporated by reference herein.

 

“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 Negative Pledge, 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.

 

“Negative Pledge”
is that certain Negative Pledge Agreement executed and delivered by Borrower
and Guarantors to Bank of even date herewith.

 

27

 

“Net Income”
means, as calculated on a consolidated basis for Borrower and its Subsidiaries
for any period as at any date of determination, the net profit (or loss), after
provision for taxes, of Borrower and its Domestic Subsidiaries for such period
taken as a single accounting period.

 

“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 Loan Documents, the Receivables Purchase Facility 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.

 

“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;

 

(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) any
Subsidiary to any Borrower, 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; 
and

 

(g)           extensions, refinancings,
modifications, amendments and restatements of any items of Permitted
Indebtedness (a) through (d) 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;

 

28

 

(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)           Investments of Borrower and its
Subsidiaries consisting of deposit accounts held with foreign financial
institutions; provided, that the aggregate dollar value of all such
deposit accounts does not exceed 40% of the dollar value of all Unrestricted
Cash of Borrower and its Subsidiaries; and

 

(l)            Investments of Borrower in
Subsidiaries not to exceed $1,000,000.00 in the aggregate.

 

“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;

 

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

 

29

 

(g)           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) five and one-half percent (5.50%) and (ii) Bank’s
most recently announced “prime rate,” even if it is not Bank’s lowest rate.

 

“Receivables Purchase
Facility” is that certain Non-Recourse Receivables Purchase
Agreement of even date herewith among Borrower (as Seller) and Bank (as Buyer),
as amended, modified, restated or replaced from time to time.

 

“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
Controller of Borrower.

 

“Revolving Line”
is the Total Commitment minus the then aggregate outstanding loans,
advances and other extensions of credit made by Bank under the Receivables
Purchase Facility.

 

“Revolving Line Maturity Date”
is April 23, 2010.

 

“Sale Leaseback Transaction” is
a sale and leaseback transaction (excluding any Equipment) relating to Borrower’s
corporate headquarters and manufacturing facility located at 108 Cherry Hill
Drive, Beverly, Massachusetts, pursuant to an arms-length transaction.

 

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

 

“Settlement Date”  is defined in Section 2.1.3.

 

“Subordinated Debt”
is (i) the Convertible Senior Subordinated Notes and (ii) 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.

 

30

 

“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. 
For the avoidance of doubt, Borrower and Bank agree that SEN
Corporation, an SHI and Axcelis Company is not a Subsidiary.

 

“Total Commitment”
is Fifty Million Dollars ($50,000,000.00).

 

“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 (i) at such times as Borrower’s
unrestricted cash plus Cash Equivalents at Bank are equal to or less than Fifty
Million ($50,000,000), 0.95% and (ii) at such times as Borrower’s
unrestricted cash plus Cash Equivalents at Bank are greater than Fifty Million
($50,000,000), 0.70%.

 

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

 

[Signature page follows.]

 

31

 

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/ Stephen G. Bassett

  	
   

  
	
  Name:

  	
  Stephen G. Bassett

  
	
  Title:

  	
  Chief Financial Officer
  and Executive Vice President

  
	
   

  	
   

  
	
  AXCELIS TECHNOLOGIES CCS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Stephen G. Bassett

  	
   

  
	
  Name:

  	
  Stephen G. Bassett

  
	
  Title:

  	
  Chief Financial Officer
  and Executive Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  BANK:

  
	
   

  	
   

  
	
  SILICON VALLEY BANK

  
	
   

  	
   

  
	
  By

  	
  /s/ Michael Tramack

  	
   

  
	
  Name:

  	
  Michael Tramack

  
	
  Title:

  	
  Senior Vice President

  
				

 

 

Effective Date: April 23,
2008

 

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 (i) 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 and (ii) any of Borrower’s
rights, title and interest in SEN Corporation, an SHI and Axcelis Company.

 

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 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

  	
   

  
	
  Transaction Report, A/R & A/P Agings,
  Inventory reports

  	
   

  	
  Monthly
  within 30 days

  	
   

  	
  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:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Liquidity, at all times

  	
   

  	
  >
  $             million

  	
   

  	
  $                

  	
   

  	
  Yes    No

  	
   

  
	
  Profitability, as of the last day of each
  quarter

  	
   

  	
  $                

  	
   

  	
  $                

  	
   

  	
  Yes    No

  	
   

  
	
  Maximum Losses, as of the last day of each
  quarter

  	
   

  	
  $                

  	
   

  	
  $                

  	
   

  	
  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.

 

1

 

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:

  	
   

  	
   

  	
   

  
													

 

2

 

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.

  	
  Liquidity (Section 6.9(a))

  	
   

  
	
   

  	
   

  	
   

  
	
  Required:

  	
   

  	
  $                   

  	
   

  
	
   

  	
   

  	
   

  
	
  Actual:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  A.

  	
  Unrestricted cash and Cash
  Equivalents

  	
  $

  
	
   

  	
   

  	
   

  
	
  B.

  	
  Unused availability under
  the Revolving Line, as determined by Bank with reference to the

  Availability Amount

  	
  $

  
	
   

  	
   

  	
   

  
	
  C.

  	
  Liquidity (line A plus
  line B)

  	
  $

  
	
   

  	
   

  	
   

  
	
  Is line C equal to or
  greater than required amount [$50 million] or [$40 million]?

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  No, not in compliance

  	
   

  	
  Yes, in compliance

  	
   

  
	
   

  	
   

  	
   

  
	
  II.

  	
  Maximum Losses (Section 6.9(b))

  	
   

  
	
   

  	
   

  	
   

  
	
  Required:

  	
                  $              

  	
   

  
	
   

  	
   

  	
   

  
	
  Actual:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  A.

  	
  Aggregate value of
  Borrower losses

  	
  $

  
	
   

  	
   

  	
   

  
	
  Is line A less than or
  equal to $        ?

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  No, not in compliance

  	
   

  	
  Yes, in compliance

  	
   

  
	
   

  	
   

  	
   

  
	
  III.

  	
  Profitability (Section 6.9(c))

  	
   

  
	
   

  	
   

  	
   

  
	
  Required:

  	
   

  	
  $        

  	
   

  
	
   

  	
   

  	
   

  
	
  Actual:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  A.

  	
  Net Income

  	
  $

  
	
   

  	
   

  	
   

  
	
  Is line A equal to or
  greater than $        ?

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  No, not in compliance

  	
   

  	
  Yes, in compliance

  	
   

  
									

 

3

 

Schedule 2 to Compliance Certificate

 

Additional Patents and Trademarks

 

[Borrower
to provide]

 

4

 

EXHIBIT C – TRANSACTION REPORT

 

[TO BE PROVIDED BY LENDING OFFICER]

 

1

 

EXHIBIT D

 

LIBOR SUPPLEMENT TO AGREEMENT

 

This LIBOR Supplement to Agreement (the “LIBOR Supplement”) is a supplement to the Loan and Security  Agreement (the “Loan
Agreement”) dated as of April 23, 2008 between SILICON VALLEY BANK (“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”),
and forms a part of and is incorporated into the Loan Agreement.  Notwithstanding any other provision of the
Loan Agreement to the contrary, the following provisions shall govern with
respect to LIBOR Advances as to the matters covered:

 

1              DEFINITIONS.

 

“Additional Costs”
is defined in Section 6(b) of this LIBOR Supplement.

 

“Continuation Date”
means any date on which Borrower elects to continue a LIBOR Advance into
another Interest Period.

 

“Conversion Date”
means any date on which Borrower elects to convert a Prime Rate Advance to a
LIBOR Advance or a LIBOR Advance to a Prime Rate Advance.

 

“Effective Amount”
means with respect to any Advances on any date, the aggregate outstanding
principal amount thereof after giving effect to any borrowing and prepayments
or repayments thereof occurring on such date.

 

“Interest Payment Date”
means (a) with respect to any LIBOR Advance, the last day of each Interest
Period applicable to such LIBOR Advance and the last day of each month, and (b) with
respect to Prime Rate Advances, the first (1st ) day of each month
(or, if the first day of the month does not fall on a Business Day, then on the
first Business Day following such date), and each date a Prime Rate Advance is
converted into a LIBOR Advance to the extent of the amount converted to a LIBOR
Advance.

 

“Interest Period”
means, as to any LIBOR Advance, the period commencing on the date of such LIBOR
Advance, or on the conversion/continuation date on which the LIBOR Advance is
converted into or continued as a LIBOR Advance, and ending on the date that is
one (1), two (2) or three (3) months thereafter, in each case as
Borrower may elect in the applicable Notice of Borrowing or Notice of
Conversion/Continuation; provided, however,
that (a) no Interest Period with respect to any LIBOR Advance shall end
later than the Revolving Line  Maturity Date,
(b) the last day of an Interest Period shall be determined in accordance
with the practices of the LIBOR interbank market as from time to time in
effect, (c) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the following
Business Day unless, in the case of a LIBOR Advance, the result of such
extension would be to carry such Interest Period into another calendar month,
in which event such Interest Period shall end on the preceding Business Day, (d) any
Interest Period pertaining to a LIBOR Advance that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the calendar month at the end of such
Interest Period, and (e) interest shall accrue from and include the first
Business Day of an Interest Period but exclude the last Business Day of such
Interest Period.

 

“Interest Rate
Determination Date” means each date for calculating the LIBOR for
purposes of determining the interest rate in respect of an Interest
Period.  The Interest Rate Determination
Date shall be the second Business Day prior to the first day of the related
Interest Period for a LIBOR Advance.

 

“LIBOR” means,
for any Interest Rate Determination Date with respect to an Interest Period for
any Advance to be made, continued as or converted into a LIBOR Advance, the
rate of interest per annum determined by Bank to be the per annum rate of
interest at which deposits in United States Dollars are offered to Bank in the
London interbank market (rounded upward, if necessary, to the nearest
1/10,000th of one percent (0.0001%)) in which Bank customarily participates at
11:00 a.m. (local time in such interbank market) two (2) Business
Days prior to the first day of such Interest Period for a period approximately
equal to such Interest Period and in an amount approximately equal to the amount
of such Advance.

 

2

 

“LIBOR Advance”
means an Advance that bears interest based at the LIBOR Rate.

 

“LIBOR Rate”
means, for each Interest Period in respect of LIBOR Advances comprising part of
the same Advances, an interest rate per annum
(rounded upward, if necessary, to the nearest 1/10,000th of one percent
(0.0001%)) equal to the greater of (i) two and three-quarters of one
percent (2.75%) and (ii) LIBOR for such Interest Period divided by one (1) minus the
Reserve Requirement for such Interest Period.

 

“LIBOR Rate Margin”
is (i) at such times as Borrower’s unrestricted cash plus Cash Equivalents
at Bank are equal to or less than Fifty Million ($50,000,000), three and
three-quarters of one percent (3.75%) and (ii) at such times as Borrower’s
unrestricted Cash plus Cash Equivalents at Bank are greater than Fifty Million
($50,000,000), three and one-quarter of one percent (3.25%).

 

“Notice of Borrowing”
means a notice given by Borrower to Bank in accordance with Section 3.2(a),
substantially in the form of Schedule I, with appropriate insertions.

 

“Notice of
Conversion/Continuation” means a notice given by Borrower to Bank in
accordance with Section 3.5(b), substantially in the form of Schedule
II, with appropriate insertions.

 

“Parent” is
defined in Section 6(c) of this LIBOR Supplement.

 

“Prime Rate Advance”
means an Advance that bears interest based at the Prime Rate.

 

“Prime Rate Margin”
is (i) at such times as Borrower’s unrestricted Cash plus Cash Equivalents
at Bank are equal to or less than Fifty Million ($50,000,000), one percent
(1.00%) and (ii) at such times as Borrower’s unrestricted Cash plus Cash
Equivalents at Bank are greater than Fifty Million ($50,000,000), one-half of
one percent (0.50%).

 

“Regulatory Change”
means, with respect to Bank, any change on or after the Effective Date of the
Loan Agreement in United States federal, state, or foreign laws or regulations,
including Regulation D, or the adoption or making on or after such date of any
interpretations, directives, or requests applying to a class of lenders
including Bank, of or under any United States federal or state, or any foreign
laws or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.

 

“Reserve Requirement”
means, for any Interest Period, the average maximum rate at which reserves
(including any marginal, supplemental, or emergency reserves) are required to
be maintained during such Interest Period under Regulation D against “Eurocurrency
liabilities” (as such term is used in Regulation D) by member banks of the
Federal Reserve System.  Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by Bank by reason of any Regulatory Change
against (a) any category of liabilities which includes deposits by
reference to which the LIBOR Rate is to be determined as provided in the
definition of LIBOR or (b) any category of extensions of credit or other
assets which include Advances.

 

2             GENERAL PROVISIONS RELATING TO
THE ADVANCES.

 

Each Advance shall, at Borrower’s option in accordance
with the terms of the Loan Agreement, be either in the form of a Prime Rate
Advance or a LIBOR Advance; provided that in no event shall Borrower maintain
at any time LIBOR Advances having more than three (3) different Interest
Periods.  Borrower shall pay interest
accrued on the Advances at the rates and in the manner set forth in Section 2.3(a).

 

3             PROCEDURES FOR BORROWING.

 

3.1          Subject to the prior satisfaction of all
other applicable conditions to the making of an Advance set forth in the Loan
Agreement, each Advance shall be made upon Borrower’s irrevocable written
notice delivered to Bank in the form of a Notice of Borrowing, each executed by
a Responsible Officer of Borrower 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.  Borrower will indemnify
Bank for any loss Bank suffers due to such reliance.  Such Notice of Borrowing must be received by
Bank prior to 12:00 p.m. Eastern time, (i) at least three (3) Business
Days prior to the requested Funding 

 

3

 

Date, in the case of LIBOR Advances, and (ii) on the
requested Funding Date, in the case of Prime Rate Advances, specifying:

 

3.1.1       the
amount of the Advance;

 

3.1.2       the
requested Funding Date;

 

3.1.3       whether
the Advance is to be comprised of LIBOR Advances or Prime Rate Advances; and

 

3.1.4       the
duration of the Interest Period applicable to any such LIBOR Advances included
in such notice; provided that if the Notice of
Borrowing shall fail to specify the duration of the Interest Period for any
Advance comprised of LIBOR Advances, such Interest Period shall be one (1) month.

 

3.2          The proceeds of all such Advances will
then be made available to Borrower on the Funding Date by Bank by transfer to
the Designated Deposit Account and, subsequently, by wire transfer to such
other account as Borrower may instruct in the Notice of Borrowing.  No Advances shall be deemed made to Borrower,
and no interest shall accrue on any such Advance, until the related funds have
been deposited in the Designated Deposit Account.

 

4              CONVERSION
AND CONTINUATION ELECTIONS.

 

4.1         So long as (i) no Event of Default or
Default exists; (ii) Borrower shall not have sent any notice of termination
of the Loan Agreement; and (iii) Borrower shall have complied with such
customary procedures as Bank has established from time to time for Borrower’s
requests for LIBOR Advances, Borrower may, upon irrevocable written notice to
Bank:

 

4.1.1       elect
to convert on any Business Day, Prime Rate Advances into LIBOR Advances;

 

4.1.2       elect
to continue on any Interest Payment Date any LIBOR Advances maturing on such
Interest Payment Date; or

 

4.1.3       elect
to convert on any Interest Payment Date any LIBOR Advances maturing on such
Interest Payment Date into Prime Rate Advances.

 

4.2         Borrower shall deliver a Notice of
Conversion/Continuation to be received by Bank prior to 12:00 p.m. Pacific
time (i) at least  three
(3) Business Days in advance of the Conversion Date or Continuation Date,
if any Advances are to be converted into or continued as LIBOR Advances; and (ii) on the
Conversion Date, if any Advances are to be converted into Prime Rate Advances,
in each case specifying the:

 

4.2.1       proposed
Conversion Date or Continuation Date;

 

4.2.2       aggregate
amount of the Advances to be converted or continued;

 

4.2.3       nature
of the proposed conversion or continuation; and

 

4.2.4       duration
of the requested Interest Period.

 

4.3         If upon the
expiration of any Interest Period applicable to any LIBOR Advances, Borrower
shall have timely failed to select a new Interest Period to be applicable to
such LIBOR Advances, Borrower shall be deemed to have elected to convert such
LIBOR Advances into Prime Rate Advances.

 

4.4         Any LIBOR Advances shall, at Bank’s
option, convert into Prime Rate Advances in the event that (i) an Event of
Default or Default shall exist, or (ii) the aggregate principal amount of
the Prime Rate Advances which have been previously converted to LIBOR Advances,
or the aggregate principal amount of existing LIBOR Advances continued, as the
case may be, at the beginning of an Interest Period shall at any time during
such Interest Period exceed the Revolving Line. 
Borrower agrees to pay Bank, upon demand by Bank (or Bank may, at 

 

4

 

its option, charge the Designated Deposit Account or
any other account Borrower maintains with Bank) any amounts required to
compensate Bank for any loss (including loss of anticipated profits), cost, or
expense incurred by Bank, as a result of the conversion of LIBOR Advances to
Prime Rate Advances pursuant to any of the foregoing.

 

4.5          Notwithstanding anything to the contrary
contained herein, Bank shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable LIBOR market to
fund any LIBOR Advances, but the provisions hereof shall be deemed to apply as
if Bank had purchased such deposits to fund the LIBOR Advances.

 

5             SPECIAL PROVISIONS GOVERNING
LIBOR ADVANCES.

 

5.1          Determination of Applicable Interest
Rate.  As soon as practicable on each
Interest Rate Determination Date, Bank shall determine (which determination
shall, absent manifest error in calculation, be final, conclusive and binding
upon all parties) the interest rate that shall apply to the LIBOR Advances for
which an interest rate is then being determined for the applicable Interest
Period and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to Borrower.

 

5.2          Inability to Determine Applicable
Interest Rate.  In the event that
Bank shall have determined (which determination shall be final and conclusive
and binding upon all parties hereto), on any Interest Rate Determination Date
with respect to any LIBOR Advance, that by reason of circumstances affecting
the London interbank market adequate and fair means do not exist for
ascertaining the interest rate applicable to such Advance on the basis provided
for in the definition of LIBOR, Bank shall on such date give notice (by
facsimile or by telephone confirmed in writing) to Borrower of such
determination, whereupon (i) no Advances may be made as, or converted to,
LIBOR Advances until such time as Bank notifies Borrower that the circumstances
giving rise to such notice no longer exist, and (ii) any Notice of
Borrowing or Notice of Conversion/Continuation given by Borrower with respect
to Advances in respect of which such determination was made shall be deemed to
be rescinded by Borrower.

 

5.3          Compensation for Breakage or
Non-Commencement of Interest Periods. 
Borrower shall compensate Bank, upon written request by Bank (which
request shall set forth the manner and method of computing such compensation),
for all reasonable losses, expenses and liabilities, if any (including any
interest paid by Bank to lenders of funds borrowed by it to make or carry its
LIBOR Advances and any loss, expense or liability incurred by Bank in
connection with the liquidation or re-employment of such funds) such that Bank
may incur: (i) if for any reason (other than a default by Bank or due to
any failure of Bank to fund LIBOR Advances due to impracticability or
illegality under Sections 6(d) and 6(e) of this LIBOR
Supplement) a borrowing or a conversion to or continuation of any LIBOR Advance
does not occur on a date specified in a Notice of Borrowing or a Notice of
Conversion/Continuation, as the case may be, or (ii) if any principal
payment or any conversion of any of its LIBOR Advances occurs on a date prior
to the last day of an Interest Period applicable to that Advance.

 

5.4          Assumptions Concerning Funding of
LIBOR Advances.  Calculation of all
amounts payable to Bank under this Section 5 and under Section 3 of
this LIBOR Supplement shall be made as though Bank had actually funded each of
its relevant LIBOR Advances through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to the definition of LIBOR Rate
in an amount equal to the amount of such LIBOR Advance and having a maturity
comparable to the relevant Interest Period; provided, however,
that Bank may fund each of its LIBOR Advances in any manner it sees fit and the
foregoing assumptions shall be utilized only for the purposes of calculating
amounts payable under this Section 5 and under Section 3 of this
LIBOR Supplement.

 

5.5          LIBOR Advances After Default.  After the occurrence and during the
continuance of an Event of Default, (i) Borrower may not elect to have an
Advance be made or continued as, or converted to, a LIBOR Advance after the
expiration of any Interest Period then in effect for such Advance and (ii) subject
to the provisions of Section 5(c), any Notice of Conversion/Continuation
given by Borrower with respect to a requested conversion/continuation that has
not yet occurred shall be deemed to be rescinded by Borrower and be deemed a
request to convert or continue Advances referred to therein as Prime Rate
Advances.

 

5

 

6             ADDITIONAL
REQUIREMENTS/PROVISIONS REGARDING LIBOR ADVANCES.

 

6.1          If for any reason (including voluntary or
mandatory prepayment or acceleration), Bank receives all or part of the
principal amount of a LIBOR Advance prior to the last day of the Interest
Period for such Advance, Borrower shall immediately notify Borrower’s account
officer at Bank and, on demand by Bank, pay Bank the amount (if any) by which (i) the
additional interest which would have been payable on the amount so received had
it not been received until the last day of such Interest Period exceeds (ii) the
interest which would have been recoverable by Bank by placing the amount so
received on deposit in the certificate of deposit markets, the offshore
currency markets, or United States Treasury investment products, as the case
may be, for a period starting on the date on which it was so received and
ending on the last day of such Interest Period at the interest rate determined
by Bank in its reasonable discretion. 
Bank’s determination as to such amount shall be conclusive absent
manifest error.

 

6.2          Borrower shall pay Bank, upon demand by
Bank, from time to time such amounts as Bank may determine to be necessary to
compensate it for any costs incurred by Bank that Bank determines are
attributable to its making or maintaining of any amount receivable by Bank
hereunder in respect of any Advances relating thereto (such increases in costs
and reductions in amounts receivable being herein called “Additional
Costs”), in each case resulting from any Regulatory Change which:

 

6.2.1       changes
the basis of taxation of any amounts payable to Bank under the Loan Agreement
in respect of any Advances (other than changes which affect taxes measured by
or imposed on the overall net income of Bank by the jurisdiction in which Bank
has its principal office);

 

6.2.2       imposes
or modifies any reserve, special deposit or similar requirements relating to
any extensions of credit or other assets of, or any deposits with, or other
liabilities of Bank (including any Advances or any deposits referred to in the
definition of LIBOR); or

 

6.2.3       imposes
any other condition affecting the Loan Agreement (or any of such extensions of
credit or liabilities).

 

Bank will notify Borrower of any event occurring after
the Effective Date which will entitle Bank to compensation pursuant to this Section 6
as promptly as practicable after it obtains knowledge thereof and determines to
request such compensation.  Bank will
furnish Borrower with a statement setting forth the basis and amount of each
request by Bank for compensation under this Section 6.  Determinations and allocations by Bank for
purposes of this Section 6 of the effect of any Regulatory Change on its
costs of maintaining its obligations to make Advances, of making or maintaining
Advances, or on amounts receivable by it in respect of Advances, and of the
additional amounts required to compensate Bank in respect of any Additional
Costs, shall be conclusive absent manifest error.

 

6.3          If Bank shall determine that the adoption
or implementation of any applicable law, rule, regulation, or treaty regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
compliance by Bank (or its applicable lending office) with any respect or
directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank, or comparable agency, has or would have
the effect of reducing the rate of return on capital of Bank or any person or
entity controlling Bank (a “Parent”) as a
consequence of its obligations hereunder to a level below that which Bank (or
its Parent) could have achieved but for such adoption, change, or compliance
(taking into consideration policies with respect to capital adequacy) by an
amount deemed by Bank to be material, then from time to time, within fifteen
(15) days after demand by Bank, Borrower shall pay to Bank such additional
amount or amounts as will compensate Bank for such reduction.  A statement of Bank claiming compensation
under this Section 6(c) and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive absent manifest error.

 

6.4          If, at any time, Bank, in its sole and
absolute discretion, determines that (i) the amount of LIBOR Advances for
periods equal to the corresponding Interest Periods are not available to Bank
in the offshore currency interbank markets, or (ii) LIBOR does not
accurately reflect the cost to Bank of lending the LIBOR Advances, then Bank
shall promptly give notice thereof to Borrower. 
Upon the giving of such notice, Bank’s obligation to make the LIBOR
Advances shall terminate; provided, however,
Advances shall not terminate if Bank and Borrower agree in writing to a
different interest rate applicable to LIBOR Advances.

 

6.5          If it shall become unlawful for Bank to
continue to fund or maintain any LIBOR Advances, or to perform its obligations
hereunder, upon demand by Bank, Borrower shall prepay the Advances in 

 

6

 

full with accrued interest thereon and all other
amounts payable by Borrower hereunder (including, without limitation, any
amount payable in connection with such prepayment pursuant to Section 6(a) of
this LIBOR Supplement).  Notwithstanding
the foregoing, to the extent a determination by Bank as described above relates
to a LIBOR Advance then being requested by Borrower pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, Borrower shall have the
option, subject to the provisions of Section 5(c) of this LIBOR
Supplement, to (i) rescind such Notice of Borrowing or Notice of
Conversion/Continuation by giving notice (by facsimile or by telephone
confirmed in writing) to Bank of such rescission on the date on which Bank
gives notice of its determination as described above, or (ii) modify such
Notice of Borrowing or Notice of Conversion/Continuation to obtain a Prime Rate
Advance or to have outstanding Advances converted into or continued as Prime
Rate Advances by giving notice (by facsimile or by telephone confirmed in
writing) to Bank of such modification on the date on which Bank gives notice of
its determination as described above.

 

7

 

SCHEDULE I

 

FORM OF NOTICE OF BORROWING

 

AXCELIS TECHNOLOGIES, INC.
and AXCELIS TECHNOLOGIES CCS CORPORATION

	
   

  	
  Date:

  	
                     

  	
   

  

 

	
  TO:

  	
  SILICON
  VALLEY BANK

  
	
   

  	
  3003
  Tasman Drive

  
	
   

  	
  Santa
  Clara, CA  95054

  
	
   

  	
  Attention:  Corporate Services Department

  
	
   

  	
   

  
	
  RE:

  	
  Loan
  and Security Agreement dated as of April 23, 2008 (as amended, modified,
  supplemented or restated from time to time, the “Loan
  Agreement”), by and among Axcelis Technologies, Inc. and
  Axcelis Technologies CCS Corporation (individually and collectively, jointly
  and severally “Borrower”), and Silicon
  Valley Bank (the “Bank”)

  

 

Ladies and Gentlemen:

 

The undersigned refers to the Loan Agreement, the terms defined therein
and used herein as so defined, and hereby gives you notice irrevocably,
pursuant to Section 3 of the LIBOR Supplement to the Loan Agreement, of
the borrowing of an Advance.

 

1.             The Funding Date, which shall be a Business
Day, of the requested borrowing is                               .

 

2.             The aggregate amount of the requested
borrowing is $                          .

 

3.             The requested Advance shall consist of $                      
of Prime Rate Advances and $            
of LIBOR Advances.

 

4.             The duration of the Interest Period for the
LIBOR Advances included in the requested Advance shall be                   
month(s).

 

The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the proposed Advance before and after
giving effect thereto, and to the application of the proceeds therefrom, as
applicable:

 

(a)           all
representations and warranties of Borrower contained in the Loan Agreement are
true, accurate and complete in all material respects as of the date hereof;

 

(b)           no
Default or Event of Default has occurred and is continuing, or would result
from such proposed Advance; and

 

(c)           the
requested Advance will not cause the aggregate principal amount of the
outstanding Advances to exceed, as of the designated Funding Date, (a) the
Revolving Line, 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 Reserves, minus (c) the FX Reserve, and minus (d) the
outstanding principal balance of any Advances (including any amounts used for
Cash Management Services).

 

[Signature page follows.]

 

8

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  [AXCELIS ENTITY]

  

 

	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   Title:

  	
   

  	
   

  
						

 

 

For internal Bank use only

 

	
  LIBOR Pricing Date

  	
   

  	
  LIBOR

  	
   

  	
  LIBOR Variance

  	
   

  	
  Maturity Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  

 

9

 

SCHEDULE II

 

FORM OF NOTICE OF CONVERSION/CONTINUATION

 

AXCELIS TECHNOLOGIES, INC.
and AXCELIS TECHNOLOGIES CCS CORPORATION

	
   

  	
  Date:

  	
                     

  

 

	
  TO:

  	
  SILICON
  VALLEY BANK

  
	
   

  	
  3003 Tasman Drive

  
	
   

  	
  Santa Clara, CA 
  95054

  
	
   

  	
  Attention:

  
	
   

  	
   

  
	
  RE:

  	
  Loan
  and Security Agreement dated as of April 23, 2008 (as amended, modified,
  supplemented or restated from time to time, the “Loan
  Agreement”), by and among Axcelis Technologies, Inc. and
  Axcelis Technologies CCS Corporation (individually and collectively, jointly
  and severally “Borrower”), and Silicon
  Valley Bank (the “Bank”)

  

 

Ladies and Gentlemen:

 

The undersigned refers to the Loan Agreement, the terms defined therein
being used herein as therein defined, and hereby gives you notice irrevocably,
pursuant to Section 4 of the LIBOR Supplement to the Loan Agreement, of
the [conversion] [continuation] of the Advances specified herein, that:

 

1.             The date of the [conversion] [continuation]
is                                            ,
20      .

 

2.             The aggregate amount of the proposed Advances
to be [converted] is $                   or
[continued] is
$                   .

 

3.             The Advances are to be [converted into]
[continued as] [LIBOR] [Prime Rate] Advances.

 

4.             The duration of the Interest Period for the
LIBOR Advances included in the [conversion] [continuation] shall be               
month(s).

 

The undersigned, on behalf of Borrower, hereby certifies that
the following statements are true on the date hereof, and will be true on the
date of the proposed [conversion] [continuation], before and after giving
effect thereto and to the application of the proceeds therefrom:

 

(a)           no
Default or Event of Default has occurred and is continuing, or would result
from such proposed [conversion] [continuation].

 

[Signature page follows.]

 

1

 

	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  [AXCELIS ENTITY]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

For internal Bank use only

 

	
  LIBOR Pricing Date

  	
   

  	
  LIBOR

  	
   

  	
  LIBOR Variance

  	
   

  	
  Maturity Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  

 

2

 

Schedule 6.8(b)

 

	
  Institution
  Name

  	
   

  	
  Account
  Number (if applicable) / Maximum Amount

  
	
   

  	
   

  	
   

  
	
  Beverly
  National Bank

  	
   

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

  
	
   

  	
   

  	
   

  
	
  US
  Bank

  	
   

  	
  793841000
  (Trust account used solely for payments made in connection with the
  Convertible Senior Subordinated Notes Due 2009)

  
	
   

  	
   

  	
   

  
	
  Merrill
  Lynch

  	
   

  	
  171
  08U80; Amount (value) not to exceed $15,000

  
	
   

  	
   

  	
   

  
	
  United
  States Patent and Trademark Office

  	
   

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

  

 

Schedule 7.2

 

1.                                       Matrix
Integrated Systems Acquisition Corporation (California corporation)

2.                                       Matrix
Europe, N.V. (Belgium)

3.                                       Axcelis
Technologies, B.V. (Netherlands)

 

3Exhibit 10.10

 

DEMAND NOTE

 

	
  U.S.
  $250,000

  	
   

  	
  March 14, 2008

  

 

FOR VALUE RECEIVED, the undersigned, Granahan
McCourt Acquisition Corporation, a Delaware corporation (the “Borrower”), hereby unconditionally
promises to pay, as provided below, to David C. McCourt (the “Lender”), the principal sum of two
hundred and fifty thousand U.S. dollars ($250,000), by wire transfer of
immediately available funds.  No interest
shall accrue on the unpaid principal balance of this Demand Note.  Capitalized terms used and not defined herein
shall have the meanings set forth in Borrower’s fourth amended and restated
certificate of incorporation.

 

The aggregate outstanding principal amount of this
Demand Note (this “Demand Note”)
shall be due and payable in cash on the earliest of (a) one (1) business
day following the Lender’s written demand to Borrower for such payment, and (b) upon
consummation of a Business Combination and (c) upon liquidation of the
Trust Fund (the “Maturity Date”).  This Demand Note may be prepaid in whole or
in part without penalty by the Borrower at any time prior to the Maturity Date.

 

The following shall constitute events of default (each,
an “Event of Default”) for
purposes of this Demand Note: (i) a default by Borrower in the payment of
the principal of this Demand Note when due and payable if such default is not
cured by Borrower within two (2) days after Lender has given Borrower
written notice of such default; (ii) the institution by Borrower of
proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to
the institution of bankruptcy or insolvency proceedings against it or the
filing by it of a petition or answer or consent seeking reorganization or
release under the federal bankruptcy laws, or any other applicable law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of Borrower,
or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the taking of corporate action by
Borrower in furtherance of any such action; and (iii) if, within thirty
(30) days after the commencement of an action against Borrower seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action
shall not have been resolved in favor of Borrower or all orders or proceedings
thereunder affecting the operations or the business of Borrower stayed, or if
the stay of any such order or proceeding shall thereafter be set aside, or if,
within thirty (30) days after the appointment without the consent or
acquiescence of Borrower of any trustee, receiver or liquidator of Borrower or
of all or any substantial part of the properties of Borrower, such appointment
shall not have been vacated; provided that the adoption of a plan of
dissolution and distribution and its implementation by the Borrower’s board of
directors that is approved by its stockholders due to the failure of Borrower
to complete a Business Combination shall not in any instance be deemed an Event
of Default hereunder.  If an Event of
Default shall occur, Lender may declare this Demand Note and all amounts
payable hereunder to be forthwith due and payable, whereupon this Demand Note
and all such amounts shall become forthwith due and payable.

 

Notwithstanding anything to the contrary contained
herein, Lender hereby acknowledges and agrees that, prior to a Business
Combination, Lender shall have no right, title or interest in or to any of the
funds in the Trust Fund, notwithstanding the fact that such funds were received
for the purchase and sale of securities of Borrower, or any funds distributed
from the Trust Fund

 

 

other than in a Business Combination
Distribution (as defined below), and that Lender’s sole recourse for repayment
of any and all amounts due under this Demand Note shall be against the assets
or properties of Borrower never deposited into the Trust Fund or distributed to
Borrower from the Trust Fund in a Business Combination Distribution. Lender
hereby irrevocably waives any claim Lender may have to funds in the Trust Fund,
and any funds distributed from the Trust Fund other than in a Business
Combination Distribution, at law or in equity, and agrees not to make any such
claim. A “Business Combination Distribution” means a distribution from the
Trust Fund in connection with the consummation of a Business Combination.

 

Time is of the essence for the performance and
observance of each agreement and obligation of Borrower hereunder.

 

This Demand Note and its validity, construction and
performance shall be governed in all respects by the laws of the State of New
York applicable to contracts entered into and to be performed wholly within
said State.

 

Borrower hereby waives diligence, presentment,
protest, demand and notice of every kind. 
This Demand Note may not be amended, modified, changed or terminated
orally.  This Demand Note shall bind the
legal representatives, successors and permitted assigns of the undersigned and
shall inure to the benefit of the Lender and its successors and assigns.  Each provision of this Demand Note shall
survive until all amounts due hereunder are paid in full as described herein,
shall be interpreted as consistent with existing law and shall be deemed
amended to the extent necessary to comply with any conflicting law.  If a court deems any provision hereof
invalid, the remainder of this Demand Note shall remain in effect.

 

IN WITNESS WHEREOF, the undersigned, by its
authorized officer, has duly executed this Demand Note as of the day and year
first above written.

 

	
   

  	
  GRANAGHAN MCCOURT
  ACQUISITION

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:.

  	
  /s/ Ellyn Ito

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Ellyn Ito

  
	
   

  	
  Title:

  	
  CAO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Accepted and agreed:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DAVID C. MCCOURT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ David C. McCourt

  	
   

  	
   

  
						

 

 

2

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