Axcelis Technologies, Inc. (the "Company" or "Axcelis") and U.S. Bank National Association, as trustee (the "Trustee"), are parties to an Indenture dated as of May 2, 2006 (the "Indenture") relating to the Company's 4.25% Convertible Senior Subordinated Notes (the "Senior Subordinated Notes"). Under the Indenture, the Company is required to repay the outstanding principal amount of the Senior Subordinated Notes plus a maturity premium and accrued interest (a total payment of approximately $85 million) on January 15, 2009. A copy of the Indenture was included as Exhibit 4.12 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 4, 2006.

On January 15, 2009, Axcelis failed to make the required payment under the Indenture. Such failure constitutes an event of default under the Indenture. Pursuant to the Indenture and as a result of the failure by Axcelis to make the required payment, Axcelis is required to pay, upon demand of the Trustee, the entire overdue amount, plus interest at a rate of 8.0% per annum, plus certain additional costs and expenses associated with the collection of such amounts. Axcelis is actively engaged in discussions with the sole holder of the Senior Subordinated Notes (the "Holder"). Axcelis will continue to seek a waiver and forbearance or longer term refinancing from the Holder, but also continues to be engaged in seeking other sources of financing and other liquidity initiatives. There can be no assurance that the Company's efforts will be successful or that the Holder or Trustee will not declare all outstanding obligations under the Indenture to be immediately due and payable and pursue their rights and remedies under the Indenture.