Exhibit 10.13

EXECUTION COPY

SUPPLY AGREEMENT

This Supply Agreement (this “Agreement”) dated as of June 17, 2009 (the
“Effective Date”) is entered into between Zygo Corporation, a Delaware
corporation (“Zygo”) and Nanometrics Incorporated, a Delaware corporation
(“Nano”).

RECITALS

A. Zygo has developed and is the owner of certain technology related to
“Automated Interferometer Systems” (as defined below), including the Heads (as
defined below), the control, monitoring and analysis software, and electronic
control systems) as well as the automation of the systems that use these
technologies.

B. Zygo seeks to establish a relationship with Nano, and Nano intends to
establish a relationship with Zygo, pursuant to which Nano becomes the exclusive
provider of the product referred to by Zygo as the “Unifire” and other Approved
Systems (as defined below) in the Approved Markets (as defined below) that
incorporate Heads.

C. As such, Zygo seeks to supply to Nano the Heads (as defined below), the
Components (as defined below), and certain other parts and components, and to
transfer to Nano certain flow through license rights and assets related to the
Heads, Components and the Unifire, in order to empower Nano as the exclusive
provider of Approved Systems in Approved Markets as described below.

AGREEMENT

In consideration of the foregoing and the respective representations,
warranties, covenants and agreements contained in this Agreement and the Asset
Transfer Agreement (as defined below), and other good and valuable
consideration, the receipt and sufficiency of which each of the parties hereby
acknowledges, and intending to be legally bound hereby, the parties agree as
follows:

1. Definitions. As used in this Agreement, the terms set forth in this Section 1
shall have the meanings set forth below.

1.1 “Approved Markets” means the following markets in which Nano will have the
exclusive right to market and sell Approved Systems, but limited to Nano’s Field
of Use (defined below): […*…].

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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1.2 “Approved Systems” means the following types of systems that Nano will have
exclusive rights to market and sell in Approved Markets pursuant to the terms of
this Agreement: […*…].

1.3 “Asset Transfer Agreement” means that certain Asset Transfer Agreement of
even date herewith entered into by Zygo and Nano.

1.4 “Automated Interferometer System” means an interferometer system including
fully-automated wafer handling equipment sufficient to enable in-line operation
in the Approved Markets for Nano’s Field of Use, and specifically excluding
laboratory tool interferometer systems and semi-automated interferometer systems
(such as those with motorized stages). The Automated Interferometer Systems can
be a stand-alone metrology unit or it can be incorporated into another unit,
such as a production unit to, for example, provide real-time metrology feedback
during production of a device.

1.5 “Components” means all components of any of the Heads (defined below), all
improvements or modifications of such components made or acquired by Zygo during
the term of this Agreement, and all replacements for or successors of such
components made or acquired by Zygo during the term of this Agreement.

1.6 “Flow-Through Licensed Technology” means […*…].

1.7 “Heads” means the heads for interferometers made by or for Zygo as described
in Exhibit A attached hereto as well as any heads hereafter made by or for Zygo
that include modifications or improvements but are generally the same as, or a
successor of, such heads described in Exhibit A.

1.8 “Nano’s Field of Use” means in-line, fully–automated wafer handling
equipment, as opposed to laboratory tools or semi-automated systems (such as
those with motorized stages).

1.9 “Net Revenues” means the revenues received by Nano from the sale of Approved
Systems. Net Revenues do not include any amounts which are (a) collected by Nano
as sales tax, use tax, or other taxes; or (b) refunded or otherwise credited to
the Person from whom Nano received such amounts; provided, however, that the
calculation for Net Revenues shall add back the dollar amount of any set-offs or
other types of credits paid, or reductions to the purchase price for, amounts
Nano may otherwise owe, to such customer for matters unrelated to the sale of
Approved Systems. For purposes of determining Net Revenues, revenues from
Approved Systems sold by Nano on credit shall not be considered received by Nano
unless and until such payments are actually collected by Nano.

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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1.10 “Person” means any individual, partnership, corporation, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government entity, agency or political subdivision of any
governmental entity, or any other entity.

2. Purchase and Sale of Heads and Components.

2.1 Supply of Heads and Components. Zygo shall sell and deliver to Nano such
Heads and Components as Nano may order from Zygo during the term of this
Agreement, in accordance with the terms hereof.

2.2 Orders. Each of Nano’s orders for Heads or Components (an “Order”) shall
contain a description of the Heads or Components ordered, specify the quantity
and price of the Heads or Components ordered, specify the date on which each
order of Heads or Components is to be delivered and specify the address to which
the Heads or Components are to be shipped. Such specifications will be within
the parameters for Orders set forth on Schedule 2.2 hereto.

2.3 Purchase Price.

2.3.1 […*…].

2.3.2 The price to be paid by Nano to Zygo for any Heads or Components not
listed on Exhibit B shall be determined in accordance with the provisions of
this subsection.

(a) With respect to each Head or Component not listed on Exhibit B that is
substantially the same as a Head or Component listed on Exhibit B (a
“Category #1 New Head or Component”) the price to Nano of such Category #1 New
Head or Component shall be equal to the price to Nano of the Head or Component
listed on Exhibit B that is substantially the same as the Category #1 New Head
or Component.

(b) With respect to each Head or Component not listed on Exhibit B that is not a
Category #1 New Head or Component (a “Category #2 New Head or Component”), the
price to Nano of such Category #2 New Head or

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Component shall be, from time to time, an amount that […*…] listed on Exhibit B
(regardless of how similar or dissimilar the Category #2 New Head or Component
may be from a Head or Component listed on Exhibit B). For clarification, the
parties acknowledge that the gross margins received by Zygo on the sales of Head
hardware, Head software and other Components described in Exhibit B may be
different.

(c) Zygo and Nano agree to negotiate in good faith to agree upon the prices to
be paid by Nano for any Heads and Components not listed on Exhibit B, consistent
with the provisions of Section 2.3.2(b) above.

2.4 Payment. Zygo shall issue its invoice to Nano for the price of Heads and
Components purchased by Nano upon delivery of such Heads and Components. Nano
shall pay Zygo the amount due under each of Zygo’s invoices within 30 days after
Nano’s receipt of the invoice or delivery of the Heads or Components, whichever
is later. Zygo shall promptly furnish Nano with such documentation and
information as Nano may reasonably request to verify the amount due under any of
Zygo’s invoices. Notwithstanding the foregoing, to the extent any such Head or
Component is determined by Nano, after inspection as provided in Section 4
hereof, not to comply with specifications, payment for such non-complying Head
or Component only, may be withheld by Nano, with the remainder of the invoice
paid in full. In such event, Nano shall notify Zygo of such determination of
non-compliance and, at the request of Zygo, Nano shall return such non-complying
Head or Component to Zygo.

2.5 Cancellation of Orders. Nano may at any time cancel any Order placed in good
faith, as to all or any portion of the Heads or Components not then delivered to
and accepted by Nano, by giving Zygo written notice of such cancellation. […*…]
In the event any Order is cancelled by Nano, Nano will be responsible for
cancellation charges as follows:

(a) […*…];

(b) […*…];

(c) […*…];

(d) […*…].

[…*…].

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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2.6 Taxes. The prices specified in this Agreement do not include sales taxes
that may be imposed upon the sale of Heads or Components under this Agreement.
Nano shall pay such taxes that are properly due and payable. At Zygo’s request,
Nano shall provide Zygo with reasonable justification for Nano’s position that
any such taxes are not properly due or payable (e.g., certification that such
sales are exempt from tax). If Zygo receives any assessment or other notice with
regard to any such taxes, Zygo shall immediately provide Nano with a copy of
such notice.

2.7 Exclusivity. During the term of this Agreement, Zygo will not directly or
indirectly (a) sell to any Person other than Nano any Heads or Components for
Approved Systems, or Automated Interferometer Systems, to be marketed or sold in
the Approved Markets, or any Unifires or any other Approved Systems to be
marketed or sold in the Approved Markets, (b) make, have made, use, import,
export, maintain or repair any Approved Systems or portion thereof including the
Head for marketing or sale in any Approved Markets, (c) grant any right or
license to any Person other than Nano to make, have made, use, sell, license,
import, export, maintain or repair any Approved System or portion thereof
including the Head for marketing or sale in the Approved Markets, (d) provide
any Person with any training or other service pertaining to the Flow-Through
Licensed Technology with respect to the Approved Systems to be marketed or sold
in the Approved Markets, (e) exercise any rights under any third party rights
that are included in the Flow-Through Licensed Technology with respect to the
Approved Systems in the Approved Markets; or (f) sublicense or assign any rights
in the Flow-Through Licensed Technology with respect to the Approved Systems in
the Approved Markets. Notwithstanding the foregoing or anything to the contrary
in this Agreement, nothing herein shall prevent Zygo from providing, directly or
indirectly, (i) Automated Interferometer Systems in any markets other than the
Approved Markets or (ii) any other products, including without limitation
laboratory systems, semi-automated systems, and stage metrology interferometer
systems (such as distance measuring interferometry systems), in any market.

3. Delivery.

3.1 Point of Delivery. Zygo shall deliver all Heads and Components to Nano or to
Nano’s customers F.O.B. or FCA (Incoterms) Zygo’s facility located at
Middlefield, Connecticut.

3.2 Shipment. Zygo shall properly mark and otherwise identify the Heads and
Components for shipment to Nano or such other destination as may be specified by
Nano in the Order for such Heads and Components.

3.3 Packaging. Zygo shall properly package the Heads and Components for
protection against damage or deterioration that may result from shipment,
handling, storage or other cause.

 

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3.4 Schedule. Zygo shall deliver the Heads and Components to Nano on the
delivery date specified in the Order for such Heads and Components. However,
Zygo shall not be liable for delays in delivery due to causes which are not
reasonably foreseeable and which are beyond Zygo’s control provided that, to the
extent practicable, Zygo gives Nano prompt written notice of the circumstances
giving rise to the delay, the anticipated duration of the delay and the action
being taken by Zygo to overcome or mitigate the delay. The specified delivery
date shall be extended by the period of any such delay.

4. Inspection.

4.1 Zygo’s Plant. Zygo’s facilities at which Zygo manufactures any Heads or
Components shall be subject to inspection by Nano during normal business hours
provided that reasonable notice is given to Zygo to accommodate such inspection.
Zygo shall provide Nano with safe and sufficient access for such inspection.
Nano shall perform any such inspection in such a manner as to minimize
disruption of Zygo’s business and operations at such facility.

4.2 By Zygo. Zygo shall perform such detailed inspections and tests of the Heads
and Components sold by Zygo to Nano as are reasonably necessary to ensure that
such Heads and Components comply with the requirements of this Agreement and
applicable regulations governing the manufacture, supply and delivery of such
Heads and Components to Nano as provided hereunder. Without limiting the
generality of the foregoing, Zygo shall comply with the inspection procedures
applicable to the Heads and Components. Zygo shall keep and maintain complete
and adequate records of all inspections and tests performed on Heads and
Components. Final test documentation shall be shipped with each Head and
component assembly. Zygo shall make such records available to Nano for
examination, copying and audit, for a period of two (2) years from the date of
sale.

4.3 By Nano. All Heads and Components purchased by Nano shall be subject to
reasonable inspection and testing by Nano; and provided such inspection and
testing is performed in such a manner as to minimize disruption to Zygo’s
business and operations. Zygo shall provide Nano with safe and sufficient
access, equipment and facilities for any such inspection or test prior to
delivery. No acceptance of any Heads or Components shall be construed to result
from any inspection, test or delay or failure to inspect or test by Nano prior
to final inspection and test of such Heads or Components by Nano in accordance
with this Section 4.3. Payment for any Heads or Components shall not constitute
acceptance of such units. Nano shall inspect and test the Heads and Components
at its specified destination within three (3) months of receipt (the “Inspection
Period”), and any failure to notify Zygo of a problem or defect within the
Inspection Period shall be deemed an acceptance by Nano of such Heads or
Components. No inspection, test, delay or failure to inspect or test, or failure
to discover any defect or noncompliance by Nano prior to expiration of the
Inspection Period shall relieve Zygo of any of its obligations under this
Agreement or impair Nano’s right to reject defective or noncomplying Heads or
Components or any other right or remedy afforded to Nano.

 

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5. Compliance with Standards.

5.1 General. Zygo shall use commercially reasonable good faith efforts to comply
in all material respects, and to ensure that all Heads, Components and Unifires
assembled by Zygo comply in all material respects, with all applicable laws,
ordinances, rules, regulations, orders, licenses, permits and other
requirements, now or hereafter in effect, of any governmental authority that are
applicable to the manufacture, supply or delivery of the Heads, Components and
Unifire as provided hereunder. Upon reasonable request, Zygo shall furnish such
documents as may be required to effect or evidence such compliance.
Notwithstanding any other provision of this Agreement, Zygo will, after a
reasonable but expeditious opportunity to cure any such non-compliance, make
Nano whole for any such non-compliance that results directly in Nano bearing any
costs, obligations or damages therefrom, subject to the damage limitations in
Section 17.18 hereof. Any such non-compliance will not constitute a breach of
this Agreement unless Zygo does not satisfy its obligations defined in the
immediately preceding sentence.

5.2 Industry Standards. Zygo shall produce all Heads, Components and Unifire in
accordance with, and shall ensure that each unit of Heads, Components and
Unifire complies with, the following requirements as now or hereafter in effect:

(a) CE standard specifications; and

(b) Semiconductor industry specifications for electronic equipment and
Underwriters Laboratory (or UL) rating.

Zygo shall provide Nano with such specifications, testimony and other assistance
as Nano may reasonably request in connection with the listing, approval,
registration or satisfaction of similar requirements of any trade association or
other organization, as the same may apply to any Heads or Components.

6. Training and Technical Support. Zygo will provide training to Nano personnel
according to the terms, scheduling, and compensation set forth on Exhibit C.
Zygo will also provide technical support services to Nano in accordance with the
provisions of Exhibit C during the term and thereafter until the expiration of
the warranty period for all Heads and Components delivered under this Agreement.

7. Development Services and Sustaining Engineering Services/Minimum Volume.
Beginning on July 1, 2010, Nano shall pay Zygo a Sustaining Engineering Fee (the
“Sustaining Engineering Fee”) which shall be applied to any engineering requests
that Nano should request from Zygo to facilitate the commercial development of
Automated Interferometer Systems (see Exhibit C, Section (b) and (c) for terms,
scheduling and compensation). Zygo shall be under no obligation to provide
engineering and/or development services beyond those paid for through the
Sustaining Engineering Fee, with any such supplemental services to be provided
by Zygo (if at all) on mutually agreeable pricing and terms.

 

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8. […*…].

9. Confidentiality. Zygo and Nano have entered into a separate Non-Disclosure
Agreement. Each of the parties shall perform their obligations under such
Non-Disclosure Agreement with respect to Confidential Information received by
the parties in connection with the performance of this Agreement.

10. Warranty.

10.1 Warranty. Zygo warrants to Nano that:

(a) the Heads and Components shall be free from defects in materials,
workmanship and design;

(b) all materials, parts, components and other items incorporated in the Heads
and Components shall be new and suitable for its intended purposes;

(c) the Heads and Components shall comply with the specifications applicable to
such Heads and Components, the documentation provided by Zygo pertaining to such
Heads and Components, and to any samples of such Heads and Components provided
by Zygo;

(d) the Heads and Components shall comply with the requirements of this
Agreement and the Order pursuant to which it is purchased by Nano; and

(e) Zygo will not, without the prior written consent of Nano, alter or change
the existing design of the Heads to be provided to Nano in any way that would
require Nano to create new designs for integration of the Heads or Components
into its products. Specifically, Zygo is aware that certain customers maintain
“Copy Exact” requirements and Zygo agrees to maintain a product in compliance
therewith. Nothing in this section shall preclude Zygo from changing the design
of other heads which Zygo may manufacture or produce for its own use or for sale
to others so long as Zygo continues to supply Nano “copy exact” Heads as Nano so
requests.

10.2 […*…].

10.3 Correction of Noncompliance. If at any time during the warranty period Nano
notifies Zygo of any failure of any unit of the Heads or Components to comply
with any applicable warranty, Zygo shall correct such noncompliance within three
(3) business days after receiving Nano’s notice (i.e., by repair or replacement
of the

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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noncomplying unit) and remedy any damage to such unit of the Head or Component
resulting from such failure. All transportation and other costs incidental to
such correction and remedying shall be borne by Zygo. If Nano rejects any Heads
or Components that do not comply with any applicable warranty, Zygo shall have a
reasonable time to correct the noncompliance. If Zygo fails to correct the
noncompliance within a reasonable time, Nano may cancel the Order as it applies
to the noncomplying Heads or Components without any cost to Nano with respect to
such Heads or Components, in which event Nano shall promptly return to Zygo any
noncomplying Heads or Components from the cancelled Order of which it still has
possession.

10.4 Warranty Service by Zygo. Zygo shall maintain a list, by serial numbers of
Heads and Components, of the shipment date of each unit and a toll-free service
number for the purpose of notifying Zygo of warranty claims. Upon receipt of
each such claim, Zygo shall determine whether the warranty period with respect
to such unit has expired. If the warranty period has not expired, Zygo shall
perform warranty service as required under this Section. Zygo shall provide
technical phone response upon notification of a field failure from Nano’s field
service or factory personnel. Zygo’s warranty service includes telephone support
and technical assistance by email to support diagnosis of problems and repair of
Heads in the field by Nano that can reasonably be serviced in the field by Nano.
If Nano or Zygo determine that a Head cannot be reasonably serviced in the
field, Nano will remove the Head and ship the Head to Zygo for repair. Zygo
shall maintain sufficient inventory of Heads and Components to enable Zygo to
ship a replacement Head or Component to Nano within three (3) business days
after receiving notice from Nano. Zygo shall ship replacement Heads and
Components to Nano within three (3) business days after receiving notice from
Nano of the requirement for a replacement Head, provided that Nano shall ship
the Head requiring repair back to Zygo promptly after giving such notice. If the
claim is not within Zygo’s warranty obligations, Zygo shall so notify Nano and,
at Nano’s option, shall either return such unit to Nano, at Nano’s expense, or
shall perform the required service as directed by Nano, at such price as Nano
and Zygo shall agree.

10.5 Limitation on Warranty. Notwithstanding anything contained in this
Section 10 or any other provision of this Agreement, Zygo will not have any
warranty obligations for any products on which Nano performs repairs in addition
to those for “first level” issues (as provided in Section 8 hereof), or on which
Nano personnel have performed or attempted repairs that are not in accordance
with the training provided by Zygo (as provided in Section 6 hereof).

11. […*…].

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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11.1 […*…].

11.2 […*…].

11.3 […*…].

11.3.1. […*…].

11.4 […*…].

11.5 Non-Assertion of Rights. Zygo shall not assert any patent, copyright, trade
secret rights or other intellectual property rights against Nano or Nano’s
sublicensees or customers relating to the manufacture, use, sale or importation
of the Approved Systems in the Approved Markets, in a manner consistent with and
as authorized and approved herein, or with respect to the use of the
Flow-Through Licensed Technology by Nano or Nano’s sublicensees or customers in
connection with the Approved Systems in the Approved Markets, in a manner
consistent with and as authorized and approved herein.

12 Intellectual Property Infringement. […*…].

12.1 In the event that Zygo fails to promptly or effectively respond to any such
claim or to defend any such suit or proceeding brought against Nano or any of
Nano’s sublicensees or customers, or Zygo notifies Nano that Zygo has opted not
to do so, Nano may, but shall not be obligated to, respond, at Nano’s sole cost,
to the claim or defend or assume the defense of the suit or proceeding, in which
event Nano is hereby authorized, upon giving prior written notice to Zygo, to
proceed, if it so elects, in its own name or the name(s) of its sublicensee(s)
or customer(s).

12.2 Zygo shall defend, indemnify and hold Nano (including its officers, agents,
directors and employees) and Nano’s sublicensees and customers harmless from and
against all costs, expenses, royalties, damages, losses, harm, and liabilities
(including, without limitation attorneys’ fees and expenses) (the “Costs”),
arising out of any such claim, suit or proceeding for which Zygo is obligated to
indemnify pursuant to the provisions of the first paragraph of this Section 12,
in all instances up to […*…] (the “Indemnity Cap”). Notwithstanding any other
provision in this Agreement, Zygo’s obligation under this indemnity section will
not extend to claims of lost profit by the third party intellectual property
owner, Nano, or any other third party, or any consequential damages resulting
from an injunction against Nano or its customers, or any consequential,
indirect, punitive, individual or special damages of any nature. If applicable,
Zygo will negotiate in good-faith with Nano to adjust the purchase price of
subsequent Zygo-made Heads to account for the third party intellectual property.

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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12.2.1 In the event the suit or proceeding is settled or otherwise terminated
without a final judgment setting forth the reasonable royalty for those
Zygo-made Heads and those Zygo-designed “Unifire” automated interferometer
systems determined to have infringed the third party intellectual property, the
Parties will negotiate in good-faith to determine what portion of the settlement
is attributable to a reasonable royalty for the accused Zygo-made Heads and
Zygo-designed “Unifire” automated interferometer systems. The settlement price
can be considered in determining the reasonable royalty, but is not dispositive
of it.

12.2.2 If the Indemnity Cap is less than the total Costs, Nano shall have the
right to terminate this Agreement upon sixty (60) days written notice to Zygo,
except that, Zygo, in response to Nano’s written notice, can elect to pay Nano
the difference between the Costs and the Indemnity Cap within the sixty (60)-day
period to keep this Agreement in force.

12.3. Actions Against Infringers

Enforcement against any third party of any Zygo patent related to this Agreement
shall be at Zygo’s sole discretion. Nano shall promptly provide notice to Zygo
if Nano becomes aware of any third party patent infringement, and in response
Zygo shall determine in good faith whether the commercial consequences to Zygo
of that third party’s patent infringement (including with respect to the sale of
Zygo Heads to Nano under this Supply Agreement) merit enforcement of a Zygo
patent(s) against that third party. If Zygo decides not to pursue enforcement of
its patent(s), and Nano can demonstrate in good faith that the third party
infringement has substantial commercial consequences adverse to Nano, then Nano
and Zygo shall have 30 days (the “Renegotiation Period”) after notice thereof
from Nano to Zygo to renegotiate in good faith the Purchase Price of the Zygo
Heads sold to Nano under this Supply Agreement. In such event, if no agreement
is reached within the Renegotiation Period, then Nano shall have the right to
terminate this Supply Agreement by notice given to Zygo not more than 10
business days after the expiration of the Renegotiation Period; provided that no
such termination shall affect Nano’s obligation to pay for Heads previously
delivered to Nano, or for Heads in production by Zygo pursuant to an accepted
Order (except as permitted by Section 2.5 hereof).

13. Improvements.

13.1 Improvements By Zygo. Zygo shall deliver to Nano all improvements,
enhancements, derivative works and modifications (collectively, “Zygo
Improvements”) in, of or to any Flow-Through Licensed Technology used in the
Approved Systems in the Approved Markets hereafter developed or acquired by
Zygo. During the term of this Agreement, Zygo shall deliver all such updating
information to Nano within 10 business days after Nano’s request therefor, but
in no event more than once per calendar quarter. All sales

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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of Approved Systems by Nano subsequent to its receipt of any such Zygo
Improvements that are not required to be “copy exact” shall include such Zygo
Improvements; provided, however, that Nano will have no such obligation if
including such Zygo Improvements would require Nano to make a modification to
the Approved System that Nano, in its sole discretion, deems undesirable; but
further provided, in such instance, that Zygo shall not be liable for damages
under Section 12 hereof subsequent to Nano’s receipt of any such Zygo
Improvements in the event that the Zygo Improvement would have rectified or
otherwise minimized any such intellectual property infringement. Zygo shall be
the sole owner of any and all Zygo Improvements in, of or to any Flow-Through
Licensed Technology made independently by Zygo.

13.2 Improvements by Nano. Nano shall be the sole owner of any and all
improvements, enhancements, derivative works and modifications in, of or to any
Flow-Through Licensed Technology, used in the Approved Systems in the Approved
Markets, made independently by Nano.

13.3 Joint Improvements. Nano and Zygo shall jointly own any improvements,
enhancements, derivative works and modifications in, of or to any Flow-Through
Licensed Technology, used in the Approved Systems in the Approved Markets, made
jointly by Nano and Zygo. Neither Nano nor Zygo shall have any obligation to
(a) share with the other party any revenue or profits derived from the
exploitation of such jointly owned property, or (b) provide any accounting to
the other party. Each party shall be the sole owner of any improvements,
enhancements, derivative works and modifications made by such party in, of, or
to any jointly owned technology. Ownership of joint improvements pertaining
solely to Heads shall revert back to Zygo upon termination of this Agreement;
provided Nano retains a perpetual, non-exclusive, royalty free license for such
joint improvements.

14. Zygo Representations. Zygo hereby represents and warrants to Nano that the
following are true and correct as of the date of this Agreement, and, except for
the representations and warranties in Section 14.3 hereof, with respect to all
modifications and improvements of Flow-Through Licensed Technology delivered by
Zygo to Nano during the term of this Agreement, as of the date of each delivery
of such modifications and improvements.

14.1 Good Title, Free of Rights of Others. Zygo owns all Flow-Through Licensed
Technology, free and clear of all security interests, liens, encumbrances,
restrictions, licenses, rights and claims of any Person, or otherwise has
sufficient rights, title and interest in and to the Flow-Through Licensed
Technology necessary to grant the rights and licenses set forth in this
Agreement, and to perform Zygo’s obligations under this Agreement.

14.2 No Conflicting Licenses. Zygo is not a party to any outstanding options,
licenses or agreements of any kind relating to the Unifire, or the Flow-Through
Licensed Technology used in Approved Systems in Approved Markets, or to the
manufacture, use, or sale of Approved Systems, or their improvements, in
Approved Markets, […*…].

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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14.3 No Infringement. As of the date hereof, (a) neither the Unifire nor the
Zygo-made Head infringes, misappropriates or otherwise violates any patent,
copyright, mask work right, trademark right, trade dress right, trade secret
right, or other intellectual property right of any Person; and (b) the
manufacture, use, sale, export and import of the Heads, Components or Unifires
do not infringe or misappropriate any intellectual property rights of any
Person. Zygo makes the representations and warranties in this Section 14.3 only
as to Heads, Components and Unifires that have not been modified in any way
after manufacture or sale by Zygo where the modification directly or indirectly
causes the claimed infringement. Nothing in this paragraph shall extinguish
Zygo’s indemnity obligation under the paragraphs of Section 12 with respect to
modifications and improvements made by Zygo to the Heads after the Effective
Date of this Agreement where such Heads are sold to Nano.

14.4 No Violation of Obligations of Zygo. The licenses granted by Zygo in this
Agreement, and the other obligations of Zygo under this Agreement do not
constitute a breach of, default under or other violation of any agreement,
contract or obligation of Zygo.

15. Payment of Technology Transfer Fees to Zygo. Nano shall pay Zygo […*…] in
technology transfer fees (the “Technology Transfer Fees”) in accordance with
this Section 15.

15.1 […*…].

15.2 […*…].

15.3 Reports. Nano shall deliver to Zygo a report within thirty (30) days after
the end of each calendar quarter during the Fee Period, stating the number of
Approved Systems (including Upgrade Sales) sold by Nano during such calendar
quarter.

15.4 Payments. Concurrently with each report under Section 15.3, Nano shall pay
to Zygo the Technology Transfer Fees due to Zygo for each unit sold by Nano
pursuant to 15.1, at Zygo’s office in Middlefield, Connecticut, or at such other
address as may be designated in writing.

15.5 Records. Nano shall keep records and books of account which shall show the
Net Revenues received by Nano from each Approved System sold by Nano during the
Fee Period. Zygo will have the right to conduct annual audits of reports
submitted during

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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the prior six (6) calendar years. Such audits shall be conducted by a certified
public accountant at the expense of Zygo, unless an underpayment of ten percent
(10%) or more is found for any calendar year, in which case the expense shall be
borne by Nano.

15.6 Covenants as to Net Revenues.

(a) Nano shall sell Approved Systems for cash consideration, including a check
or money order, and shall determine the pricing for sales of Approved Systems
based on its standard practice for ordinary course, arms-length transactions.

(b) Nano shall not make sales of Approved Systems on credit outside of its
ordinary course of business, or on terms or for reasons inconsistent with past
practice.

(c) Nano will diligently pursue collection of amounts due from sales of Approved
Systems on a good faith basis.

15.7 Consideration. In clarification of this Section 15, the Technology Transfer
Fees due Zygo under this Section are separate from, and in addition to, the
Sustaining Engineering Fee due Zygo under Section 7 and Exhibit C and the
Purchase Price of Zygo Heads by Nano under Sections 2.3 and 2.4.

16. Additional Obligations of Zygo.

16.1. Spare Parts. Zygo shall supply to Nano a spare parts price list no later
than thirty (30) days after the date of this Agreement and shall supply Nano
with a revised spare parts price list as revisions are made. The prices included
on such price list shall be Zygo’s then-current list price for such spare parts.
Zygo shall stock parts reasonably required for the repair and servicing of Heads
and Components by Nano, and shall sell such parts to Nano pursuant to the terms
of this Agreement. Zygo shall test and inspect all parts using the same
procedures as Zygo uses for like components of the Heads and Components. Zygo
shall maintain the capability of repairing and otherwise servicing Heads and
Components and furnishing spare parts manufactured by Zygo until the expiration
of at least five (5) years after the date of Zygo’s delivery of such Head or
Component. Zygo shall use its best efforts to ship parts ordered by Nano within
two (2) business days after receipt and acceptance of Nano’s order. Zygo shall
notify Nano promptly of the date by which such shipment will occur if such
shipment will not be made within such two (2) business day period.

16.2 Service Not Covered by Warranty. In the event that any unit requires repair
or other service that is not covered by Zygo’s warranty obligations (e.g., after
expiration of the warranty period), Zygo shall be obligated to provide such
service at Zygo’s then-applicable labor rate and parts prices unless Zygo is
otherwise no longer in the business of selling or supporting such parts. Zygo
shall use its best efforts to complete such repairs within ten (10) business
days.

 

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16.3 Defect Notification. Zygo shall immediately notify Nano of any material or
recurring defect, deficiency or nonconformity discovered with respect to any of
the Heads or Components manufactured by Zygo.

16.4 Head Modifications and Life Cycle Management. Zygo will satisfy all “Copy
Exact” requirements so that Nano can fulfill such requirements to […*…] and
other customers. If Zygo at any time modifies any Heads, Zygo shall, if
requested by Nano in Nano’s sole discretion, continue to make and supply Nano
with unmodified Heads during the remaining term of this Agreement. Zygo will
notify Nano at least six months prior to making any change in the design,
performance, function, material or components of any Head purchased by Nano.
Zygo shall use good faith efforts to notify Nano of any engineering change in
any Head or Component sufficiently in advance of making any engineering change
to enable Nano to provide comments and input into Zygo’s engineering change
control process. Zygo shall not modify or authorize any modification affecting
fit, form or function of any of the Heads or Components, or which would be
significant with respect to requirements of any governmental authority.

16.5 Documentation. Zygo shall deliver a copy of the user manuals (hard or
soft), if any, with each unit of Heads and Components. Zygo shall update all
documentation as necessary to keep it current, accurate and complete. Nano shall
have a nonexclusive, royalty-free license to use, reproduce and distribute any
and all documentation in connection with the marketing, use or distribution of
Heads and Components or products or systems into which any of the Heads or
Components are incorporated.

17. General.

17.1 Independent Contractors. The parties to this Agreement are acting as
independent contractors with respect to each other; neither is an employee,
partner or joint venturer of the other with respect to this Agreement. Neither
party is authorized to act on behalf of, make representations for, or bind the
other in any way.

17.2 Successors and Assigns. Each party may assign all of its rights and
delegate all of its duties hereunder to an entity which acquires at least that
portion of its business to which this Agreement relates, or to any corporate
successor by way of merger or consolidation; provided, however, that such
assignee assumes all of such parties obligations hereunder; and provided further
that Nano may not make such assignment or delegation to those specific entities
listed on Schedule 17.2 hereto. Subject to the foregoing, this Agreement shall
be fully binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors, assigns and legal representatives.

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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17.3 Time of Essence. Time is of the essence in the performance of each party’s
obligations under this Agreement.

17.4 Force Majeure. Neither party shall be liable for any delays in performance
due to causes beyond its reasonable control, including but not limited to acts
of God, public enemy, governmental laws, regulations or requirements, civil or
military authority, labor disputes, fires, riots, wars, embargoes, epidemic, or
floods.

17.5 Notices. Any notices required or permitted to be given by one party under
this Agreement shall be deemed given to the other party when delivered in hand
or three days after deposit with the United States Postal Service, registered or
certified mail, postage prepaid, addressed as follows:

If to Zygo:

Zygo Corporation

Laurel Brook Road

Middlefield, CT 06455-0448

Attention: Chief Executive Officer

Tel: 860-704-5109

Fax: 860-347-8372

With a copy to:

Fulbright & Jaworski L.L.P.

666 Fifth Avenue

New York, NY 10103

Attention: Sheldon Nussbaum

Tel: (212) 318-3000

Fax: (212) 318-3400

If to Nano:

Nanometrics Incorporated

1550 Buckeye Drive

Milpitas, CA 95035

Attention: Chief Executive Officer

Tel: (408) 545-6000

Fax: (408) 904-6278

With a copy to:

Perkins Coie LLP

101 Jefferson Drive

Menlo Park, CA 94025

Attention: Buddy Arnheim

Tel: (650) 838-4300

Fax: (650) 838-4350

 

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17.6 Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable by a court of competent jurisdiction, then that
provision shall be deemed omitted form this Agreement, and all remaining
provisions shall remain in effect and enforceable according to their terms;
provided, however, that if the result of this severability provision is to
substantially alter the obligations of the parties or the underlying intent of
this Agreement, then either party may at its option rescind this Agreement.

17.7 Governing Law; Venue. This Agreement and performance under it are governed
by the laws of the State of Delaware, exclusive of choice of law rules.

17.8 Arbitration.

(a) Any controversy, dispute or claim arising under or in connection with this
Agreement (including, without limitation, the existence, validity,
interpretation or breach hereof and any claim based on contract, tort of
statute) shall be resolved by a binding arbitration, to be held in Portland,
Oregon (or its nearest surrounding area) pursuant to the Federal Arbitration Act
and in accordance with the then-prevailing International Arbitration Rules of
the American Arbitration Association (“AAA”).

(b) The parties shall commence the arbitration by jointly filing a written
submission with the Portland, Oregon (or its nearest surrounding area) office of
the AAA in accordance with Commercial Rule 5 (or any successor provision). The
arbitration shall be conducted by a single arbitrator (the “Arbitrator”)
selected by Nano and Zygo in accordance with the Commercial Arbitration Rules of
the AAA (the “Commercial Rules”).

(c) The Arbitrator shall have no power or authority, under the Commercial Rules
or otherwise, to (i) modify or disregard any provision of this Agreement, or
(ii) address or resolve any issue not submitted by the parties.

(d) In connection with any arbitration proceeding pursuant to this Agreement,
each party shall bear its own costs and expenses, except that the fees and costs
of the AAA and the Arbitrator, the costs and expenses of obtaining the facility
where the arbitration hearing is held, and such other costs and expenses as the
Arbitrator may determine to be directly related to the conduct of the
arbitration and appropriately borne jointly by the parties (which shall not
include any party’s attorneys’ fees or costs, witness fees (if any), costs of
investigation and similar expenses) shall be shared equally by the parties.

 

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17.9 Attorneys’ Fees. If any action or suit is instituted to enforce the
obligations of this Agreement, the prevailing party shall be entitled to recover
from the other party, in addition to any other rights and remedies it may have,
all reasonable expenses and attorneys’ fees incurred up to and including
arbitration, trial, appeal, and any petition for review.

17.10 Titles and Subheadings. The use of titles and subheadings in this
Agreement is for the convenience of the parties only. They do not constitute
binding portions and are not to be used in the interpretation of this Agreement.

17.11 Exhibits. The following Exhibits are attached and are part of this
Agreement:

Exhibit A:     Descriptions of Heads and Components

Exhibit B:     Price List

Exhibit C:     Training

Exhibit D:     Orders

17.12 Complete Agreement. This Agreement, together with the related Asset
Transfer Agreement and Non-Disclosure Agreement, constitute the entire
understanding of the parties with respect to its subject matter and supersedes
all prior agreements and understandings of the parties. A breach by either party
under the Asset Transfer Agreement shall be deemed to constitute a breach by
that party under this Agreement. Nano shall not be bound by, and specifically
objects to, any term, condition or other provision which is different from or in
addition to the provisions of this Agreement (whether or not it would materially
alter this Agreement) and which is proposed by Zygo in any quotation, invoice,
shipping document, acceptance, confirmation, correspondence or otherwise, unless
Nano specifically agrees to such provision in a written instrument signed by
Nano.

17.13 Modification by Signed Writing Only; Waiver. No modification, change,
amendment, or any waiver of rights with respect to this Agreement shall be
binding unless in writing signed by the party to be charged. No waiver of any
violation or nonperformance of this Agreement in one instance shall be deemed to
be a waiver of any subsequent violation or nonperformance.

17.14 Nonwaiver. The failure of any party to insist upon or enforce performance
of any of the provisions of this Agreement or to exercise any rights under this
Agreement shall not be construed as a waiver or relinquishment to any extent of
such party’s right to assert or rely upon any such provisions or rights in that
or any other instance; rather, the same shall be and remain in full force and
effect.

17.15 Implementation. Each party shall take such action (including, but not
limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other party for the implementation or continuing
performance of this Agreement. Without limiting the generality of the foregoing,
Zygo shall execute, acknowledge and deliver to Nano all such further assurance
as Nano may reasonably request to evidence, vest and confirm the rights granted
to Nano under this Agreement.

 

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17.16 Remedies. The rights and remedies provided in this Agreement shall be the
exclusive rights or remedies of the parties for monetary damages with respect to
the matters covered herein.

17.17 Set-Off. All claims for monies due or to become due from Nano under this
Agreement or otherwise shall be absolute, and there shall be no right to
deduction by Nano for any setoff arising out of this or any other transaction
between Nano and Zygo.

17.18 Damages. Notwithstanding anything contained in any other provision of this
Agreement, (a) in the case of Zygo, damages hereunder will not exceed the […*…];
(b) Zygo shall have no obligation to Nano in respect of any claim by Nano
relating to any Head or Component, other than servicing or replacing such Head
or Component in accordance with Section 10; and (c) in no event will
consequential, indirect, punitive, individual or special damages of any nature,
or any damage or claim for lost profits, be awarded to either party under any
circumstances. Notwithstanding the foregoing, the indemnification obligations
under Section 12 hereof are excluded from the foregoing as provided in
Section 12.

17.19 Equitable Relief. Each party acknowledges that the provisions of this
Agreement pertaining to the other party’s interests in the Flow-Through Licensed
Technology are essential to the other party; that the other party would not
enter into this Agreement if this Agreement did not include such provisions; and
that damages sustained by the other party as a result of a breach of such
provisions cannot be adequately remedied by monetary damages. Each party agrees
that the other party, in addition to any other remedy it may have under this
Agreement or at law, shall be entitled to injunctive and other judicial
equitable relief to prevent or curtail a party from breaching the provisions of
this Agreement.

17.20 […*…].

17.21 Nano shall use good faith efforts to market and sell the Approved Systems
in the Approved Markets.

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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ZYGO CORPORATION

(“Zygo”)

   

NANOMETRICS CORPORATION

(“Nano”)

By:   /s/ J. Bruce Robinson     By:   /s/ Timothy J. Stultz, Ph.D. Its:   Chief
Executive Officer     Its:   President and Chief Executive Officer

 

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EXHIBIT A

Descriptions of Heads and Components

For purposes of clarification, the term “Head” is exemplified by the Head in the
Unifire and includes:

(a) optical lens subassemblies, light source, components, power supplies,
filters, cameras, image processing and pattern recognition software and
algorithms and related mounting or bridging hardware required to embody the head
in an automated final assembly;

(b) the control, modeling and analysis software, and related algorithms,
utilized by and in the Automated Interferometer Systems developed and marketed
by Zygo;

(c) the electronic control systems utilized by and in the Automated
Interferometer Systems developed and marketed by Zygo (which may or may not be
contained in the “Head” assembly);

(d) the know-how, software, systems and hardware that automates the systems;

(e) all parts, components and subassemblies of the products described in clause
(a) above;

(f) all equipment and goods that are or may be used in connection with or
ancillary to the manufacture, testing, use, calibration, maintenance or repair
of “Heads”;

(g) all modifications and enhancements to any of the foregoing; and

(h) all replacements for and successors of any of the foregoing products made,
used, sold or acquired by Zygo during the term of this Agreement.

“Head” also includes any improvements or modifications that arise during the
term of this Agreement. Reference is made to Section 10.1(e) of the Agreement
regarding “Copy Exact” requirements.

Notes:

The light source for the Head will be a white-light LED. The head can accept a
Xenon light source as an option, but this is priced separately. There is no
laser.

 

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EXHIBIT B

Price List

[…*…]

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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EXHIBIT C

Training, Sustaining Engineering Services and Development Services

[…*…]

 

* CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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