EXHIBIT 10.2

___________________________CONFIDENTIAL
TREATMENT REQUESTED___________________________

CERTAIN PORTIONS INDICATED BY [*****]
HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED NON-PUBLIC
PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

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DEVELOPMENT AGREEMENT
(for RTS Projects)

This DEVELOPMENT AGREEMENT
(AGREEMENT), effective as of March 26, 2004, by and between Canon Inc., a
Japanese corporation having its principal place of business at 30-2, Shimomaruko 3-chome,
Ohta-ku, Tokyo 146-8501, Japan (CANON) and Zygo Corporation, a Delaware
corporation having its principal place of business at 21 Laurel Brook Road, P.O. Box 448,
Middlefield, Connecticut 06455-0448, U.S.A. (ZYGO), each sometimes referred to
hereinafter as a PARTY and jointly as the PARTIES to this
AGREEMENT,

WITNESSETH:

WHEREAS, CANON has been engaged in
the design, development, manufacture and sales of certain lithography tools such as
steppers, scanners and aligners;

WHEREAS, ZYGO has expertise in the
field of interferometric metrology;

WHEREAS, CANON and ZYGO have entered
into a Development Agreement effective as of September 6, 2001 under which the PARTIES
have been cooperatively developing a certain leading-edge figure measurement machine
together with an interferometer to be incorporated into such figure measurement machine;
and

WHEREAS, CANON and ZYGO have mutual
interests in further developing another series of figure measurement machines based on the
results of the development of aforesaid figure measurement machine under the terms and
conditions contained herein;

NOW, THEREFORE in consideration of
the premises and the covenants herein contained, the PARTIES agree as follows:

ARTICLE 1.  DEFINITIONS

|1.1 |  | The
term TARGET PRODUCT as used herein shall mean a figure measurement machine
identified by the PARTIES as of the execution date hereof as RTS ([*****] or
[*****]), incorporating certain interferometery unit, for large size and high precision
aspheric surface measurement in normal atmosphere, including tools, accessories and parts
thereof, and specified in EXHIBIT A attached hereto, and which fully meets the FINAL
SPECIFICATIONS thereof.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|1.2 |  | The
term PROJECT as used herein shall mean the works to be performed by both
PARTIES pursuant hereto in designing, developing (developing includes
manufacturing at least one (1) unit of the TARGET PRODUCT that materialize the result
thereof) and evaluating the respective TARGET PRODUCT and of which details are fully
described in EXHIBIT A attached hereto, and installing such unit of the TARGET PRODUCT in
CANONs premise.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|1.3 |  | The
term DRAFT SPECIFICATIONS as used herein shall mean the preliminary
specifications of the respective TARGET PRODUCT which are provided by CANON under the
PROJECT. The DRAFT SPECIFICATIONS shall be expressly included in the Confidential
Information (as defined in EXHIBIT C attached hereto) of CANON.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|1.4 |  | The
term FINAL SPECIFICATIONS as used herein shall mean the definitive and
finalized specifications of the respective TARGET PRODUCT which are initially proposed by
ZYGO based upon the DRAFT SPECIFICATIONS, evaluated by the PARTIES and finally agreed
upon by both PARTIES in writing under the PROJECT. The FINAL SPECIFICATIONS shall be
included in the RESULTS.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

1

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1.5

The
term RESULTS as used herein shall mean any and all results obtained by a
PARTY or the PARTIES through performance of the PROJECT, including without limitation,
working samples, prototypes and drawings of the TARGET PRODUCT and related technology,
knowledge and know-how obtained through performance of the PROJECT. The term RESULTS shall
expressly include the FINAL SPECIFICATIONS, TARGET PRODUCT, DELIVERABLES and INVENTION.1.6

The
term DELIVERABLES as used herein shall mean the items to be delivered by
either PARTY to the other PARTY under the respective PROJECT and which are specified in
EXHIBIT A attached hereto.1.7

The
term INVENTION as used herein shall mean any and all inventions, discoveries,
improvements, designs, ideas or other creations, whether or not protectable through
patent, utility model, copyright, trade secret, mask work right or other intellectual
property rights, which are conceived, developed, reduced to practice or acquired solely
by a PARTY or jointly by the PARTIES during the term of this AGREEMENT specifically while
performing work in carrying out the PROJECT.1.8

The
term "EFFECTIVE DATE" shall mean March 26, 2004.ARTICLE 2. PERFORMANCE
OF THE PROJECT


2.1

At
the commencement of the PROJECT, both PARTIES hereby expressly acknowledge that both
PARTIES are uncertain whether the PARTIES will complete the PROJECT and achieve the
results of the PROJECT.2.2

ZYGO
and CANON shall use their good faith effort to carry out the PROJECT in accordance with
the schedule set forth in the EXHIBIT A.A
working team shall be formed in ZYGO for carrying out the PROJECT. CANON agrees to
cooperate with ZYGO in ZYGOs performance of the PROJECT. Outline of the work to be
performed by respective PARTIES is described in EXHIBIT A attached hereto.ZYGO
agrees to provide CANON with a monthly report stating (i) actual costs incurred during the
previous one month for the respective PROJECT with the details of the list of the
materials purchased and wages, overhead and hours of each employees engaged in the
respective PROJECT; (ii) prediction of the next three months consumption of the
DEVELOPMENT FEE (as defined in Section 4.2 below); (iii) anticipated aggregate cost of the
PROJECT by the completion of such PROJECT; and (iv) estimated timing of actual completion
of the PROJECT.If
the PROJECT becomes behind schedule, ZYGO shall promptly notify CANON thereof and provide
sufficient explanation for how and why it happens, and ZYGO and CANON will enter into a
good faith discussion thereon. If CANON and ZYGO are unable to agree on revision of the
development schedule, such PROJECT can be terminated by either PARTY without liability to
the other PARTY except for the remedies under Sections 2.7 and 6.6 which will take effect.If
ZYGO believes the actual or estimated total cost of a certain PROJECT will exceed the
DEVELOPMENT FEE (as defined in Section 4.2 below) thereof, ZYGO shall promptly notify
CANON thereof and provide with sufficient explanation for how and why the costs exceed the
amount agreed, and ZYGO and CANON will enter into a good faith discussion thereon. If
CANON and ZYGO are unable to agree on a contract price adjustment, such PROJECT can be
terminated by either PARTY without liability to the other PARTY except for the remedies
under Sections 2.7 and 6.6 which will take effect.2.3

The
PARTIES acknowledge that each PARTY agrees to deliver to the other PARTY the DELIVERABLES
as specified in EXHIBIT A attached hereto under the respective PROJECT.2.4

The
PARTIES agree to have periodical and occasional discussions for exchanging information
relating to the respective PROJECT in order to accelerate the progress of such PROJECT.2.5

Each
PARTY shall provide the other PARTY with the RESULTS obtained through the performance of
the respective PROJECT promptly after such RESULTS have been obtained. Except as
expressly provided in Article2



3 hereof,  ZYGO shall not provide, deliver
or transfer its RESULT to any third party other than CANON during the term of the PROJECT.2.6

Each
PROJECT shall be deemed completed when CANON accepts all the DELIVERABLES of ZYGO under
such PROJECT at Canons premise as the TARGET PRODUCT which fully meets the FINAL
SPECIFICATIONS therefor.CANON
shall have the right to inspect the DELIVERABLES of ZYGO under the respective PROJECT to
determine whether they meet the FINAL SPECIFICATIONS of the TARGET PRODUCT under such
PROJECT. In the event the DELIVERABLES fail to meet the FINAL SPECIFICATIONS, CANON shall
have the right to have ZYGO modify such DELIVERABLES of ZYGO so that they meet the FINAL
SPECIFICATIONS. The foregoing procedure shall be performed until CANON accepts all the
DELIVERABLES under such PROJECT. In the event CANON accepts all the DELIVERABLES of ZYGO
for each PROJECT, such DELIVERABLES shall be deemed to be the TARGET PRODUCT thereof. In
the event CANON does not accept the DELIVERABLES of ZYGO as the TARGET PRODUCT for each
PROJECT, CANON shall have the right to terminate such PROJECT and enforce its rights under
Section 6.6 below, provided that CANONs sole ground for such non-acceptance of the
DELIVERABLES of ZYGO shall be such ZYGOs DELIVERABLES non-compliance with the
FINAL SPECIFICATIONS thereof.Notwithstanding
the foregoing, in the event CANON decides to adopt any DELIVERABLES having any
non-compliance with the FINAL SPECIFICATIONS as a commercial level product under a PROJECT
and notify ZYGO of its intent so in writing, such DELIVERABLES shall be deemed to be a
premature commercial level TARGET PRODUCT (PREMATURE TARGET PRODUCT) and
Section 7.1 shall apply to such PREMATURE TARGET PRODUCT as if it were named in the place
of the TARGET PRODUCT and ZYGO shall make all necessary assistance to CANON so that CANON
can commercially use such PREMATURE TARGET PRODUCT; provided, however, that such adoption
of PREMATURE TARGET PRODUCT shall not relieve ZYGO from any of its obligations under this
AGREEMENT, including without limitation, its obligation to modify such DELIVERABLES to
meet the FINAL SPECIFICATIONS pursuant to the procedure set forth herein.2.7

In
addition to the foregoing, CANON shall have the right to terminate any of the PROJECTs at
any time with or without cause. Upon such termination which has occurred solely for CANONs
reasons, CANON agrees to pay ZYGO on timing separately agreed upon by the PARTIES the
actual costs incurred by ZYGO solely from its performance of such PROJECT by the time of
such termination and not paid by CANON to ZYGO, plus costs solely arising out of the
occurrence of such termination (e.g., cancellation fee for outside materials, orders and
services, details of which are separately agreed upon by the PARTIES); provided, however,
that ZYGO shall promptly provide written documentation which sufficiently specifies
details of the costs and proves the correctness of the calculation of the amount of such
costs and CANON agreed it is reasonable costs of such termination.ARTICLE 3. SUBCONTRACT


3.1

ZYGO
may assign any of its tasks under the PROJECT to its subcontractor subject to the prior
written consent of CANON and disclose Confidential Information (as defined in the EXHIBIT
C) of CANON to such subcontractor only for the purpose of carrying out such task, subject
to terms and conditions of this AGREEMENT (including without limitation, confidentiality)
and subject further to CANONs prior written consent thereto.3.2

In
the event that ZYGO assigns its task of the PROJECT to its subcontractor, ZYGO shall
execute a written agreement with such subcontractor which at least sets forth:(a)
all
rights, titles and interests in and to all materials, devices, notebooks, documents and
other items made by such subcontractor in carrying out such task, and all inventions,
discoveries, improvements, designs, ideas, technical data, devices, steps, works,
software, equipment or other creations, whether or not protectable or protected through
patent, utility model, copyright, trade secret, mask works or other intellectual property
rights, which are conceived, developed, reduced to practice or acquired by such
subcontractor in carrying out such task (the SUBCONTRACTOR RESULTS) shall be
assigned and transferred to ZYGO so that they shall be treated under the terms and
conditions of this AGREEMENT; and(b)
such
subcontractor shall bear the confidentiality obligations and other restrictions in
accordance with Section 2 of EXHIBIT C.3



3.3

All
activities and works performed by such subcontractor shall be considered to be performed
by ZYGO for the purpose hereof, and the foregoing permission to assign its task of the
PROJECT to subcontractors shall not relieve ZYGO from performing hereunder.ARTICLE 4. DEVELOPMENT
FEE


4.1

CANON
shall bear all its costs and expenses incurred by itself relating to its performance of
the respective PROJECT.4.2

In
full and complete consideration for the respective PROJECT performed by ZYGO hereunder,
including without limitation, the costs of the DELIVERABLES of ZYGO under such PROJECT,
CANON agrees to pay to ZYGO the fee set forth in applicable EXHIBIT A (DEVELOPMENT
FEE).4.3

The
PARTIES hereby expressly acknowledge that CANON shall have no liability and obligation to
pay any consideration or fee to ZYGO for the respective PROJECT except as expressly
provided in the applicable EXHIBIT A attached hereto. Notwithstanding anything contained
herein to the contrary, in the event a certain or all of the PROJECT is sooner terminated
pursuant to Sections 2.2, 2.7, 10.2 or 10.3, CANON shall be under no obligation of paying
any compensation or fee to ZYGO after such termination with respect to such PROJECT,
except as expressly provided in Section 2.7.4.4

Certain
reasonable period before the payment date of each installment of the payments, ZYGO shall
provide CANON with an invoice which shall include breakdown of such invoiced amount which
is necessary to prove that all of the payment to be made by CANON to ZYGO for such
invoice pursuant hereto will be used only for the performance of the respective PROJECT.
The form of the invoice shall be attached hereto as EXHIBIT D.4.5

For
customs purposes, in the event ZYGO delivers the RESULTS to CANON hereunder, ZYGO shall
accompany the RESULTS with an invoice specifying actual costs and expenses for each of
the RESULTS.4.6

Payments
made by CANON under this AGREEMENT shall be made to ZYGO by wire transfer to the
following bank account:(Bank Name)  (Branch Name)
  (Bank Address)  (Telex No.)  (Account Number)
     Bank of America
Bank of America, New YorkABA No. 021300019 2210869369163599ARTICLE 5.
CONFIDENTIALITY


The
PARTIES hereby agree that any and all information of a confidential and proprietary nature
to be disclosed from either PARTY to the other PARTY under the PROJECT shall be treated in
accordance with the terms set forth in EXHIBIT C attached hereto.ARTICLE 6. OWNERSHIP


6.1

Any
and all RESULTS shall be jointly vested in the both PARTIES, and subject to Sections 6.2
through 6.6 and Article 7 below, each PARTY is free to use and utilize any and all
RESULTS without restriction.Notwithstanding
anything contained herein to the contrary, any and all right, title and interest in and to
any sample of the TARGET PRODUCT shall be solely vested in CANON, and ZYGO shall expressly
agree that CANON can freely use, sell or otherwise dispose of such samples of the TARGET
PRODUCT without any restriction, in all instances to be used by CANON or a third party
solely for their intended use, provided that the third party shall not acquire any
intellectual property rights, or rights to any Confidential Information from ZYGO as a
result of the use, sale or disposition of any such samples.6.2

Notwithstanding
Section 6.1 above, any and all applications for patents and utility models for any
INVENTION made solely by one PARTY through performance of the PROJECT, and any and all
patents and utility models4



issued on or
registered from  applications for such INVENTION shall be solely vested in such
inventing PARTY subject to Sections 6.6 and 7.4 below.6.3

Any
and all applications for patents and utility models for any INVENTION made jointly by the
both PARTIES through performance of the PROJECT, and any and all patents and utility
models issued on or registered from applications for such INVENTION shall be jointly
vested in and owned equally by the both PARTIES. The PARTIES agree to enter into
discussions for the filing, prosecution and maintenance of such application and patents
and utility models jointly owned by the PARTIES, and any cost and expense required for
such filing, prosecution and maintenance shall be equally borne by the PARTIES.With
respect to such jointly owned patents and utility models including applications therefor,
each joint owner PARTY may, without the other joint owner PARTYs consent and without
any compensation to the other joint owner PARTY, exercise and practice any rights
thereunder by itself, and may grant a non-exclusive license thereunder to one or more
third parties in any country of the world. License fees, royalties or other consideration
obtained under such license grant, if any, shall vest in the PARTY who granted such
license. Each joint owner PARTY shall have the right to make improvements based on such
jointly owned patents and utility models including applications therefor as well as the
INVENTION, and all rights and interests in and titles to such improvements shall be wholly
and solely vested in such joint owner PARTY who made the improvements.6.4

If
ZYGO does not desire to file, prosecute, or maintain such application and patents and
utility models set forth in Sections 6.2 and 6.3 above, then ZYGO shall, at no charge,
convey, assign, transfer and deliver to CANON all of its rights, titles and interests in
and to such patents and utility models, together with the right to further sell, convey,
assign, transfer or license such patents and utility models, or any part thereof, to any
entities in the world. CANON may file such application at its sole expense and in its own
name as the sole owner, and ZYGO shall have no right whatsoever with respect to such
application and patents and utility models. In any case, ZYGO shall reasonably cooperate
in such filing at its own expense.6.5

Notwithstanding
anything herein contained to the contrary, if it is necessary to pay any compensation to
any employee who makes an INVENTION, the PARTY who employs such employee shall be solely
liable and responsible for such compensation.6.6

(1)     
In the event CANON does not accept the DELIVERABLES under a certain PROJECT as the TARGET
PRODUCT as set forth in Section 2.6 hereof, CANON shall have the right to develop, have
developed, use, manufacture and have manufactured whole or portion of such TARGET PRODUCT
and the DERIVATIVES with use of the RESULTS and under any and all applications for
patents and utility models of ZYGO made pursuant to Section 6.2 above, any and all
patents and utility models issued or registered from such applications, any and all ZYGOs
intellectual property rights applicable to the TARGET PRODUCT and the DERIVATIVES with
use of the RESULTS, and/or Confidential Information (as defined in EXHIBIT C attached
hereto) of ZYGO, without any payment to ZYGO; but in all cases, only to the extent any
such DERIVATIVES are used solely for the same purpose and intended use as that of the
TARGET PRODUCT. For the purpose of this AGREEMENT, the term DERIVATIVES shall
mean any successor product of the TARGET PRODUCT.(2)      In such event, (i) CANON may disclose ZYGOs Confidential Information
          through a confidentiality agreement to the extent it is necessary to manufacture
          the TARGET PRODUCT or the DERIVATIVES under the terms and conditions which are
          to be reasonably acceptable to ZYGO, provided that any confidentiality
          obligation and use restrictions under such agreement with respect to the
          Confidential Information of ZYGO shall be effective for five (5) years from the
          date of disclosure of such Confidential Information and; (ii) ZYGO shall grant
          to CANON a non-exclusive, royalty-free, payment-free license for CANON to
          exercise the right set forth in this Section 6.6; provided, however, that such
          license with respect to the patent rights issued on any applications which was
          filed by ZYGO on and before the EFFECTIVE DATE and the patent rights issued on
          any applications which are acquired by ZYGO separately from and independently of
          the PROJECT after the EFFECTIVE DATE (ZYGO PREEXISTING PATENTS)
          shall be royalty-bearing and CANON agrees to pay reasonable royalty to ZYGO for
          such license under the ZYGO PREEXISTING PATENTS. Detailed conditions of such
          royalty-bearing license under ZYGO PREEXISTING PATENTS shall be discussed and
          agreed upon by ZYGO and CANON, including the amount of royalty, provided further
          that in no event such amount of the royalty shall exceed the reasonable cost of
          the royalty reflected on a net selling price of the TARGET PRODUCT or such
          product with use of the RESULTS as if ZYGO could steadily supply volume
          production quantities of the TARGET PRODUCT or5



such
product with use of the RESULTS to CANON or DESIGNEES (as defined in Section 7.1 below)
pursuant to Section 7.1 below.(3)      Notwithstanding
the foregoing, in case the TARGET PRODUCT under a certain           PROJECT hereof is not
an interferometer or a figure measurement machine but the           components,
exclusively designed tools, or parts thereof that are [*****] of a           figure
measurement machine, CANON shall have the right to develop, have           developed,
use, manufacture and have manufactured the components, tools and           parts with use
of the RESULTS and under any and all applications for patents and           utility
models of ZYGO made pursuant to Section 6.2 above and any and all           patents and
utility models issued or registered from such applications, and if           any; any and
all ZYGOs intellectual property rights applicable thereto and
          Confidential Information (as defined in EXHIBIT C attached hereto) of ZYGO
          without payment to ZYGO. In such event, the proviso of subsection (2)(ii)
hereof           shall not apply hereto.All
ZYGOs intellectual property rights applicable to the TARGET PRODUCT and the
DERIVATIVES remain vested with and are the sole possession of ZYGO and shall be treated in
accordance with paragraph 6.6 hereof.In
the event the PARTIES agree to develop as the TARGET PRODUCT under a certain PROJECT any
components, exclusively deigned tools or parts of a figure measurement machine other than
those specified in this subsection 6.6(3), the PARTIES will discuss and separately
determine the conditions of the license for ZYGOs intellectual property rights
applicable thereto.(4)      Notwithstanding anything to the contrary contained in the AGREEMENT, none of
          the ZYGO PREEXISTING PATENTS may be used by CANON for any purpose other than for
          the development and the manufacture of the TARGET PRODUCT or the DERIVATIVES,
          nor may any of the RESULTS or INVENTIONS be used by any other party in the
          development or manufacture of any product (other than a product which is used
          solely by CANON for internal purposes) that directly or indirectly competes with
          ZYGOs core business of metrology products, provided that the limitation
          under this Section 5.5 with respect to the Confidential Information of ZYGO
          shall be effective for five (5) years from the date of disclosure of the
          Confidential Information.ARTICLE 7. MANUFACTURE
AND SUPPLY OF THE TARGET PRODUCT


7.1

After
completion of the respective PROJECT or adoption of the PREMATURE TARGET PRODUCT and upon
CANONs request, ZYGO shall manufacture and steadily supply to CANON and/or any
other entities designated by CANON (DESIGNEES) volume production quantities
of whole or portion of the TARGET PRODUCT or PREMATURE TARGET PRODUCT (hereinafter
individually or collectively referred to as TARGET PRODUCT in Articles 7 and
8). Detailed conditions of such supply shall be determined in a separate purchase
agreement for the TARGET PRODUCT between ZYGO and CANON or the DESIGNEES (PURCHASE
AGREEMENT); provided that the provision of this Article 7 shall precede the
PURCHASE AGREEMENT.7.2

So
long as CANON and/or DESIGNEES purchase whole or portion of TARGET PRODUCT from ZYGO or
CANON manufactures or has manufactured the TARGET PRODUCT pursuant to Section 6.6 or 7.4
hereof, ZYGO hereby agrees not to assert or enforce against CANON, DESIGNEES, their
subsidiaries or affiliates and their distributors, dealers, agents and customers any of
the rights under its patents, patent applications, utility model and utility model
applications and any intellectual property rights of ZYGO in any country of the world
with respect to the import, use, sale, offer for sale and lease of CANONs products
using or containing such TARGET PRODUCT or the DERIVATIVES subject in all cases to the
compliance with Section 6.6 above.7.3
Notwithstanding
anything contained herein to the contrary, ZYGO shall not sell, ship, supply or
distribute to any third parties, or shall not grant to any third parties any license to
sell, ship, supply or distribute (other than the DESIGNEE) the TARGET PRODUCT, any
product, tools or system incorporating any portion of the TARGET PRODUCT, including those
which can measure absolute calibration, which product, tools and system shall fall into
the scope of the EXCLUSIVITY for CANON set forth in Section 1 of EXHIBIT B attached
hereto, for a period of five (5) years after:(i)
           termination of the latest ongoing PROJECT by CANONs non-acceptance of the
          DELIVERABLES as the TARGET PRODUCT of such PROJECT as set forth in Section 2.6
          above; or(ii) successful
completion of the latest ongoing PROJECT under Section 2.6 above.6



For
the purposes of this AGREEMENT, the PROJECT as used in this Section 7.3 shall include the
work to be performed by ZYGO and/or CANON relating to the product or technology developed
under this AGREEMENT and of which details are determined in a separate agreement between
the PARTIES, including without limitation, those under the Development Agreement
effective as of September 6, 2001 between the PARTIES.Such
restriction shall not be applied to the product, tools and system which is inside the
Scope of the NON-EXCLUSIVITY set forth in Section 2 of EXHIBIT B attached hereto.
Consequently, either PARTY shall have the right, feely and independently of the PROJECT,
to develop and manufacture by itself or jointly with others and acquire from any third
party whose operations, characteristics, features or functions may be similar or
identical to, or competitive with the TARGET PRODUCT subject to the terms of this
AGREEMENT, including this Section 7.3.7.4
In
the event ZYGO cannot manufacture and steadily supply to CANON and/or DESIGNEE volume
production quantities of the TARGET PRODUCT pursuant to Section 7.1 above, CANON shall
have the right to manufacture the TARGET PRODUCT by itself or to have the TARGET PRODUCT
manufactured and supplied by any third party (THIRD PARTY MANUFACTURER) to
CANON and/or DESIGNEES.In
either case, ZYGO shall grant to CANON a non-exclusive, royalty-free, payment-free
license to manufacture, have manufactured the TARGET PRODUCT and supply and have supplied
the same by the THIRD PARTY MANUFACTURER to CANON and/or DESIGNEES, including without
limitation, licenses under any and all applications for patents and utility models of
ZYGO made solely by ZYGO pursuant to Section 6.2 above, and any and all patents and
utility models issued on or registered from applications for such INVENTION, and any and
all ZYGOs preexisting intellectual property rights applicable to the TARGET
PRODUCT, and ZYGO also shall provide all necessary assistance which enables CANON to
enforce its rights aforementioned.Notwithstanding
      the foregoing, such license with respect to the ZYGO PREEXISTING PATENTS
      shall be royalty-bearing and CANON agrees to pay reasonable royalty to ZYGO
      for the license under the ZYGO PREEXISTING PATENTS. Detailed conditions
      of such royalty-bearing license under ZYGO PREEXISTING PATENTS shall be
      discussed and agreed upon by ZYGO and CANON, including the amount of royalty;
      provided, however, that in no event such amount of the royalty shall exceed
      the reasonable cost of the royalty reflected on a net selling price of the
      TARGET PRODUCT as if ZYGO could steadily supply volume production quantities
      of the TARGET PRODUCT to CANON or DESIGNEES pursuant to Section 7.1 above.7.5
In
the event CANON determines to enforce its rights to have the TARGET PRODUCT manufactured
and supplied by the THIRD PARTY MANUFACTURER to CANON and/or DESIGNEE pursuant to Section
7.4 above, CANON may disclose Confidential Information of ZYGO through a confidentiality
agreement to the extent it is necessary to manufacture the TARGET PRODUCT or the
DERIVATIVES under the terms and conditions which should be reasonably acceptable to ZYGO,
provided that such limitation with respect to the Confidential Information of ZYGO shall
be effective for five (5) years from the date of disclosure of such Confidential
Information.ARTICLE 8. INTELLECTUAL
PROPERTY INDEMNITY


8.1
ZYGO
hereby represents and warrants, to its knowledge, that the RESULTS and the TARGET PRODUCT
and the use thereof, in whole or in part, does not constitute infringement or
misappropriation of any patent, copyright, trade secret or other intellectual property of
any third party. This representation by ZYGO does not extend to the use or incorporation
solely of any Confidential Information of CANON or a portion of RESULTS provided by
CANON.Notwithstanding
the foregoing, ZYGOs representation will be limited to the case where such
infringement or misappropriation is judicially determined, if both PARTIES cannot agree,
to relate solely and directly to the use and application of the intellectual property
developed by ZYGO specifically in connection with and for use in the PROJECT. This
representation shall not extend to modifications, additions or alterations to the TARGET
PRODUCT made by CANON or other third parties.8.2
In
the event that any claim, action, suit or proceeding is brought by any third party in any
country of the world against CANON, any of its subsidiaries or affiliates, or against any
distributor, dealer, agent or customer of any of them, DESIGNEES, or THIRD PARTY
MANUFACTURER (each referred to as an INDEMNIFIED PARTY),7



alleging
that the RESULTS,  TARGET PRODUCT or any derivative product manufactured with use of the
RESULTS, or the use thereof, in whole or in part, constitute at least a part of
infringement or misappropriation of any patent, copyright, trade secret or other
intellectual property of such party, ZYGO shall hold the INDEMNIFIED PARTY harmless and
shall, at its own expense, defend or settle such claim, action, suit or proceeding. ZYGO
shall pay for all losses, damages and all reasonable expenses and costs, including
attorney fees and royalties, incurred by the INDEMNIFIED PARTY relating to such claim,
action, suit or proceeding, provided that CANON:(a)
notifies ZYGO in writing of any such claim, action, suit or proceeding after
          CANON itself received written notice of it;(b)
reasonably cooperates
in the defense thereof at ZYGOs expense; and(c)
authorizes
ZYGO to defend against or settle such claim, action, suit or           proceeding on
behalf of CANON or on behalf of INDEMNIFIED PARTY to the extent           that CANON has
the right to grant such authorization.Notwithstanding
the foregoing, ZYGOs indemnification will be limited to the case where such
infringement or misappropriation is judicially determined, if both PARTIES cannot agree,
to relate solely and directly to the use and application of the intellectual property
developed by ZYGO specifically in connection with and for use in the PROJECT. This
liability shall not extend to modifications, additions or alterations to TARGET PRODUCT
made by CANON or other third parties.8.3
Notwithstanding
the foregoing, in the event CANON desires, CANON may defend and settle the claim, action,
suit or proceeding as set forth in Section 8.2 above, receiving full authority therefor
from ZYGO, or may participate in the defense and/or settlement thereof to whatever extent
CANON desires, including controlling said defense and/or settlement. In any case, all
expenses for such defense and/or settlement shall be borne by ZYGO; provided, however,
that CANON agrees to discuss with ZYGO and obtain ZYGOs consent, before taking any
decisive action on material issues of the defense and/or settlement. If said defense
and/or settlement is conducted by CANON, ZYGO shall assist CANON at ZYGOs expense
upon CANONs request.8.4
If
any of the RESULTS, TARGET PRODUCT or any product manufactured with use of the RESULTS,
in whole or in part, are or, in the opinion of ZYGO or CANON, may become the subject of
any claim, action, suit or proceeding for constituting at least a part of infringement or
misappropriation of, or if it is judicially determined that the RESULTS, TARGET PRODUCT
or any product manufactured with use of the RESULTS, in whole or in part, constitute at
least a part of infringement or misappropriation of, any patent, copyright, trade secret
or other intellectual property of a third party, or if the use of the RESULTS, TARGET
PRODUCT or any product manufactured with use of the RESULTS, in whole or in part, is as a
result enjoined, then, ZYGO shall perform either of the following:(a)
procure
for INDEMNIFIED PARTY the right under such patent, copyright, trade           secret or
other intellectual property right to continue to use or sell or           otherwise
dispose of the RESULTS, TARGET PRODUCT or such product manufactured           with use of
the RESULTS; or(b)
alter,
change or modify the RESULTS, TARGET PRODUCT or such product           manufactured with
use of the RESULTS so as not to infringe such third           partys intellectual
property, or replace the RESULTS, TARGET PRODUCT or           such product manufactured
with use of the RESULTS with non-infringing           alternatives, while conforming, as
closely as possible, to the FINAL           SPECIFICATIONS.The
foregoing remedial actions shall not relieve ZYGO from its obligations under Section 8.2
hereof.8.5
The
provisions of this Article 8 shall supersede any contradicting provisions provided in the
PURCHASE AGREEMENT.ARTICLE 9. NO LICENSE
AND RIGHTS


Except
as expressly provided herein, no license or right, express or implied, is hereby conveyed
or granted by either PARTY to the other PARTY under any patents, utility models, design
patents, design registrations, copyrights, mask works and trademarks.8



ARTICLE 10. TERM AND
TERMINATION


10.1
This
AGREEMENT shall become effective on the EFFECTIVE DATE and continue to be effective until
terminated by the PARTIES agreement unless earlier terminated pursuant to Section
10.2 or 10.3 below.10.2
In
the event that either PARTY materially breaches any of its obligations hereunder, the
other PARTY shall have the right to terminate this AGREEMENT by giving a written notice
thereof to be effective thirty (30) days after the receipt of such notice, unless such
breaching PARTY cures such breach within thirty (30) days of the receipt of such notice.
In the event that such breaching PARTY cures such breach within such thirty (30) day
period, there shall be no termination.10.3
In
the event either PARTY becomes insolvent or bankrupt or makes an assignment for the
benefit of creditors, or a receiver or similar officer is appointed to take charge of all
or part of such PARTYs assets, the other PARTY may terminate this AGREEMENT
immediately by giving written notice thereof to such PARTY.10.4
Notwithstanding
anything contained herein to the contrary, Sections 4.3 and Articles 5 through 8 shall
survive any termination or expiration of this AGREEMENT.ARTICLE 11. MISCELLANEOUS


11.0
(1)      All contract relevant press releases and Form 8-Ks, 10-Qs and 10-Ks, and any other
required filing to the Securities and Exchange Commission of the USA in relation to this
AGREEMENT or any PROJECT shall be delivered to CANON for review by CANON ten (10) days
prior to the required date of issuance or filing by ZYGO under applicable laws and
regulations. ZYGO shall make every effort to provide CANON with details of such potential
release or filing in order for CANON to review the necessity and contents thereof. In the
event CANON does not respond with comments within such ten (10) day period, ZYGO may
submit all necessary documentation without the benefit of CANONs response. In all
instances, ZYGO will have the final determination of the form and content of any press
release (unless it is a joint filing) or SEC filing.(2)                         Subject to the above, ZYGO
agrees not to disclose, disseminate and publicize           any RESULTS during the term
of this AGREEMENT and the five (5) year period set           forth in Section 7.3 above.11.1
Each
PARTY shall comply with all applicable export control laws and regulations. In the event
that the export of any commodity, software, technical data or information by ZYGO to
CANON hereunder requires a license set forth in the US Export Administration Regulations,
as amended (EAR), ZYGO shall take all necessary steps to obtain such a
license and shall promptly notify CANON thereof. In the event that the export of any
commodity, software, technical data or information by ZYGO to CANON hereunder requires a
written assurance set forth in the EAR, ZYGO shall request CANON to issue such written
assurance, providing CANON with sufficient information therefor. Upon CANONs
request, ZYGO shall furnish CANON with all necessary assistance, information and
documentation, including without limitation ECCN (Export Control Classification Number)
on the Commerce Control List.11.2
No
amendment or change hereof or addition hereto shall be effective or binding on the
PARTIES unless set forth in writing and executed by a duly authorized representative of
each of the PARTIES.11.3
Neither
PARTY may assign this AGREEMENT and any of its rights or under this AGREEMENT without the
prior written consent of the other PARTY, and purported assignment without such consent
shall have no force or effect. Subject to the foregoing, this AGREEMENT shall bind and
inure to the benefit of the respective PARTIES and their successors and assigns.11.4
In
the event that any of the provision of this AGREEMENT shall be held by a court or other
tribunal of competent jurisdiction to be invalid or unenforceable, the remaining portions
of this AGREEMENT shall remain in full force and effect. The PARTIES shall then endeavor
to replace such invalid or unenforceable provision with a clause which is the closest to
the contents of such invalid or unenforceable provision.9



11.5
No
delay or omission in exercising any right or remedy hereunder shall operate as a waiver
thereof or of any other right or remedy, and no single or partial exercise thereof shall
preclude any other or further exercise thereof or the exercise of any other right or
remedy.11.6
Neither
PARTY shall be liable to the other PARTY for any failure or delay in the performance of
any of its obligations under this AGREEMENT for the period and to the extent such failure
or delay is caused by riots, civil commotion, wars, hostilities, actions of any
government, Act of God, earthquakes, floods, storms, fires, accidents, explosions,
epidemics, acts of public enemy, invasion, strikes, labor disputes, lockouts or other
similar or different contingencies beyond the reasonable control of the respective PARTY.
The PARTY affected shall notify the other PARTY in writing of the circumstances of force
majeure as soon as possible.11.7
Headings
to Articles hereof are to facilitate reference only, do not form a part thereof, and
shall not in any way affect the interpretation or construction hereof.11.8
Neither
PARTY shall be deemed to be an agent of the other PARTY as a result of or in any
transaction under or relating to this AGREEMENT, and neither PARTY shall in any way
pledge the other PARTYs credit or incur any obligation in or on behalf of such
PARTY.11.9
Any
notice which either PARTY desires or is obligated to give to the other PARTY hereunder
shall be in writing and sent by registered air mail or courier, postage prepaid and
addressed to the last known address of such PARTY which the notice is intended. As of the
date hereof, any notice to be given to ZYGO shall be addressed to:Zygo
Corporation:                21 Laurel Brook Road                Middlefield, Connecticut
06455-0448, U.S.A                Attention:  Bruce RobinsonPresident
and CEO                                     Facsimile Number: +1-860-347-8372As
of the date hereof, any notice to be given to CANON shall be addressed to:Canon
Inc.               30-2, Shimomaruko 3-chome               Ohta-ku, Tokyo 146-8501,
JapanAttention: For any provision of this AGREEMENT:Senior
General Manager Contracts and Licensing Center Corporate Intellectual Property and Legal
Headquarters Facsimile Number: +81-3-3758-8163For
all other matters:Senior
General Manager                                     High-Precision Optics Engineering
Center                                     Optical Products Operations
                                    Facsimile Number: +81-28-667-9325Except
as otherwise expressly provided herein, notice shall be deemed to have been received on
the date when actually received by the receiving PARTY. Notice hereunder may be given via
facsimile; provided, however, that such notice shall be promptly confirmed in writing and
sent to the receiving PARTY in accordance with procedures set forth above in this Section
11.9.11.10
This
AGREEMENT constitutes the entire agreement and understanding between the PARTIES on the
subject matter hereof, and supersedes and replaces all prior written or oral discussions
and negotiations between the PARTIES regarding such subject matter, including Letter
Agreement regarding the M#2 Project and RTS#1 Project dated March 26, 2004 between the
PARTIES. Neither PARTY shall be bound by any conditions, definitions, warranties and
representations, other than as expressly provided in this AGREEMENT.10



11.11
IN
NO EVENT SHALL EITHER PARTY BE LIABLE FOR LOSS OF PROFITS, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, WHETHER IN THE EVENT OF TERMINATION, BREACH, REPUDIATION OR OTHER
EVENT, UNDER ANY THEORY OF LIABILITY, WHETHER BASED ON TORT, CONTRACT OR OTHER CAUSE OF
ACTION, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.IN
WITNESS WHEREOF, the PARTIES have caused this AMENDMENT to be executed in duplicate
originals by their duly authorized representatives as of the date last signed below.






CANON INC.
     ZYGO CORPORATIONBY:
     /s/ Hironori Yamamoto
     BY:
     /s/ Bruce RobinsonHironori
        YamamotoGroup Executive, Managing Director
        Core Technology
     
     Bruce RobinsonTITLE:
     Development Headquarters
     TITLE:
     PresidentDATE:
     February 23, 2005
     DATE:
     February 23, 200511



EXHIBIT A-1


PROJECT for RTS#1


1. TARGET PRODUCT


A
figure measurement machine identified by the PARTIES as RTS#1", of which
fundamental specifications and requirements are specified herein or separately agreed
upon by the PARTIES and which fully meets the FINAL SPECIFICATIONS2. Fundamental
specifications and requirements of the TARGET PRODUCTS


1.
Function(a)
 Uncertainty                [*****] (target)
 (b) Measurable part size 
       [*****](c)
 [*****]2.
OperationThe
TARGET PRODUCT shall be installed at Canons facility in Japan. ZYGO by itself (not
subcontractor) shall be responsible for the maintenance of the TARGET PRODUCT and CANON
will cooperate such maintenance by ZYGO. CANON and ZYGO will discuss with and determine
detailed conditions of such maintenance, including compensation therefor.3. Scope
of the PROJECT


Design,
development (development includes manufacturing one (1) unit of the TARGET
PRODUCT that materialize the result thereof) of the TARGET PRODUCT, including associated
tools and accessories (such as software, tools and electronics) and installment of such
one (1) unit of the TARGET PRODUCT.(Works to be performed by CANON)


(1)
Delivery
of the DRAFT SPECIFICATIONS to be determined by CANON(2)
Creation
and delivery of [*****], [*****] lens, [*****] lens and other parts
               separately agreed upon by the PARTIES based on the drawings designed by
ZYGO(3)
Acceptance
test of TARGET PRODUCT as installed at CANONs facility(Works to be performed by ZYGO)


(1)
Creation
and delivery of the proposed FINAL SPECIFICATIONS and the           environmental
specifications of the TARGET PRODUCT(2)
Design,
development,           evaluation and delivery to CANON of the TARGET PRODUCT and
installation and           adjustment of the TARGET  PRODUCT
at CANONs facility(3)
Creation
of documentation for testing, use and maintenance of the TARGET PRODUCTDetails
of the PROJECT other than those specified herein shall be determined by the PARTIESdiscussion.12



4. DELIVERABLES


     (From CANON to ZYGO)


DRAFT
SPECIFICATIONS(From ZYGO to CANON)


(1)
Proposed
FINAL SPECIFICATIONS(2)
One
(1) unit of the TARGET PRODUCT(3)
Reports
of evaluation by ZYGO of TARGET PRODUCT(4)
Documentation
for testing,           use and maintenanceDetails
of the DELIVERABLES other than those specified herein shall be determined by the PARTIES discussion.5. Development Schedule


Completion
of the PROJECT (Target Date)           [*****]6. Development Fee


In
full and complete consideration for this PROJECT performed by ZYGO hereunder, including
without limitation, the costs of the DELIVERABLES of ZYGO, CANON agrees to pay to ZYGO
Eight Million One Hundred Thousand US Dollars (US$8,100,000); provided, however, that
CANON shall not be required to pay to ZYGO under this AGREEMENT and EXHIBIT A-1 the
amount of Eight Hundred Fourteen Thousand Three Hundred Eighty-Four US Dollars
(US$814,384), which has been already paid by CANON to ZYGO for this PROJECT under Letter
Agreement regarding the M#2 Project and RTS#1 Project dated March 26, 2004 between
the PARTIES.Therefore,
after the execution date hereof, CANON shall pay the amount of Seven Million Two Hundred
Eighty-Five Thousand Six Hundred Sixteen US Dollars (US$7,285,616) for this PROJECT under
this AGREEMENT and EXHIBIT A-1 in accordance with the following payment schedule subject
to ZYGOs issuance of the invoice prior to each payment due date:(a)
Sixty
Hundred Seventy-One Thousand Four Hundred Fifty-One US Dollars (US$671,451) within thirty
(30) days of CANONs receipt of a fully executed original copy of the AGREEMENT;(b)
Two
Million Six Hundred Thousand US Dollars (US$2,600,000) by March 1, 2005;(c)
Two
Million Six Hundred Thousand US Dollars (US$2,600,000) by June 1, 2005;(d)
Nine
Hundred Thousand US Dollars (US$900,000) by September 1, 2005; and(e)
Five
Hundred Fourteen Thousand One Hundred Sixty-Five US Dollars (US$514,165)
               within thirty (30) days of CANONs acceptance of all the DELIVERABLES
               pursuant to Section 2.6 hereof or CANONs final decision to terminate
the                PROJECT and enforce its rights under Section 6.6 of the AGREEMENT with
respect                to the PROJECT pursuant to Section 2.6 thereof, or within thirty
(30) days of                March 31, 2006, whichever occurs earlier.13



EXHIBIT A-2


PROJECT for RTS#3


     1.
TARGET PRODUCT


A
figure measurement machine identified by the PARTIES as RTS#3 for large size
and high precision [*****] surface measurement [*****], of which fundamental
specifications and requirements are specified herein or separately agreed upon by the
PARTIES and which fully meets the FINAL SPECIFICATIONS2.
Fundamental specifications and requirements of the TARGET PRODUCTS


1.
Function(a)
Uncertainty           [*****] (target) (b) Measurable part size(c)
 [*****]2.
Operation


The
TARGET PRODUCT shall be installed at Canons facility in Japan. ZYGO by itself (not
subcontractor) shall be responsible for the maintenance of the TARGET PRODUCT and CANON
will cooperate such maintenance by ZYGO. CANON and ZYGO will discuss with and determine
detailed conditions of such maintenance, including compensation therefor.3.
Scope of the PROJECT


Design,
development (development includes manufacturing one (1) unit of the TARGET
PRODUCT that materialize the result thereof) of the TARGET PRODUCT, including associated
tools and accessories (such as software, tools and electronics) and installment of such
one (1) unit of the TARGET PRODUCT.(Works to be performed by CANON)


(1)
Delivery
of the DRAFT SPECIFICATIONS to be determined by CANON(2)
Creation
and delivery of [*****], [*****] lens, [*****] lens and other parts
               separately agreed upon by the PARTIES based on the drawings designed by
ZYGO(3)
Acceptance
test of TARGET PRODUCT as installed at CANONs facility(Works to be performed by ZYGO)


(1)
Creation
and delivery of the proposed FINAL SPECIFICATIONS and the           environmental
specifications of the TARGET PRODUCT(2)
Design,
development,           evaluation and delivery to CANON of the TARGET PRODUCT and
installation and           adjustment of the TARGET PRODUCT at CANONs facility(3)
Creation
of documentation for testing, use and maintenance of the TARGET PRODUCTDetails
of the PROJECT other than those specified herein shall be determined by the PARTIESdiscussion.14



4. DELIVERABLES


(From CANON to ZYGO)


DRAFT
SPECIFICATIONS(From ZYGO to CANON)


(1)
Proposed
FINAL SPECIFICATIONS(2)
One
(1) unit of the TARGET PRODUCT(3)
Reports
of evaluation by ZYGO of TARGET PRODUCT(4)
Documentation
for testing,           use and maintenanceDetails
of the DELIVERABLES other than those specified herein shall be determined by the PARTIES discussion.5. Development Schedule


Completion
of the PROJECT (Target Date)                 [*****]6. Development Fee


In
full and complete consideration for this PROJECT performed by ZYGO hereunder, including
without limitation, the costs of the DELIVERABLES of ZYGO, CANON agrees to pay to ZYGO
Five Million Five Hundred Thousand US Dollars (US$5,500,000) in accordance with the
following payment schedule subject to issuance of invoice therefor by ZYGO prior to each
payment due date:(a)
Five
Hundred Thousand US Dollars (US$500,000) within thirty (30) days of CANONs receipt
of a fully executed original   copy of the AGREEMENT;(b)
Two
Million US Dollars (US$2,000,000) by May 1, 2005;(c)
Two
Million Two Hundred Fifty Thousand US Dollars (US$2,250,000) by August 1,
               2005; and(d)
Seven
Hundred Fifty Thousand US Dollars (US$750,000) within thirty (30) days of
               CANONs acceptance of all the DELIVERABLES pursuant to Section 2.6
hereof                or CANONs final decision to terminate the PROJECT and enforce
its rights                under Section 6.6 of the AGREEMENT with respect to the PROJECT
pursuant to                Section 2.6 thereof, or within thirty (30) days of September
30, 2006, whichever                occurs earlier.15



EXHIBIT B


Scope of the EXCLUSIVITY


1  Scope of EXCLUSIVITY for CANON


Scope of Exclusivity shall mean any
product, tools, systems and any parts therefor which fall in the following definition of
paragraph 1.1.1 below:


1.1.1 Optical interferometer tools
and systems for the measurement of [*****] surfaces and wavefronts and which meets the
following requirements simultaneously


*Optical
interferometer systems that measure [*****] surfaces and wavefronts with [*****], AND  
*Optical
interferometer systems that measure [*****] surfaces and wavefronts to an uncertainty less
than or equal [*****]., AND *Optical interferometer systems that measure lenses [*****].These systems potentially include a
series of tools and measurement procedures which when combine adequately measure [*****]
for lithography lens systems. For example, the Enabler and Production Tools.


     2.    
          Scope of the NON-EXCLUSIVITY Non-Exclusive means the following
          technology and metrology systems that ZYGO can sell on the open market or
          utilize to support ZYGO manufacturing.


2.1      Non-Exclusive [*****]
surface and wavefront measurement systems


2.1.1
The measurement of [*****]:     *Definition: [*****]2.1.2  The measurement of [*****]
with higher measurement uncertainty:


2.1.3  The measurement of other
[*****]         *The
measurement of [*****] surfaces that fall outside the definition in 1.1.1 above


2.2 ZYGO Manufacturing          *ZYGO
has the right to use this technology to support manufacturing within ZYGO and its wholly
owned subsidiaries.


2.3 Any and all sub-systems and
supporting technology


2.3.1 Examples, but not limited to those noted.


*Lower coherence
      illumination technologies, such as the Ring of Fire 
      *PSI technology utilizing the Ring of Fire 
      *General data acquisition technologies, such as the FTPSI technology 
      *Technologies for measuring homogeneity 
      *Technologies to measure radius of curvature of polished surfaces 
      *Imaging technologies, such as camera designs 
      *Interferometer configuration technologies, such as [*****] 
      *Technologies for measuring optical lens center thickness16



EXHIBIT C


Confidentiality


1. General Terms


1-1
The
term Confidential Information shall mean any and all information disclosed by
either PARTY to the other PARTY during the term of this AGREEMENT in relation to the
PROJECT and which is (i) in writing or in other tangible form (including facsimile
transmission and electronic form) and designated with the legend CONFIDENTIAL(or
comparable legend), or if it is not practicable, accompanied by a cover letter
identifying the information to be treated as Confidential Information hereunder; or (ii)
disclosed orally or visually, designated confidential at the first time of each oral or
visual disclosure and followed by a letter designated with the legend CONFIDENTIAL (or
comparable legend) sent to the other PARTY within sixty (60) days of such disclosure and
setting forth such oral or visual information to be treated as Confidential Information
hereunder; or (iii) contained in materials, hardware and/or software furnished hereunder
and accompanied with a cover letter identifying the information to be treated as
Confidential Information hereunder. For purposes of this AGREEMENT, either PARTY who
discloses its Confidential Information shall be referred to as the Disclosing Party and
the other PARTY who receives such Confidential Information from Disclosing Party shall be
referred to as the Receiving Party. The scope of any disclosure of
Confidential Information hereunder shall be determined by Disclosing Party at its sole
discretion.1-2
For
a period of five (5) years from the date of disclosure of each Confidential Information
of Disclosing Party, Receiving Party agrees not to disclose such Confidential Information
to any person, firm, corporation other than Receiving Partys officers and
employees; provided, however, that Receiving Party may disclose any Confidential
Information of Disclosing Party to its subsidiaries who agree to be bound by the
obligations provided herein.1-3
Notwithstanding
Section 1-2 above, Receiving Party shall be free from any confidentiality obligation, use
restriction and other restrictions hereunder regarding any information which:(a)
is
in the possession of or known to Receiving Party at the time of disclosure where the
information is not subject to any obligations of confidentiality owed to a third party;(b)
is
or becomes publicly known or publicly available without breach of this
          AGREEMENT by Receiving Party;(c)
is
approved for release or disclosure to any           third party without restriction by
the prior written authorization of                   Disclosing Party;(d)
is
independently developed by Receiving Party;(e)
is
lawfully obtained from a           third party;(f)
is
furnished to a third party by Disclosing Party without           imposing a similar
restriction on such third party;(g)
is
disclosed pursuant to           the requirement of a governmental agency or disclosure is
required by operation           of law; or(h)
is
disclosed through the supply or sale of products.1-4
Notwithstanding
anything contained herein to the contrary, Receiving Party shall have the right to file
applications for intellectual property rights for its own inventions and creations, and
it shall not be considered a breach of this AGREEMENT for Receiving Party to set forth in
those applications Confidential Information of Disclosing Party, as may be necessary to
describe completely Receiving Partys invention or creation in accordance with the
requirements of the applicable intellectual property right law of the country involved.1-5
Subject
to Section 1-2 above, it is understood that during the term of this AGREEMENT and
thereafter Receiving Party is free to internally use Confidential Information of
Disclosing Party for any purpose, including without limitation for development of any
products, and such products shall be free to be manufactured, used, sold or otherwise
distributed to others without restriction; provided that such permission to use the
Confidential Information shall not be construed as a license grant under any of
Disclosing Partys valid patents, utility models, design patents, design
registrations, copyrights, mask works and trademarks.2.          Confidentiality
in relation to the subcontract





17



2-1
Notwithstanding
Section 1-2 above, in the event ZYGO assigns any of its tasks under the PROJECT to its
subcontractor pursuant to Section 3.1 of this AGREEMENT, ZYGO may disclose Confidential
Information of CANON to such subcontractor under the following conditions subject to CANONs
prior written consent:(i)
CANON
will designate such Confidential Information of CANON which can be           disclosed
from ZYGO to subcontractor on an item-by-item basis;(ii)
ZYGO
shall execute a written agreement with such subcontractor that imposes on           the
subcontractor to keep such Confidential Information in strict confidence,           and
not to disclose it to any person, firm, corporation or entity nor to use the
          same for any purpose other than carrying out the task which such subcontractor
          is assigned by ZYGO hereunder until it becomes publicly known or publicly
          available without breach of such subcontractors obligations; and(iii)
ZYGO
shall bear all responsibility and liability to have such subcontractor           comply
with such conditions.Conditions
set forth herein shall supersede Section 3.2(b) of this AGREEMENT solely with respect to
the treatment of the Confidential Information. It is also expressly agreed and
acknowledged by the PARTIES that in no event the subcontractor shall be deemed to be
Receiving Party under this EXHIBIT C.18



EXHIBIT D


The Form of Invoice
and Payment Breakdown


1. Total Costs billed under this
invoice$__________________


2. Payment Breakdown

Material
     
     
     $Consulting
     $Subcontractor
     $Subtotal
     $____________Material Overhead ([*****]%)
     $____________Total Material
     $____________RD & Engineering Labor
     $____________RD & Engineering Labor Overhead
     $____________Travel Costs
     $____________Other Costs:Recruiting
     $____________Software
     $____________Other Direct Overhead
     $____________Subtotal Costs
     $____________General & Administrative Expenses ([*****]%)
     $____________Total
     $____________19