EXHIBIT 10.31 

 
	
  

 
	
 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): (a) manufacturing and testing of semiconductors,
including but not 





limited to [...*...] (b)
manufacturing and testing of [...*...] (c)
manufacturing and testing of [...*...] and
(d) manufacturing and testing of [...*...]. 


                    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:
(a) an Automated Interferometer System referred to as the “Unifire” that has
been designed, marketed and sold by Zygo [...*...].



                    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
all intellectual property, trade secrets, know-how, software, works of
authorship, copyrightable works, mask works, data, discoveries, inventions and
improvements, whether patentable or not, technology, information and
documentation now owned or hereinafter obtained by Zygo related to the Head or
Components as they are used in the Approved Systems in the Approved Markets, [...*...].
Flow-Through Licensed Technology may be recorded or fixed in written or other
form. 


                    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. 


 


	
  

 	
  

 
	
  

 	

 


 



          *
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. 


-2-






                    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. 


                    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
 Nano shall pay to Zygo for each unit of Heads or Components accepted by Nano
 the price set forth in Exhibit B.
 Such prices shall not be increased during [...*...]. Thereafter, Zygo will give Nano [...*...] advance notice of any increase in any
 price. Zygo shall have no right to increase prices more often than [...*...] and each increase in prices by Zygo, [...*...] shall not exceed [...*...]

 






	
  

 	
  

 
	
  

 	

 


 



* 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. 


-3-









	
  

 	
  

 
	
  

 	
                     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 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 


	
  

 	
  

 
	
  

 	




 



* 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. 


-4-





accepted by
Nano, by giving Zygo written notice of such cancellation. Nano will provide
Zygo a written 12-month forecast for shipment of Orders, to be updated within
30 days of the end of each calendar quarter. In the event any Order is
cancelled by Nano, Nano will be responsible for cancellation charges as
follows: 


                    (a)
[...*...]; 


                    (b)
[...*...];



                    (c)
[...*...];



                    (d)
[...*...].



 [...*...].



                    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 


	
  

 	
  

 
	
  

 	




 



* 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. 


-5-





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. 


                    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 


-6-





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. 


          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 

 


-7-









	
  

 	
  

 
	
  

 	
                     (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. 


          8. Customer Support. During the warranty period applicable to the Heads and
Components, Zygo will provide warranty service to Nano pursuant to Section 10.4
of this Agreement. Nano will maintain trained personnel to address Head repairs
for [...*...] Zygo will provide replacement Heads and Components to Nano
for all Heads and Components that are under warranty. [...*...] Support or repair needs during the term
of this Agreement will continue after termination of this Agreement in
accordance with Zygo’s standard rates and schedules for such services, as may
be in effect from time to time, until [...*...].



          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. 


	
  

 	
  

 
	
  

 	




 



* 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. 


-8-





                    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
Warranty Period. The warranty for each unit of the Heads and Components
shall be in effect for [...*...]. 


                    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 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 


	
  

 	
  

 
	
  

 	




 



* 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. 


-9-





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.
Flow-Through License To Nano. The parties intend for Nano to be able to
integrate the Heads into Approved Systems and sell such Approved Systems in the
Approved Markets. To facilitate this intent, Zygo agrees to grant to Nano the
following Flow-Through License: 


                         11.1
Subject to Nano’s obligations under this Agreement and Nano’s obligations in
the related Asset Transfer Agreement, for the term of this Agreement, Zygo
hereby grants to Nano an exclusive, worldwide license to the Flow-Through
Licensed Technology to [...*...]. The foregoing is
intended to allow Nano to exercise all patents, 


	
  

 	
  

 
	
  

 	




 



* 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. 


-10-





copyrights,
works of authorship, copyrightable works, and mask works in connection with the
exercise of Nano’s rights to [...*...] Notwithstanding the foregoing or any
other provision of this Agreement, it is understood and agreed that this
license is limited to [...*...] No
license is granted for any system that includes a Head made by an entity other
than Zygo. Notwithstanding the foregoing or anything to the contrary in this
Agreement, nothing herein shall prevent Zygo from providing, [...*...]


                    11.2
For purposes of clarification with respect to 11.1 above, the Flow-Through
Licensed Technology will include but not be limited to [...*...]. 


                    11.3
Sublicenses. The licenses granted by Zygo to Nano include the sublicenses (but
limited only to [...*...]) of any Flow-Through Licensed Technology
that Zygo has a license to use or under which Zygo has a license to [...*...]  


                         11.3.1.
Zygo shall pay all payments and royalties due under [...*...].


                    11.4
Right to Sublicense. The licenses granted in this Section include the right of
Nano to grant sublicenses (but limited only to [...*...]).  


                    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


	
  

 	
  

 
	
  

 	




 



* 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. 


-11-





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. 


	
  

 	
  

 
	
  

 	
                     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 


	
  

 	
  

 
	
  

 	




 



* 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. 


-12-







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 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


-13-





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, [...*...].


                    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.


	
  

 	
  

 
	
  

 	




 



*
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.


-14-





                    15.1
Fee Per System or Head. Until the aggregate amount of Technology
Transfer Fees paid by Nano to Zygo under this Agreement equals [...*...] Nano shall pay to Zygo the following [...*...] Nano shall have no obligation to pay
more than an aggregate [...*...]
in Technology Transfer Fees to Zygo under this Agreement. [...*...].


                    15.2
Fee Period. As used in this Agreement, the term “Fee Period” means the period beginning on
January 1, 2010 and ending on the earliest of (a) the date on which
Nano shall have paid to Zygo aggregate Technology Transfer Fees under this
Agreement of [...*...] or
(b) the expiration or earlier termination of this Agreement, or (c) [...*...].


                    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 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.

 




	
  

 	
  

 
	
  

 	




 



*
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.


-15-





                    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.


                    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


	
  

 	
  

 
	
  

 	




 



*
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.


-16-





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.


                    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

 


-17-









	
  

 	
  

 
	
  

 	
 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

 



                    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. 


-18-









	
  

 	
  

 
	
  

 	
           (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.

 



                    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

 


-19-





                    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. 


                    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.


-20-







                    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
Term. This Agreement shall continue for an initial term of [...*...] from the date of execution (the “Initial Term”). The
term of this Agreement shall be renewed upon mutual agreement of both parties. [...*...].


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


	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ZYGO CORPORATION

 	
  

 	
 NANOMETRICS CORPORATION

 
	
 (“Zygo”)

 	
  

 	
 (“Nano”)

 
	
  

 
	
 By:

 	
  /s/ J. Bruce
 Robinson

 	
  

 	
 By:

 	
  /s/ Timothy
 J. Stultz, Ph.D.

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Its:

 	
  Chief
 Executive Officer

 	
  

 	
 Its:

 	
  President
 and Chief Executive Officer

 
	
  

 	

 


 	
  

 	
  

 	

 


 






	
  

 	
  

 	
  

 
	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 
	
 * 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.

 


-21-





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.


-22-





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.

 


-23-





EXHIBIT C


Training, Sustaining Engineering Services and
Development Services


          (a)
Training. Zygo shall train, instruct and advise [...*...] as provided in this Exhibit
C. This training, instruction and advice (a) shall commence on the
Effective Date, (b) shall proceed in good faith at a reasonable pace to
completion, and (c) may be conducted individually or collectively (except that
persons in each category shall be trained collectively with the others in such
category). The cost of such training shall be included in subsection (c) below.
Training shall be conducted at Zygo’s manufacturing facility in Middlefield,
Connecticut [...*...] After such training in Middlefield,
Connecticut, training shall be conducted at Nano’s manufacturing facility in
Milpitas, California in accordance with Zygo’s acceptance test procedures
(ATPs) in conjunction with the manufacture of [...*...] at such facility of Nano [...*...] All
other training shall be conducted at Zygo’s facility in Middlefield,
Connecticut. Zygo shall complete such training within approximately 90 days of
the Effective Date. Additional training sessions shall be held semiannually
with respect to updates supplied under this Agreement. Zygo’s obligation to
provide training, instruction, and advice pursuant to this Exhibit C
shall continue so long as this Agreement remains in effect.


          (b) 
Development Services. During the term of the Agreement, Zygo agrees to work
with Nano toward the development of [...*...]


          (c)
Sustaining Engineering/Minimum Volume: Payments by Nano. 


                   Beginning
July 1, 2010, and throughout the term of this Agreement, Nano shall pay to Zygo
a Sustaining Engineering Fee which shall be applied to any engineering services
that Nano requests from Zygo to facilitate the commercial development of the
Unifire and other automated interferometer systems that include a Zygo Head. [...*...]


	
  

 	
  

 	
  

 
	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 
	
 * 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.

 


-24-