EXHIBIT 99.2
DEVELOPMENT AGREEMENT
This DEVELOPMENT AGREEMENT ("AGREEMENT"), effective as of September 6, 2001, 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 the NON-DISCLOSURE AGREEMENT as of
June 6, 2001 under which the PARTIES have disclosed their information of a
confidential nature with each other and have been continuing feasibility studies
for cooperation in the development of certain interferometers; and
WHEREAS, CANON and ZYGO have mutual interests in cooperatively developing said
interferometers;
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 the following
products:
(1) A figure measurement machine identified by the Parties as "Machine
1" specified in EXHIBIT A attached hereto and of which fundamental
specifications and requirement are specified in EXHIBIT A attached
hereto; and which machine fully meets the PHASE 1 FINAL
SPECIFICATIONS (as defined in Section 1.4 below) ("PHASE 1 TARGET
PRODUCT"); and
(2) an interferometerery unit specified in EXHIBIT A to be developed;
and which fully meets the PHASE 2 FINAL SPECIFICATIONS (as defined
in Section 1.4 below) ("PHASE 2 TARGET PRODUCT").
1.2 The term "PROJECT" as used herein shall mean all the works to be performed
by both PARTIES pursuant hereto in designing, developing, making and
evaluating the TARGET PRODUCT. PROJECT shall be consisting of PHASE 1, for
model concept and proof of principle ("Step 1 of PHASE 1") and development
of the PHASE 1 TARGET PRODUCT ("Step 2 of PHASE 1"), and PHASE 2, for
development of the PHASE 2
TARGET PRODUCT; and of which details are fully described in EXHIBIT A
attached hereto.
1.3 The term "DRAFT SPECIFICATIONS" as used herein shall mean the preliminary
specifications of each of the PHASE 1 TARGET PRODUCT and the PHASE 2
TARGET PRODUCT (respectively, "PHASE 1 DRAFT SPECIFICATIONS" and "PHASE 2
DRAFT SPECIFICATIONS") which are provided by CANON under PHASE 1 and PHASE
2 of 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 each of the PHASE 1 TARGET PRODUCT and the
PHASE 2 TARGET PRODUCT (respectively, "PHASE 1 FINAL SPECIFICATIONS" and
"PHASE 2 FINAL SPECIFICATIONS") 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.
1.5 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 Step 1 of the PHASE 1
of the PROJECT ("PHASE 1 Step 1 DELIVERABLES"), Step 2 of the PHASE 1 of
the PROJECT ("PHASE 1 Step 2 DELIVERABLES"), or PHASE 2 of the PROJECT
("PHASE 2 DELIVERABLES") 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 September 6, 2001.
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 following schedule.
PHASE 1: Step 1 - Model Concept (Design Proof on paper):
From 2001/4Q
(note: this date excludes the development plans for
PHASE 2 TARGET PRODUCT, which is 2003/4Q)
Step 2 - Development of PHASE 1 TARGET PRODUCT:
To 2003/4Q
PHASE 2: The PARTIES shall separately agreed upon the schedule during
their performance of PHASE 1 of the PROJECT.
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.
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
Step 1 of PHASE 1 of the PROJECT, Step 2 of PHASE 1 of the PROJECT, PHASE
2 of the PROJECT, respectively.
2.4 The PARTIES agree to have periodical and occasional discussions for
exchanging information relating to the PROJECT in order to accelerate the
progress of the PROJECT.
2.5 Each PARTY shall provide the other PARTY with the RESULTS obtained through
the performance of the PROJECT promptly after such RESULTS have been
obtained. Except as expressly provided in Article 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 PHASE 1 of the PROJECT shall be deemed successfully completed when CANON
determines to enter into PHASE 2 of the PROJECT after its evaluation of
all the PHASE 1 (Step 1 and Step 2) DELIVERABLES of ZYGO. In the event
CANON determines not to enter into PHASE 2 of the PROJECT after its
evaluation of all the PHASE 1 (Step 1 and Step 2) DELIVERABLES of ZYGO,
CANON shall have the right to terminate the PROJECT and enforce its rights
under Section 6.6 below. In addition to the foregoing, CANON shall have
the right to inspect the PHASE 1 (Step 2) DELIVERABLES of ZYGO to
determine whether they meet the PHASE 1 FINAL SPECIFICATIONS. In the event
the PHASE 1 (Step 2) DELIVERABLES fail to meet the PHASE 1 FINAL
SPECIFICATIONS, CANON shall have the right to have ZYGO modify such PHASE
1 (Step 2) DELIVERABLES of ZYGO so that they meet the PHASE 1 FINAL
SPECIFICATIONS. The foregoing procedure shall be performed until CANON
accepts all PHASE 1 (Step 2) DELIVERABLES. In the event CANON accept the
PHASE 1
(Step 2) DELIVERABLES of ZYGO, such DELIVERABLES shall be deemed to be the
PHASE 1 TARGET PRODUCT.
PHASE 2 of the PROJECT shall be deemed completed when CANON accept the
PHASE 2 DELIVERABLES of ZYGO as the PHASE 2 TARGET PRODUCT which fully
meets the PHASE 2 FINAL SPECIFICATIONS. In the event CANON does not accept
the PHASE 2 DELIVERABLES of ZYGO as PHASE 2 TARGET PRODUCT, CANON shall
have the right to terminate the PROJECT and enforce its rights under
Section 6.6 below, provided that CANON's sole ground for such
non-acceptance of the PHASE 2 DELIVERABLES of ZYGO shall be such ZYGO's
PHASE 2 DELIVERABLES' non-compliance with the PHASE 2 FINAL
SPECIFICATIONS. In the event CANON accept the PHASE 2 DELIVERABLES of
ZYGO, such DELIVERABLES shall be deemed to be the PHASE 2 TARGET PRODUCT.
The term of the PROJECT shall be from the EFFECTIVE DATE to the date of
CANON's notification of the acceptance of the PHASE 2 DELIVERABLES of
ZYGO, unless otherwise sooner terminated under this AGREEMENT.
Notwithstanding the foregoing, in the event CANON decides to adopt any
PHASE 1 (Step 2) DELIVERABLES or PHASE 2 DELIVERABLES having any
non-compliance with the FINAL SPECIFICATIONS as a commercial level product
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 6.1 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 the
PROJECT 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 the PHASE 1 of the 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); 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. The total amount of the fee to be paid to ZYGO for each Step
1 and Step 2 of PHASE 1 of the PROJECT pursuant to this AGREEMENT shall
not exceed Seven Million and Eight Hundred Ninety Thousand U.S. Dollars
(US$7,890,000) for Step 1 Phase 1 and Twenty One Million and Eight Hundred
Thousand US Dollars (US$21,800,000) for Step 2 of Phase 1 except as
contemplated by Section 4.1.3 (3).
ARTICLE 3. SUBCONTRACT
3.1 ZYGO may assign any of its task 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 same confidentiality obligations
and other restrictions as set forth in this AGREEMENT with respect
to the Confidential Information (as defined in EXHIBIT C) of CANON
and the SUBCONTRACTOR RESULTS, provided that section 1-(2) of
EXHIBIT C shall not apply to the SUBCONTRACTOR as to Confidential
Information of CANON and the SUBCONTRACTOR RESULTS.
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.
3.4 In the event that ZYGO assigns any of its task under the PROJECT to its
subcontractor under terms and conditions different from Sections 3.1
through 3.3 above, both Parties shall clarify and agree to the different
or additional terms and conditions in writing.
ARTICLE 4. DEVELOPMENT FEE
4.1 As to the PHASE 1 of the PROJECT,
4.1.1 CANON shall bear all its costs and expenses incurred by itself
relating to its performance of the PROJECT.
4.1.2 In full and complete consideration of Step 1 of PHASE 1 of the
PROJECT performed by ZYGO hereunder, including without limitation,
the costs of the
PHASE 1 (Step 1) DELIVERABLES of ZYGO, CANON agrees to pay to ZYGO
Seven Million Eight Hundred and Ninety Thousand U.S. Dollars
(US$7,890,000) provided however that CANON shall not be required to
pay to ZYGO the amount of Six Hundred and Ninety Nine Thousand Four
Hundred Fifty Eight U.S. Dollars (US$699,458) which has been paid by
CANON to ZYGO as part of the cost for the Step 1 of PHASE 1 of the
Project as of the execution date hereof pursuant to the Letter of
Intent dated June 7, 2002. Therefore, after the Execution date
hereof, CANON shall pay the balance, Seven Million One Hundred
Ninety Thousand Five Hundred and Forty Two U.S. Dollars
(US$7,190,542) for the Step 1 of PHASE 1 of the PROJECT in
accordance with the following payment schedule subject to ZYGO's
issuance of the invoice prior to each payment due date:
(i) Three Million Eight Hundred Thousand Five Hundred and Forty
Two US Dollars (US$3,800,542) within thirty (30) days of
CANON's receipt of a fully executed original copy of this
AGREEMENT;
(ii) One Million and Five Hundred Thousand US Dollars
(US$1,500,000) by October 30, 2002; and
(iii) One Million and Eight Hundred Ninety Thousand US Dollars
(US$1,890,000) within thirty (30) days of CANON's final
decision (acceptance or non-acceptance) with respect to Step 1
of the PHASE 1 of the PROJECT pursuant to Section 2.6.
4.1.3 In full and complete consideration of Step 2 of PHASE 1 of the
PROJECT performed by ZYGO hereunder, including without limitation,
the costs of the PHASE 1 (Step 2) DELIVERABLES of ZYGO, CANON agrees
to pay ZYGO on a monthly basis the development cost incurred by ZYGO
solely from its performance of Step 2 of the PHASE 1 of the PROJECT
after August 1, 2002 subject to the following subsections (1)
through (3) hereof. The material cost includes the fees paid by ZYGO
to subcontractors and consultants and shall include an overhead rate
of 10%. The general and administrative rate will be 16.3% applied to
all cost incurred by ZYGO under the contract. ZYGO shall use its
best effort to break down the development cost to the following
items: labor cost (including those of the subcontractors) with work
hours and overhead thereof; cost of materials and overhead thereof;
and general and administrative expense solely allocated to the Step
2 of the PHASE 1 of the PROJECT. In principle, the labor cost shall
be calculated by the following formula.
The hourly rate for each engineer who performs the Step 2 of PHASE 1
of the PROJECT (the "ENGINEER")
x
Hours of performance of the Step 2 of PHASE 1 of the PROJECT
(expressly excluding the hours of the work other than Step 2 of
PHASE 1 of the PROJECT) in a month
(1) Within five (5) days of the end of each month until the
completion of the Step 2 of the PHASE 1 of the PROJECT, ZYGO
shall submit an invoice,
which includes the breakdown identifying the costs of the
materials of the PHASE 1 TARGET PRODUCT. The Invoice shall be
made and submitted by ZYGO in accordance with the forms
attached hereto as the EXHIBIT E. CANON pays for each invoice
within thirty (30) days of the receipt thereof; provided,
however, that CANON may suspend the payment if CANON has
reasonable doubt in the correctness of the development cost
and in such event ZYGO shall provide CANON with documentation
which sufficiently proves the correctness thereof.
(2) In no event aggregated amount of the development cost paid by
CANON to ZYGO for the Step 2 of the PHASE 1 of the PROJECT
hereunder shall exceed Twenty One Million Eight Hundred
Thousand US Dollars (US$21,800,000).
(3) If ZYGO believes the estimated total cost of the Step 2 of
PHASE 1 of the PROJECT will exceed the amount set forth in
subsection (2) of this Section 4.1.3 above or If ZYGO believes
the actual cost for Step 1 of PHASE 1 will exceed the total
amount set forth in Section 4.1.2 hereof, ZYGO shall promptly
notify CANON, and ZYGO and CANON will enter into a good faith
discussion. If CANON and ZYGO are unable to agree on a
contract price adjustment, this AGREEMENT can be terminated by
either PARTY without liability to either PARTY except for the
remedies under Section 2.7 and 6.6 which will take effect.
4.2 As to the PHASE 2 of the PROJECT, the PARTIES shall separately agree upon
in writing the payment conditions for the PHASE 2 of the PROJECT during
the period of the PHASE 1 of the PROJECT.
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
PHASE 1 of the PROJECT except as expressly provided in Sections 4.1.2 and
4.1.3 above. Notwithstanding anything contained herein to the contrary, in
the event this AGREEMENT is sooner terminated pursuant to Sections 2.6,
2.7, 10.2 or 10.3, CANON shall be under no obligation of paying any
compensation or fee to ZYGO after such termination, except as expressly
provided in Section 2.7.
4.4.1 As to the payment of the Step 1 of the PHASE 1 of the PROJECT, certain
reasonable period before the payment date of each installment of the
payments, ZYGO shall provide CANON with an invoice which is necessary to
prove that all of the payment to be made by CANON to ZYGO pursuant to
Section 4.1.2 above will be used only for the performance of the Step 1 of
the PHASE 1 of the PROJECT. The form of the invoice shall be attached
hereto as EXHIBIT E. In the event both PARTIES proceed to the PHASE 2 of
the PROJECT pursuant to Section 2.6 above, ZYGO shall provide the report
in the same manner as set forth herein for the PHASE 2 of the PROJECT on
timing separately agreed upon by the PARTIES prior to the first payment
thereof.
4.4.2 As to the payment of the Step 2 of the PHASE 1 of the PROJECT, ZYGO shall
provide the invoice set forth in Section 4.1.3 (1) so that it can
sufficiently prove that the amount
of the development cost specified in the invoice was consumed solely for
the performance of the Step 2 of the PHASE 1 of the PROJECT.
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) Fleet National Bank
(Branch Name) Fleet National Bank, New York
(Bank Address) ABA No. 021300019
(Telex No.) 221086
(Account Number) 93691635
ARTICLE 5. CONFIDENTIALITY
The PARTIES hereby agrees 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 6.7 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 models
issued on or registered from applications for such INVENTION shall be
solely vested in such inventing PARTY subject to Sections 6.6, 6.7 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 In the event (i) CANON determines not to enter into PHASE 2 of the PROJECT
after its evaluation of all the PHASE 1 (Step 1 and Step 2) DELIVERABLES
of ZYGO as set forth in Section 2.6 hereof, or (ii) CANON does not accept
the PHASE 2 DELIVERABLES 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 the 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 preexisting
intellectual property rights applicable to the TARGET PRODUCT and the
DERIVATIVES with use of the RESULTS, and/or Confidential Information 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. In
such event, CANON may disclose Confidential Information through a
confidentiality agreement to the extent it is necessary to manufacture the
TARGET PRODUCT or the DERIVATIVES. That terms and conditions of the
confidentiality agreement should be
reasonably acceptable to ZYGO. 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 before 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, provided further that
such limitation under this Section 6.6 with respect to the Confidential
Information of ZYGO shall be effective for five (5) years from the date of
disclosure of the Confidential Information. 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 or such
product with use of the RESULTS to CANON or DESIGNEES (as defined in
Section 7.1 below) pursuant to Section 7.1 below. 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 PROJECT (completion of PHASE 2 of the 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 Sections 6.6 and 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)
CANON's determination not to enter into PHASE 2 of the PROJECT after the
evaluation of the PHASE 1 DELIVERABLES as set forth in Section 2.6 above;
(ii) termination of the PROJECT by CANON's non-acceptance of the PHASE 2
DELIVERABLES as the PHASE 2 TARGET PRODUCT on the PHASE 2 of the PROJECT
as set forth in Section 2.6 above; or (iii) the successful completion of
PHASE 2 of the PROJECT under Section 2.6 above. 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, freely 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 through a confidentiality agreement to the extent
it is necessary to manufacture the TARGET PRODUCT or the DERIVATIVES. That
terms and conditions of the confidentiality agreement should be reasonably
acceptable to ZYGO.
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 were 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"), 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 were 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.
ARTICLE 10. TERM AND TERMINATION
10.1 This AGREEMENT shall become effective on the EFFECTIVE DATE and continue
to be effective until the date of completion of the PROJECT as set forth
in Sections 2.6 and 2.7 above unless earlier terminated pursuant to
Section 10.2, 10.3 or 10.4 below.
10.2 In the event CANON determines DELIVERABLES of ZYGO under PHASE 1 of the
PROJECT does not meet the SPECIFICATIONS provided from CANON, CANON shall
have the right to terminate this AGREEMENT upon written notice to ZYGO.
10.3 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.
10.4 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.
10.5 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
11.1 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.
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 Robinson
President and CEO
Facsimile Number: +1-860-347-8372
As 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, Japan
Attention: For any provision of this AGREEMENT:
Senior General Manager
Contracts and Licensing Center
Corporate Intellectual Property and
Legal Headquarters
Facsimile Number: +81-3-3758-8163
For all other matters:
Masao Kosugi
Senior General Manager
Semiconductor Production Equipment Group
Optical Products Operations
Facsimile Number: +81-28-670-5301
Except 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 NON-DISCLOSURE AGREEMENT as of
June 6, 2001 between the PARTIES. Neither PARTY shall be bound by any
conditions, definitions, warranties and representations, other than as
expressly provided in this AGREEMENT.
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 AGREEMENT to be executed in
duplicate originals by their duly authorized representatives as of the date
first above written.
CANON INC. ZYGO CORPORATION
BY: /s/ AKIRA TAJIMA BY: /s/ BRUCE ROBINSON
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Akira Tajima Bruce Robinson
TITLE: Group Executive TITLE: President and CEO
Optical Products Operations ----------------------
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DATE: September 11, 2002 DATE: September 11, 2002
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