Common use of Performance of the Project Clause in Contracts

Performance of the Project. 2.1 At the commencement of the PROJECT, both PARTIES hereby expressly acknowledge that both PARTIES are uncertain whether the PARTIES will complete the PROJECT and achieve the results of the PROJECT. 2.2 ZYGO and CANON shall use their good faith effort to carry out the PROJECT in accordance with the schedule set forth in the EXHIBIT A. A working team shall be formed in ZYGO for carrying out the PROJECT. CANON agrees to cooperate with ZYGO in ZYGO’s performance of the PROJECT. Outline of the work to be performed by respective PARTIES is described in EXHIBIT A attached hereto. ZYGO agrees to provide CANON with a monthly report stating (i) actual costs incurred during the previous one month for the respective PROJECT with the details of the list of the materials purchased and wages, overhead and hours of each employees engaged in the respective PROJECT; (ii) prediction of the next three month’s consumption of the DEVELOPMENT FEE (as defined in Section 4.2 below); (iii) anticipated aggregate cost of the PROJECT by the completion of such PROJECT; and (iv) estimated timing of actual completion of the PROJECT. If the PROJECT becomes behind schedule, ZYGO shall promptly notify CANON thereof and provide sufficient explanation for how and why it happens, and ZYGO and CANON will enter into a good faith discussion thereon. If CANON and ZYGO are unable to agree on revision of the development schedule, such PROJECT can be terminated by either PARTY without liability to the other PARTY except for the remedies under Sections 2.7 and 6.6 which will take effect. If ZYGO believes the actual or estimated total cost of a certain PROJECT will exceed the DEVELOPMENT FEE (as defined in Section 4.2 below) thereof, ZYGO shall promptly notify CANON thereof and provide with sufficient explanation for how and why the costs exceed the amount agreed, and ZYGO and CANON will enter into a good faith discussion thereon. If CANON and ZYGO are unable to agree on a contract price adjustment, such PROJECT can be terminated by either PARTY without liability to the other PARTY except for the remedies under Sections 2.7 and 6.6 which will take effect. 2.3 The PARTIES acknowledge that each PARTY agrees to deliver to the other PARTY the DELIVERABLES as specified in EXHIBIT A attached hereto under the respective PROJECT. 2.4 The PARTIES agree to have periodical and occasional discussions for exchanging information relating to the respective PROJECT in order to accelerate the progress of such PROJECT. 2.5 Each PARTY shall provide the other PARTY with the RESULTS obtained through the performance of the respective PROJECT promptly after such RESULTS have been obtained. Except as expressly provided in 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 Each PROJECT shall be deemed completed when CANON accepts all the DELIVERABLES of ZYGO under such PROJECT at Canon’s premise as the TARGET PRODUCT which fully meets the FINAL SPECIFICATIONS therefor. CANON shall have the right to inspect the DELIVERABLES of ZYGO under the respective PROJECT to determine whether they meet the FINAL SPECIFICATIONS of the TARGET PRODUCT under such PROJECT. In the event the DELIVERABLES fail to meet the FINAL SPECIFICATIONS, CANON shall have the right to have ZYGO modify such DELIVERABLES of ZYGO so that they meet the FINAL SPECIFICATIONS. The foregoing procedure shall be performed until CANON accepts all the DELIVERABLES under such PROJECT. In the event CANON accepts all the DELIVERABLES of ZYGO for each PROJECT, such DELIVERABLES shall be deemed to be the TARGET PRODUCT thereof. In the event CANON does not accept the DELIVERABLES of ZYGO as the TARGET PRODUCT for each PROJECT, CANON shall have the right to terminate such PROJECT and enforce its rights under Section 6.6 below, provided that CANON’s sole ground for such non-acceptance of the DELIVERABLES of ZYGO shall be such ZYGO’s DELIVERABLES’ non-compliance with the FINAL SPECIFICATIONS thereof. Notwithstanding the foregoing, in the event CANON decides to adopt any DELIVERABLES having any non-compliance with the FINAL SPECIFICATIONS as a commercial level product under a PROJECT and notify ZYGO of its intent so in writing, such DELIVERABLES shall be deemed to be a premature commercial level TARGET PRODUCT (“PREMATURE TARGET PRODUCT”) and Section 7.1 shall apply to such PREMATURE TARGET PRODUCT as if it were named in the place of the TARGET PRODUCT and ZYGO shall make all necessary assistance to CANON so that CANON can commercially use such PREMATURE TARGET PRODUCT; provided, however, that such adoption of PREMATURE TARGET PRODUCT shall not relieve ZYGO from any of its obligations under this AGREEMENT, including without limitation, its obligation to modify such DELIVERABLES to meet the FINAL SPECIFICATIONS pursuant to the procedure set forth herein. 2.7 In addition to the foregoing, CANON shall have the right to terminate any of the PROJECTs at any time with or without cause. Upon such termination which has occurred solely for CANON’s reasons, CANON agrees to pay ZYGO on timing separately agreed upon by the PARTIES the actual costs incurred by ZYGO solely from its performance of such PROJECT by the time of such termination and not paid by CANON to ZYGO, plus costs solely arising out of the occurrence of such termination (e.g., cancellation fee for outside materials, orders and services, details of which are separately agreed upon by the PARTIES); provided, however, that ZYGO shall promptly provide written documentation which sufficiently specifies details of the costs and proves the correctness of the calculation of the amount of such costs and CANON agreed it is reasonable costs of such termination.