RESEARCH & BUSINESS DEVELOPMENT AGREEMENT

Exhibit 10.52

RESEARCH & BUSINESS DEVELOPMENT AGREEMENT

Effective as of

December 1, 2007

among

Photon Dynamics Inc.,

Dr. Kam Law

and

Masato Toshima LLC

TABLE OF CONTENTS

				Page
ARTICLE 1
Definitions					1
Section 1.01 .		Definitions			1
Section 1.02 .		Other Definitional and Interpretative Provisions			4
ARTICLE 2
Scope of Research & Business Development					4
Section 2.01 .		Responsibilities and Funding			4
Section 2.02 .		Steering Committee			6
Section 2.03.		Human Resources			4
ARTICLE 3
Intellectual Property Rights					8
Section 3.01 .		Rights in Background IP and Program IP			8
Section 3.02 .		Licensing and Option of Background IP and Program IP			9
Section 3.03 .		Termination of Option			11
Section 3.04 .		Right of First Offer			11
Section 3.05 .		Option on Fields of Use			12
ARTICLE 4
Program Budget and Payment					13
Section 4.01 .		Program Budget			13
ARTICLE 5
Confidentiality					14
Section 5.01 .		Confidential Information			14
Section 5.02 .		Restricted Use			14
ARTICLE 6
Representations and Warranties					15
Section 6.01 .		Representations of Both Parties			15
Section 6.02 .		Representations by LTS			15
Section 6.03 .		No Representation by Principals			16
ARTICLE 7
Term and Termination					16
Section 7.01 .		Term			16
Section 7.02 .		Termination for Cause			16

				Page
Section 7.03 .		Survival of Work Plans			17
Section 7.04 .		Survival			18
ARTICLE 8
Indemnification					18
Section 8.01 .		Indemnification for Research & Business Development and Development			18
Section 8.02 .		LIMITATION OF LIABILITY			18
Section 8.03 .		Notice of Claim			18
ARTICLE 9
IP Protection and Enforcement					18
Section 9.01 .		Prosecution and Protection of Inventions in Program IP			18
ARTICLE 10
Miscellaneous					20
Section 10.01 .		Dispute Resolution			20
Section 10.02 .		Non-solicitation			22
Section 10.03 .		Assignment			22
Section 10.04 .		Independent Contractors			22
Section 10.05 .		Severability			22
Section 10.06 .		Entire Agreement			22
Section 10.07 .		No Waiver			23
Section 10.08 .		Force Majeure			23
Section 10.09 .		Notices			23
Section 10.10 .		Counterparts			23
Schedule A		Work Plan
Schedule B		Program Budget and Payment
Appendix 1		Confidentiality Acknowledgement
Appendix 2		Escrow Agreement

RESEARCH & BUSINESS DEVELOPMENT AGREEMENT

     THIS RESEARCH & BUSINESS DEVELOPMENT effective December 1, 2007 (the “ Effective Date ”) by and among (i) Photon Dynamics, Inc., a California corporation (“ PDI ”) having its principal offices located at 5970 Optical Court, San Jose, CA 95138, (ii) Lam Toshima Solar LLC (“ LTS ”), a California corporation having its address of correspondence at 5502 Sunset Hills Court, San Jose, CA 95138 (iii) Dr. Kam Law, a member of LTS and (iv) Toshima, LLC, a member of LTS (each a “ Principal ” and together the “ Principals ”) (each, a “ Party ” and together, the “ Parties ”).

WITNESSETH:

     WHEREAS, the Parties wish to enter into a collaborative research and business development program under which LTS, including the Principals, and PDI will collaborate for the purpose of validating and undertaking the initial commercialization of the cover IP and machine schema for coating crystalline and polycrystalline substrates with SiNx anti-reflective coatings for the creation of silicon photovoltaics used to convert light into electricity (the “ Research & Business Development Program ”).

     NOW, THEREFORE, in consideration of the promises and the respective representations, warranties, covenants, and agreements set forth herein, the Parties hereto agree as follows:

ARTICLE 1
Definitions

     Section 1.01 . Definitions.

     (a) The following terms shall be used in this Agreement with the following meanings:

     “ 12-Month Funding Point ” means the date that is 12 months from the Effective Date.

     “ Affiliate ” means with respect to any person, any other person controlling, controlled by or under common control with such person. As used herein, “ control ” (and the derivative terms “ controlling ” and “ controlled ”) means the direct or indirect ownership or more than fifty percent (50%) of the equity securities or other ownership interests and voting rights of, and the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise. No Party or its Affiliates shall by reason of this Agreement be deemed to be an affiliate of the other Party or its Affiliates. The term “ affiliated ” shall have a corresponding meaning.

     “ Area of Responsibility ” means each area of the Research & Business Development Program in which one Party has primary responsibility for directing, carrying out or performing the Research & Business Development Program.

     “ Background IP ” means (i) the PECVD Chamber IP and machine processes and (ii) any other IP owned or controlled by the Principals or by LTS that is integrated, developed or commercialized under the Research & Business Development Program, including machine processes and designs (other than the Program IP).

     “ Confidential Information ” means (i) the existence and terms of this Agreement and (ii) any non-public, confidential or proprietary information relating to a disclosing Party, whether or not technical in nature, including any that is designated by the disclosing Party as Confidential Information at the time of its disclosure, either by a written or visual confidentiality designation, or otherwise if such information would, under the circumstances, appear to a reasonable person to be confidential or proprietary. Notwithstanding the foregoing, “ Confidential Information ” does not include information, technical data or know-how which: (i) is in the public domain at the time of disclosure or becomes available thereafter to the public without restriction, and in either case not as a result of the act or omission of the receiving Party; (ii) is rightfully obtained by the receiving Party from a third party without restriction as to disclosure; (iii) is lawfully in the possession of the receiving Party at the time of disclosure by the disclosing Party and not otherwise subject to restriction on disclosure; (iv) is approved for disclosure by prior written authorization of the disclosing Party; or (v) is developed independently and separately by either Party without use of the disclosing Party’s Confidential Information.

     “ Fair Market Value ” means a sum equal to the fair market value of the right to be granted a fully paid up, irrevocable, worldwide and perpetual commercial license within the Field of Use under the Background IP and the Program IP, which such. Fair Value shall be determined in accordance with Sections 3.02(d) and 10.01.

     “ Field of Use ” means application of coatings for crystalline and poly-crystalline photovoltaics.

     “ Intellectual Property ” means any or all of the following and all statutory and/or common law rights throughout the world in, arising out of, or associated therewith: (i) all patents and applications therefore and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof; (ii) all inventions (whether patentable or not) retained as confidential information, confidential invention disclosures, confidential improvements, and all other trade secrets; (iii) all works of authorship, copyrights, mask works, copyright and mask work registrations and applications and all industrial designs and design rights and any registrations and applications therefor; and (iv) any similar, corresponding or equivalent rights to any of the foregoing.

     “ Milestones ” means the deliverables set out in the Work Plan that each Party is required produce on or prior to the dates set out in the Work Plan.

     “ Patents ” mean all foreign and domestic patent applications (including, without limitation, all provisional, divisional, substitution, continuation and continuation in-part applications, and all foreign counterparts thereof) and all foreign and domestic patents

(including without limitation, extensions, reissues, reexaminations, renewals, inventors certificates and foreign counterparts thereof).

     “ PDI Interest ” is the percentage determined by Section 3.02(c).

     “ PECVD Chamber IP ” means all rights to and in: US Patent Application serial no. 11/826,336, Japanese patent application serial no. JAPAN 2007-39923 02/20/2007, and Japanese patent application serial no. JAPAN 2007-274792 (PECVD System Architecture) any and all other counterparts thereof worldwide, any and all related patent applications and patents sharing common priority therewith, and all inventions and other technology disclosed therein; as well as any improvements thereto within the Field of Use.

     “ Program Budget ” means the funding to be provided by PDI for the Research & Business Development Program under this Agreement, as further defined in Section 2.01.

     “ Program IP ” means all Intellectual Property rights created, developed or otherwise acquired by any Party in the course of carrying out the Research & Business Development Program during the Term of this Agreement.

     “ Work Plan ” means the work plan set forth in Schedule A to this Agreement.

     (b) Each of the following terms is defined in the Section set forth opposite such term:

Term		Section
12-MP		2.01(a)
18-MP		2.01(a)
Agreement		Preamble
Confidentiality Acknowledgement		2.03(a)
Cure Period		7.02
Dispute		2.02(b)
Effective Date		Preamble
Exercise Date		3.02(b)
Initial Term		7.01
LTS		Preamble
Negotiation Period		3.02(b)
Option IP		3.02(b)
Option Period		3.02(b)
Party(ies)		Preamble

Term		Section
PDI		Preamble
Principal(s)		Preamble
Renewal Term		7.01
Steering Committee		2.02(a)
Research & Business Development Program		Preamble
Term		7.01

     Section 1.02 . Other Definitional and Interpretative Provisions. Unless specified otherwise, in this Agreement the obligations of any party consisting of more than one person are joint and several. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.

ARTICLE 2
Scope of Research & Business Development

     Section 2.01 . Responsibilities and Funding.

     (a) Scope:

     (i) The Parties will collaborate in the Research & Business Development and development program set forth in the Work Plan (Exhibit A), which sets out in detail each Party’s responsibilities with respect to performing and/or supporting specific Research & Business Development-oriented activities.

     (ii) Without limitation to the Work Plan and subject to the terms of this Agreement, PDI will provide a Program Budget of up to $5 million. The Program Budget will be made up of an initial sum of $2 million and, subject to Sections 2.01(a)(iv) and (iv), a further sum of $3 million in two installments of $1.5 million each, payable to or usable by LTS in accordance with Section 4.01. In exchange for the Program Budget and PDI’s other obligations under this Agreement, the Principals and LTS will conduct the Research & Business Development Program and other development activities with PDI to validate and commercialize the PECVD Chamber IP in the Field of Use.

     (iii) The Research & Business Development Program is divided into two stages: the 12-month program beginning on the Effective Date and ending 12 months after the Effective Date (“ 12-MP ”) and the 18-month program beginning on the day after the end of the 12-MP and ending 18 months after the end of the 12-MP (“ 18-MP ”). During 12-MP, PDI will make up to $2 million of the Project Budget available for the Research & Business Development Program and LTS and the Principals will attempt, with best efforts, to achieve the Milestones allocated to the 12-MP in the Work Plan. At the end of the 9th month during the 12-MP, the Steering Committee will hold a progress review and, thereafter, PDI will inform LTS of whether it has a general intention of continued funding beyond the 12-MP, based on the results to date. For the avoidance of doubt, the Research & Business Development Program will terminate 30 months from the Effective Date.

     (iv) On the date of the 12-Month Funding Point, the Steering Committee will determine whether LTS has met the 12-MP Milestones. If, at that date, LTS has:

     (A) met all of the 12-MP Milestones, then, subject to Section 3.02(c)(i), PDI shall provide or make available up to a further $1.5 million to LTS for the purposes of the Research & Business Development Program; or

     (B) failed to meet all the 12-MP Milestones, then PDI may:

     (1) subject to Section 3.02(c)(ii), provide or make available up to a further $1.5 million to LTS for the purposes of the Research & Business Development Program; or

     (2) terminate the Research & Business Development Program with 90 days’ notice to LTS.

     (v) Provided PDI has not terminated the Research & Business Development Program in accordance with Section 2.01(a)(iv)(B)(2) above, then, during the 18-MP, the Parties will focus on the commercialization of a product in the Field of Use embodying the PECVD Chamber IP and the Program IP, as further set out in the Work Plan.

     (vi) If, after the 18-MP, LTS requires more than the initial $3.5 million made available to LTS by PDI to conduct the Research & Business Development Program, LTS shall notify PDI and PDI shall have a first right of refusal to provide LTS an additional $1.5 million for use only in relation to the Research & Business Development Program, in accordance with Section 3.04, as if the process for exercising the right to the Crystalline License was a right to provide further funds for the Research & Business Development Program provided that any such further funding will be subject to the terms of Section 3.02(c).

     (b) Work Plan:

     The Parties agree to perform each Area of Responsibility assigned to them, individually or collectively, in the Work Plan. However, each Party will provide the other with non-financial cooperation in all Areas of Responsibility and in every area of the Research & Business Development Program. The initial Areas of Responsibility are set forth in the Work Plan set out at Schedule A, but the Parties acknowledge that further specification of those initial Areas of Responsibility shall be agreed between them, from time to time, as necessary during the Term. Prior to the commencement of any additional Area of Responsibility, the Parties shall amend or supplement the Work Plan specifying, among other things, whether such Area of Responsibility is a PDI Area of Responsibility or a LTS Area of Responsibility, and the related Research & Business Development objectives, work plans and budgets. The Parties agree that none of the Work Plan is or will be binding or effective unless and until this Agreement has been approved by the Steering Committee. Upon obtaining the approval of the Steering Committee, the Work Plan shall be binding and shall be deemed to be incorporated into this Agreement in its entirety, with respect to the Research & Business Development Program. Any amendments to the Work Plan shall require unanimous approval of the Steering Committee.

     (c) Conflict:

     If the provisions of a Work Plan conflict with the provisions of this Agreement, the provisions of the Work Plan shall govern solely to the extent of any such conflict.

     (d) Activity Reports:

     The Parties shall promptly communicate to each other all developments related to the Research & Business Development Program. Activity reports shall be exchanged on a monthly basis by the Parties. The Steering Committee shall determine the timing and the content of the activity reports.

     Section 2.02 . Steering Committee

     (a) Composition and Responsibilities:

There shall be a committee (“ Steering Committee ”) consisting of the 3 committee members set out below or their replacements from time to time:

     (i) Mr. Wendell Blonigan PDI representative

     (ii) Mr. Kam Law LTS representative

     (iii) Mr. Matso Toshima LTS representative

     The Steering Committee shall be responsible for the direction, coordination and oversight of all research and business development with respect to the Research & Business Development Program including the following:

     (i) prioritization of research and business development activities and allocation of resources among each Area of Responsibility;

     (ii) monitoring the results of each Area of Responsibility;

     (iii) administering the Program Budget; and

     (iv) such other responsibilities as may be assigned to it by the Parties.

     (b) Procedures:

     The Steering Committee shall establish procedures to govern the conduct of its meetings including the frequency of regular meetings, the calling of special meetings, advance notice of meeting agendas and the keeping of minutes of its meetings. The Steering Committee shall meet at least quarterly.

     (c) Disputes:

     If any dispute arises between PDI, LTS and the Principals (or any of them) in relation to the Research & Business Development Program (“ Dispute ”) and those Parties are unable to resolve the Dispute between themselves within 30 days, the Dispute will be referred to the Steering Committee, which shall be the initial forum for dispute resolution. The Steering Committee shall operate, and attempt to resolve any Disputes, by consensus. If the Steering Committee is unable to resolve a Dispute regarding any issue presented to it (or arising within the Steering Committee), such Dispute will be referred to designated senior officers of the Parties for good faith resolution, for a period of 30 days, pursuant to Section 10.01(a)(i) below. If such Dispute is not resolved by the end of such 30 day period, then either Party shall be free to pursue any legal or equitable remedy available to it, in accordance with Section 10.01(b) below.

     Section 2.03. Human Resources .

     (a) LTS Principals and Staff:

     (i) The Principals will be the main investigators and will be responsible for day to day management of the program Research & Business Development Program for the Term and LTS agrees that this is an essential term of this Agreement.

     (ii) LTS may engage additional staff, including employees and contractors, to assist with performing its obligations under the Research & Business Development Program, provided that:

     (A) those employees and contractors execute a confidentiality acknowledgement that will be substantially in the form attached as Appendix 1 (“ Confidentiality Acknowledgement ”) (an original of which will be provided to PDI); and

     (B) all LTS employees and contractors comply with all of PDI’s policies, rules and directions in relation to the Research & Business Development Program and while on any of PDI’s premises.

     (b) PDI Human Resources:

     PDI will make its employees available to LTS for the purposes of the Research & Business Development Program and the fully burdened costs incurred by PDI in association with these employees shall be charged against the Program Budget. Mr. Wendell Blonigan will devote such time as is reasonable to fulfill his duties on the Steering Committee.

ARTICLE 3
Intellectual Property Rights

     Section 3.01 . Rights in Background IP and Program IP.

     (a) Ownership of Background IP:

     Except as otherwise provided herein, (i) LTS and its Principals shall retain sole right, title and interest to their Background IP and (ii) this Agreement shall not confer to PDI any rights in the Background IP of LTS and the Principals.

     (b) Ownership of Research & Business Development Program IP:

     (i) Subject to Section 3.02, all right, title and interest in the Program IP will automatically vest in LTS, irrespective of which Party created, developed or acquired that Intellectual Property.

     (ii) To the extent that the Program IP does not vest automatically in LTS by operation of law or by this Agreement, subject to Section 3.02, PDI hereby assigns all its right, title and interest in the Program IP to LTS.

     (iii) PDI undertakes to do all reasonable things that are reasonably necessary in order to perfect LTS’ title to the Program IP.

     (iv) If PDI terminates the Research & Business Development Program at any time and any Intellectual Property owned by PDI has been incorporated into the Program IP without the knowledge and agreement of LTS, then LTS will

be provided with a royalty-free, non-exclusive license to use such Intellectual Property, such license to be limited to the Field of Use. For any use by LTS of the Intellectual Property owned by PDI outside of the Field of Use, the Parties shall negotiate, in good faith, commercial terms to compensate PDI for the use of the PDI Intellectual Property.

     (c) Ownership of Non-Research & Business Development Program IP:

     Except as otherwise provided herein, PDI shall retain sole right, title and interest to all its Intellectual Property, except for the Program IP. This Agreement shall not confer any rights to LTS and the Principals (or either of them) in respect of such PDI Intellectual Property.

     (d) Program IP Escrow:

     (i) Upon the conclusion of the Research & Business Development Program and throughout the term of the Research & Business Development Program, LTS will place into escrow with the Escrow Agent all the Program IP then in existence, including all supporting documents and materials and will, for the Term of this Agreement, continue to provide any supplemental Program IP, including any improvements, modification or developments thereto created as part of the Research & Business Development Program or with resources from the Program Budget.

     (ii) The agreement with the Escrow Agent will be substantially in the form attached as Appendix 2 and the Program IP will be released to PDI if (A) LTS and the Principals (or either of them) commit a material breach of this Agreement that remains uncured for the Cure Period or (B) LTS or the Principals become insolvent or unable to pay their respective debts as they fall due, make an assignment for the benefit of creditors or become subject to any bankruptcy or insolvency proceedings under federal, state or foreign statutes which is not rescinded or dismissed within the Cure Period.

     (iii) In the event that the Program IP is released to PDI due to the physical incapacity of either of the Principals and LTS unable to continue the Research & Business Development Program, the Program IP will be subject to a royalty bearing license to PDI to be negotiated in good faith on reasonable commercial terms at such a time.

     Section 3.02 . Licensing and Option of Background IP and Program IP.

     (a) Grant of License to Background IP:

     LTS hereby grants to PDI a worldwide, royalty free, irrevocable, perpetual and non-exclusive license to use its Background IP solely for the purposes of Research & Business Development Program, as directed by LTS.

     (b) Grant of Option:

     LTS hereby grants to PDI an exclusive option to acquire a fully paid up, irrevocable, perpetual, transferable, sub-licensable, world-wide exclusive license under the Program IP and the Background IP (together the “ Option IP ”) within the Field of Use for the price applicable at the date the Option is exercised by PDI (“ Exercise Date ”) (the “ Option ”).The price for such license is a sum equal to the Fair Market Value on the Exe