EXHIBIT 10.1

FORM OF EXCHANGE AGREEMENT

April 16, 2007

Veeco Instruments Inc.

100 Sunnyside Boulevard, Suite B

Woodbury, New York 11797

Re:          Exchange of Convertible Subordinated Notes Listed on Appendix A

Ladies and Gentlemen:

The undersigned (the “Holder”) owns the principal amount of 4.125% Convertible
Subordinated Notes due December 21, 2008 (the “Old Notes”) of Veeco Instruments
Inc., a Delaware corporation (the “Company”), set forth on Appendix A hereto. 
The Holder desires to exchange the Old Notes set forth on Appendix A for a
principal amount of the Company’s newly issued 4.125% Convertible Subordinated
Notes due April 15, 2012 (the “New Notes”) at an exchange ratio of $991.70
principal amount of New Notes for each $1,000 principal amount of Old Notes
exchanged, plus a cash payment by the Company to the Holder equal to the accrued
and unpaid interest on the Old Notes to, but not including, the Settlement Date
(defined below) (the “Interest Payment”).  The terms of the New Notes will be
substantially as described in the Company’s preliminary offering memorandum
dated April 12, 2007, as supplemented by the three-page supplement thereto dated
April 16, 2007 (the “Preliminary Offering Memorandum”) and the initial
conversion rate for each $1,000 principal amount of New Notes will be 36.7277
shares of Company common stock (equivalent to an initial conversion price of
approximately $27.2274 per share).  The New Notes will be issued pursuant to an
Indenture dated as of April 16, 2007, by and between the Company, as issuer, and
U.S. Bank Trust National Association, as trustee (the “Trustee”), as
supplemented by the First Supplemental Indenture thereto to be dated as of
April 20, 2007 (as supplemented, the “New Notes Indenture”).

This letter agreement (the “Exchange Agreement”) sets forth the agreement
between the Company and the Holder regarding the terms upon which the Company
will exchange the New Notes for the Old Notes.  In connection with this
exchange, the Company and the Holder hereby agree as follows:

1.             Exchange of the Notes.

(a)   On the terms and subject to the conditions of this Exchange Agreement, the
Company hereby agrees to sell, transfer and deliver to the Holder, and the
Holder agrees to accept from the Company, New Notes and the Interest Payment in
exchange for Old Notes.  The principal amount of New Notes set forth on Appendix
A and the Interest Payment

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calculated as set forth on Appendix A will be exchanged for the principal amount
of Old Notes set forth on Appendix A.

(b)   On a date to be agreed upon between the Company and the Holder (but in no
event later than the fourth (4th) business day after the date of this Exchange
Agreement) (the “Settlement Date”), the Holder will deliver the Old Notes in
accordance with the Old Notes Indenture (defined below) for the transfer of
securities and the Deposit/Withdrawal at Custodian (“DWAC”) procedures of The
Depository Trust Company (“DTC”) free and clear of any liens, claims,
encumbrances, security interests, options, charges and restrictions of any kind
(other than those arising from acts of the Company or its affiliates).  Upon
receipt of the Old Notes as transferred through the DWAC procedures of DTC, the
Company shall issue New Notes and make the Interest Payment to the Holder in
accordance with the New Notes Indenture and the DWAC procedures of DTC free and
clear of any liens, claims, encumbrances, security interests, options, charges
and restrictions of any kind (other than those arising from acts of the Holder
or its affiliates).

2.             Representations, Warranties and Agreements of the Holder.  The
Holder hereby represents and warrants to the Company and agrees as follows:

(a)   The Holder is a corporation or other entity, as specified on the signature
page of this Exchange Agreement, duly organized, validly existing and in good
standing under the laws of the jurisdiction identified on the signature page of
this Exchange Agreement.  The Holder has all requisite entity level power and
authority to enter into this Exchange Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.  All entity
level acts and other proceedings required to be taken by the Holder to authorize
the execution, delivery and performance of this Exchange Agreement and the
consummation of the transactions contemplated hereby have been duly and properly
taken.  This Exchange Agreement has been duly executed and delivered by the
Holder and, assuming due execution and delivery by the Company, constitutes a
legal, valid and binding obligation of the Holder, enforceable against the
Holder in accordance with its terms, except that such enforcement may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors’ rights generally, and (ii)
general principles of equity.

(b)   The Holder has good and valid title to the Old Notes, free and clear of
any liens, claims, encumbrances, security interests, options, charges and
restrictions of any kind.  Upon delivery to the Company of securities
representing the Old Notes, as transferred through the DWAC procedures of DTC,
and upon the Holder’s receipt of the New Notes and the Interest Payment, good
and valid title to the Old Notes will pass to the Company, free and clear of any
liens, claims, encumbrances, security interests, options, charges and
restrictions of any kind (except for those arising from acts of the Company or
its affiliates).

(c)   The Holder acknowledges that (i) it has reviewed the Company’s filings
with the Securities and Exchange Commission (the “SEC”) since February 28, 2007,
and (ii) it understands that the rights and privileges of holders of the New
Notes (set forth in the New Notes Indenture), may be substantially different
from the rights of holders of the Old Notes

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(set forth in that certain Indenture, dated as of December 21, 2001, by and
between the Company and the Trustee (as successor in interest), relating to the
Old Notes (the “Old Notes Indenture”)).

(d)   The Holder has the requisite knowledge and experience in financial and
business matters so that it is capable of evaluating the merits and risks of the
transactions contemplated hereby and acquiring the New Notes in connection
therewith and has had such opportunity as it has deemed adequate to obtain from
representatives of the Company such information as is necessary to permit the
Holder to evaluate the merits and risks of such transactions.  The Holder
acknowledges receipt of the Preliminary Offering Memorandum and a draft of the
New Notes Indenture.  In entering into this Exchange Agreement and the
transactions contemplated hereby, the Holder acknowledges that it has and is
acting for itself and not at the direction or instruction of any other person,
including without limitation, the Company, and the Holder has not, is not and
will not hold itself out as, an agent of the Company in connection with the
transactions contemplated hereby or in connection with any subsequent sale of
the New Notes.

(e)   The Holder represents that it is acting solely as principal and has not
received any commission or remuneration (other than trading profits) in
connection with this transaction.  The Holder further represents that the
transactions contemplated in this Exchange Agreement were privately negotiated
and it has not been solicited by any person in connection with this
transaction.  The terms of this Exchange Agreement are the result of
negotiations between the Holder and the Company.

(f)    The Holder also understands that the Company is issuing the New Notes and
the Interest Payments delivered pursuant to this letter agreement in reliance
upon the exemption from the registration requirements of Section 5 of the
Securities Act of 1933, as amended (the “Securities Act”), contained in
Section 3(a)(9) thereof in reliance, in part, on the accuracy of the Holder’s
representations, warranties and agreements herein.  The Holder agrees that any
resale of the New Notes will be in accordance with the provisions of the Federal
securities laws.

3.             Representations, Warranties and Agreements of the Company.  The
Company hereby represents and warrants to the Holder and agrees as follows:

(a)   The Company is a corporation duly organized, validly existing and in good
standing under the laws of Delaware.  The Company has all requisite corporate
power and authority to enter into this Exchange Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby. 
All corporate acts and other proceedings required to be taken by the Company to
authorize the execution, delivery and performance of this Exchange Agreement and
the consummation of the transactions contemplated hereby have been duly and
properly taken.  This Exchange Agreement has been duly executed and delivered by
the Company and, assuming due execution and delivery by the Holder, constitutes
a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that such enforcement may be
subject to (i)

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bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors’ rights generally, and (ii)
general principles of equity.

(b)   The issuance of the New Notes is exempt from the registration requirements
of Section 5 of the Securities Act, pursuant to the exemption contained in
Section 3(a)(9) thereof.  The New Notes will not be “restricted securities”
within the meaning of Rule 144 under the Securities Act and will be freely
transferable by the Holder.  Accordingly, any certificates representing the New
Notes will not bear any restrictive legends.

(c)   The New Notes, when issued and delivered by the Company to the Holder in
exchange for the Old Notes pursuant to this Exchange Agreement and when duly
executed and authenticated at closing by the Trustee, will be (i) legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms (except that such enforcement may be subject to (x)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors’ rights generally, and (y)
general principles of equity); and (ii) will be free clear of any liens, claims,
encumbrances, security interests, options, charges and restrictions of any kind
(other than those arising from acts of the Holder or its affiliates); and (iii)
the Holder will be entitled to the benefits of the New Notes Indenture.

(d)   The Company is not and, after giving effect to the issuance of the New
Notes, will not be, (i) in violation of its charter or bylaws, (ii) in default
in the performance of any bond, debenture, note, indenture, mortgage, deed of
trust or other agreement or instrument to which it is a party or by which it is
bound or to which any of its parties is subject that could reasonably be
expected to have a material adverse effect on the business or financial
condition of the Company, or (iii) in violation of any local, state, federal or
foreign law, statute, ordinance, rule, regulation, requirement, judgment or
court decree applicable to it or any of its assets or properties (whether owned
or leased) that could reasonably be expected to have a material adverse effect
on the business or financial condition of the Company.  To the best knowledge of
the Company, there exists no condition that, with notice, the passage of time or
otherwise, would constitute a default under any such document or instrument that
could reasonably be expected to have a material adverse effect on the business
or financial condition of the Company.

(e)   The documents incorporated by reference in the Preliminary Offering
Memorandum (the “Incorporated Documents”), at the time they were or hereafter
are filed with the SEC, or if amended, as so amended, complied and will comply
in all material respects with the requirements of the Securities and Exchange
Act of 1934, as amended (the “1934 Act”) and the rules and regulations of the
SEC thereunder.  As of their respective dates, neither the Incorporated
Documents nor the Preliminary Offering Memorandum contained or contains an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.  The terms of the New Notes will be in all material respects as
described in the Preliminary Offering Memorandum.

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(f)    The authorized, issued and outstanding shares of capital stock of the
Company as of December 31, 2006 are as set forth in the Preliminary Offering
Memorandum under the caption “Capitalization” (except for subsequent issuances,
if any, pursuant to this Agreement, pursuant to reservations, agreements or
employee benefit plans referred to or incorporated by reference in the
Preliminary Offering Memorandum or pursuant to the exercise of convertible
securities or options referred to or incorporated by reference in the
Preliminary Offering Memorandum).  The shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are fully
paid and non-assessable.  None of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights of any
securityholder of the Company.  There are no authorized or outstanding options,
warrants, preemptive rights, rights of first refusal or other rights to purchase
granted by the Company or to which the Company is a party, or equity or debt
securities of the Company convertible into or exchangeable or exercisable for,
any capital stock of the Company or any of its subsidiaries other than those
described in the Preliminary Offering Memorandum or the Incorporated Documents.

(g)   Since the respective dates as of which information is given in the
Incorporated Documents, no event or circumstance has occurred or arisen which
has had, or would reasonably be expected to, individually or in the aggregate,
have, a Material Adverse Effect on the Company or its subsidiaries.  As used
herein, the term “Material Adverse Effect” shall mean a material adverse effect
on the business, condition (financial or otherwise), properties or results of
operations of the Company and its subsidiaries, taken as a whole, or would
materially adversely affect the ability of the Company to perform its
obligations under this Agreement or the New Notes; provided, however, that to
the extent any effect, change, events, circumstances or development is caused by
or results from any of the following, it shall not be taken into account in
determining whether there has been a “Material Adverse Effect”: (i) the
announcement of the execution of this Agreement, actions contemplated by this
Agreement or the performance of obligations under this Agreement, (ii) factors
affecting the economy or financial markets as a whole, provided that the Company
and its subsidiaries are not materially disproportionately affected thereby,
(iii) failure to meet internal or analyst financial forecasts, in and of itself,
(iv) any change in the market price or trading volume of the Company’s common
stock, par value $0.01 per share (the “Common Stock”) after the date hereof, in
and of itself, or (v) the suspension of trading in securities generally on the
New York Stock Exchange, the American Stock Exchange or the Nasdaq Global Select
Market.

(h)   The Company has not retained or authorized the Holder to act on its behalf
in connection with the Old Notes, and no broker, finder or other person has been
retained by or authorized to act on behalf of the Company in connection with the
transactions contemplated hereby, and the Company has not paid or given,
directly or indirectly, any commission or other remuneration, to any person, for
soliciting the acquisition of the Old Notes or the exchange as contemplated
hereby.

(i)    The Company’s Common Stock issuable upon conversion of the New Notes has
been duly reserved for issuance, and upon issuance in accordance with the terms
of the New Notes, will be validly issued, fully paid and non-assessable.  Such
Common Stock will be

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transferable by the Holder to the same extent as the Common Stock  issuable upon
conversion of the Old Notes.  Accordingly, any certificates representing such
Common Stock will only bear the restrictive legends (if any) required by the New
Notes Indenture.

(j)    No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of its
obligations hereunder, or under the New Notes Indenture, in connection with the
actions contemplated by this Agreement, or for the due execution, delivery or
performance by the Company of this Agreement, or the New Notes Indenture, except
such as have been already obtained or as may be required under the Securities
Act, the 1934 Act, the Trust Indenture Act of 1939, as amended, or in connection
with state securities laws.

4.     Notices.  All notices and other communications under this letter
agreement, including any notices with respect to the transfer of the New Notes,
shall be in writing and shall be deemed given (a) when delivered personally, (b)
one business day after being delivered to a nationally recognized overnight
courier or (c) when sent by facsimile or electronic mail (with confirmation of
transmission received by the sender) to the parties at the addresses (or at such
other address as shall be specified by like notice):

If to the Company:

Veeco Instruments Inc.

100 Sunnyside Boulevard, Suite B

Woodbury, New York 11797

Attention:              General Counsel

Facsimile No.:       516-677-0380

If to the Holder:

As set forth on the signature page of this Exchange Agreement

5.     Confidentiality.  Each of the Company and the Holder represent that it
has not disclosed any information regarding discussions relating to this
Exchange Agreement and each has directed its representatives not to disclose any
such information.  Prior to the issuance of the press release contemplated by
Section 6, except as required by law or any regulation (including any regulation
of The NASDAQ National Market), neither the Company nor the Holder shall
disclose the existence of this Exchange Agreement or any of the provisions
contained herein without the prior written consent of the other, which consent
will not be unreasonably withheld or delayed.  Notwithstanding the foregoing,
each of the Company and the Holder may disclose this Exchange Agreement to its
respective outside legal counsel, independent auditors or advisors.  The
separate confidentiality agreement executed by the Holder relating to the
matters contemplated by this Agreement and the confidentiality provisions of
this Section 5 shall terminate upon the public issuance by the Company of the
press release contemplated by Section 6.

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6.     Press Release; SEC Reports.  Notwithstanding anything contrary in Section
5, the Company may issue a press release or press releases on or after the
execution of this Exchange Agreement announcing the execution of this Agreement
and/or the issuance of the New Notes, and file or furnish such press release(s)
with or to the SEC on a Current Report on Form 8-K promptly thereafter, which
Current Report on Form 8-K may include this Exchange Agreement or a form of
agreement as an exhibit.  Notwithstanding the foregoing, no such press release
issued by the Company shall name the Holder or affiliates of the Holder without
the Holder’s prior written consent, unless required by law (in which case prior
notice to the Holder shall be given).

7.     Amendment.  Neither this Exchange Agreement nor any of the terms hereof
may be amended, supplemented, waived or modified except by an instrument in
writing signed by the parties hereto or, in the case of a waiver, signed by the
party waiving compliance.

8.     Governing Law; Jurisdiction.  This Exchange Agreement shall be governed
by the laws of the State of New York, without regard to any conflicts of law
principles.  By its execution and delivery of this Exchange Agreement, each
party irrevocably and unconditionally agrees that any legal action, suit or
proceeding against it with respect to any matter arising out of or in connection
with this Exchange Agreement or for recognition or enforcement of any judgment
rendered in any such action, suit or proceeding, may be brought in the courts of
the State of New York, County of New York, or in the United States District
Court for the Southern District of New York.  By execution and delivery of this
Exchange Agreement, each party irrevocably and unconditionally accepts and
submits itself to the nonexclusive jurisdiction of such courts with respect to
any such action, suit or proceeding.

9.     Counterparts.  This Exchange Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts will together constitute but one and the
same instrument.  Delivery of an executed counterpart of a signature page by
facsimile transmission shall be effective as a delivery of a manually executed
counterpart of this Exchange Agreement.

10.   Entire Agreement.  This Exchange Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof, and
supersede all prior negotiations, agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.

11.   Assignment.  Neither this Exchange Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by the Company or the
Holder without the prior written consent of the other.

12.   Successors and Assigns.  Subject to Section 11, this Exchange Agreement
shall bind and inure to the benefit of the parties hereto, and their respective
successors, assigns, administrators and representatives.

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13.   No Third-Party Beneficiaries.  This Exchange Agreement shall be solely for
the benefit of the parties hereto, and no other person or entity shall be a
third-party beneficiary of this Exchange Agreement.

14.   Severability.  The unenforceability or invalidity of any term or provision
of this Exchange Agreement in any situation in any jurisdiction shall not affect
the enforceability or validity of the remaining terms and provisions or the
enforceability of the offending term or provision in any other situation or in
any other jurisdiction.

15.   Certain Terms.  The term “affiliate” as used in this Exchange Agreement
shall mean, with respect to a specified person or entity, a person or entity
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the person or entity specified.

*     *     *     *     *

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Holder a counterpart hereof, whereupon this letter
agreement, along with all counterparts, will become a binding agreement between
the Holder and the Company in accordance with its terms.

Very truly yours,

 

 

 

 

,

 

 

a                       organized under the laws of                      , on
behalf of the Holder(s) listed on Appendix A

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

Address:

 

 

 

 

 

Facsimile No.:

 

Confirmed and agreed to as
of the date first above written:

VEECO INSTRUMENTS INC.

By:

 

 

 

Name:

 

 

Title:

 

 

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Appendix A

Each Holder listed below enters into the Exchange Agreement and makes the
agreements, representations and warranties contained therein with respect to the
Old Notes set forth opposite its name below.

Old Notes:  4.125% Convertible Subordinated Notes due December 21, 2008  (CUSIP
#922417 AB6)

New Notes:  4.125% Convertible Subordinated Notes due April 15, 2012  (CUSIP
#922417 AC4)

Holder

 

Principal
Amount of
Old Notes to
be Delivered
by Holder

 

Principal
Amount of
New Notes to
be Delivered
by the
Company

 

Interest
Payment to
be Made by
the Company
(daily rate)

 

Cash in lieu
of Fractional
New Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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