Form of Indemnification Agreement



 Exhibit 10.1 
  
 INDEMNIFICATION AGREEMENT 
  
 This INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered into this
             day of December, 2003 (the “Effective Date”) by and between Credence Systems Corporation, a Delaware corporation (the “Company”), and
[                    ] (the “Indemnitee”). 
  
 WHEREAS, the Company believes it is essential to retain and attract qualified directors and officers; 
  
 WHEREAS, the Indemnitee is a director and/or officer of the Company;

  
 WHEREAS, both the Company and the Indemnitee recognize the
increased risk of litigation and other claims being asserted against directors and officers of public companies; 
  
 WHEREAS, the Company’s Certificate of Incorporation (the “Certificate of Incorporation”) and Bylaws (the “Bylaws”)
require the Company to indemnify and advance expenses to its directors and officers to the extent permitted by the DGCL (as hereinafter defined); 
  
 WHEREAS, the Indemnitee has been serving and intends to continue serving as a director and/or officer of the Company in part in reliance on the
Certificate of Incorporation and Bylaws; and 
  
 WHEREAS, in
recognition of the Indemnitee’s need for (i) substantial protection against personal liability based on the Indemnitee’s reliance on the Certificate of Incorporation and Bylaws, and (ii) an inducement to continue to provide effective
services to the Company as a director and/or officer thereof, the Company wishes to provide for the indemnification of the Indemnitee and to advance expenses to the Indemnitee to the fullest extent permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained by the Company, to provide for the continued coverage of the Indemnitee under the Company’s directors’ and officers’ liability insurance policies. 
  
 NOW, THEREFORE, in consideration of the premises contained herein and of the
Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 
  
 1. Certain Definitions. 
  
 (a) A “Change in Control” shall be deemed to have occurred if: 
  

	(i)	any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
“Exchange Act”), other than (a) a trustee or other fiduciary holding securities under an employee benefit plan of the Company; (b) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company; or (c) any current beneficial stockholder or group, as defined by Rule 13d-5 of the Exchange Act, including the heirs, assigns and successors thereof, of beneficial ownership, within the
meaning of Rule 13d-3 of the Exchange Act, of securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities; hereafter becomes the “beneficial owner,” as defined in Rule 13d-3 of the
Exchange Act, directly or indirectly, of securities of the Company representing 20% or more of the total combined voting power represented by the Company’s then outstanding Voting Securities; 

  

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 (ii) during any period of two consecutive years, individuals who at the beginning of such period
constitute the Board and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then in office who either were directors at the
beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or 
  
 (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation
which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total
voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company, in one transaction or a series of transactions, of all or substantially all of the Company’s assets. 
  

(b) “DGCL” shall mean the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended or
interpreted; provided, however, that in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the Company to provide broader indemnification rights than were permitted prior thereto.

  
 (c) “Expense” shall mean attorneys’ fees
and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing for any of the foregoing, any Proceeding relating to any
Indemnifiable Event. 
  
 (d) “Indemnifiable
Event” shall mean any event or occurrence that takes place either prior to or after the execution of this Agreement, related to the fact that the Indemnitee is or was a director or officer of the Company, or is or was serving at the request
of the Company as a director, officer, employee, or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, or by reason of anything done or not done by
the Indemnitee in any such capacity. 
  
 (e)
“Proceeding” shall mean any threatened, pending or completed action, suit, investigation or proceeding, and any appeal thereof, whether civil, criminal, administrative or investigative and/or any inquiry or investigation, whether
conducted by the Company or any other party, that the Indemnitee in good faith believes might lead to the institution of any such action. 
  

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 (f) “Reviewing Party” shall mean any appropriate person or body consisting of a member
or members of the Company’s Board or any other person or body appointed by the Board (including the special independent counsel referred to in Section 7) who is not a party to the particular Proceeding with respect to which the Indemnitee is
seeking indemnification. 
  
 (g) “Voting
Securities” shall mean any securities of the Company which vote generally in the election of directors. 
  
 2. Indemnification. 
  
 (a) In the event the Indemnitee was or is a party to or is involved (as a party, witness, or otherwise) in any Proceeding by reason of (or
arising in part out of) an Indemnifiable Event, whether the basis of the Proceeding is the Indemnitee’s alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, the Company
shall indemnify the Indemnitee to the fullest extent permitted by the DGCL against any and all Expenses, liability, and loss (including judgments, fines, ERISA excise taxes or penalties, and amounts paid or to be paid in settlement, and any
interest, assessments, or other charges imposed thereon, and any federal, state, local, or foreign taxes imposed on any director or officer as a result of the actual or deemed receipt of any payments under this Agreement) (collectively,
“Liabilities”) reasonably incurred or suffered by such person in connection with such Proceeding. The Company shall provide indemnification pursuant to this Section 2 as soon as practicable, but in no event later than 30 days after
it receives written demand from the Indemnitee. 
  
 (b)
Notwithstanding anything in this Agreement to the contrary and except as provided in Section 6 below, the Indemnitee shall not be entitled to indemnification pursuant to this Agreement: 
  
 (i) in respect to remuneration paid to Indemnitee if it shall be determined by final judgment or other final adjudication
that such remuneration was in violation of law; 
  
 (ii) on
account of any suit in which judgment is rendered against the Indemnitee pursuant to Section 16(b) of the Exchange Act for an accounting of profits made from the purchase or sale by the Indemnitee of securities of the Company; 
  
 (iii) on account of Indemnitee’s conduct which is finally adjudged to
have been knowingly fraudulent or deliberately dishonest, or to constitute willful misconduct; 
  
 (iv) on account of Indemnitee’s conduct which is the subject of a Proceeding brought by the Company and approved by majority of the Board of
Directors which alleges willful misappropriation of corporate assets by Indemnitee, disclosure of confidential information in violation of Indemnitee’s fiduciary or contractual obligations to the Company, or any other willful and deliberate
breach in bad faith of Indemnitee’s duty to the Company or its stockholders; 
  

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 (v) in connection with any Proceeding initiated by the Indemnitee against the Company or any director or
officer of the Company unless the Company has joined in or consented to the initiation of such Proceeding; 
  
 (vi) if a final decision by a Court having jurisdiction in the matter shall determine that such indemnification is not lawful (and, in this respect, both
the Company and Indemnitee have been advised that the Securities and Exchange Commission believes that indemnification for liabilities arising under the federal securities law is against public policy and is, therefore, unenforceable and that claims
for indemnification should be submitted to appropriate courts for adjudication); or 
  
 (vii) in connection with any Proceeding with respect to which a claim for indemnity hereunder is made, arose from or is based upon any of the foregoing: (A) any solicitation of proxies by Indemnitee, or by a group of
which he was or became a member consisting of two or more persons that had agreed (whether formally or informally and whether or not in writing) to act together for the purpose of soliciting proxies, in opposition to any solicitation of proxies
approved by the Board of Directors; or (B) any activities by Indemnitee that constitute a breach of or default under any agreement between the Indemnitee and the Company. 
  
 3. Contribution. If the indemnification provided in Section 2 hereof is unavailable by reason of a Court decision
described in Section 2(b)(vi) hereof based on grounds other than any of those set forth in paragraphs (i) through (v) of Section 2(b) hereof, then in respect of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if
joined in such action, suit or proceeding), the Company shall contribute to the amount of Liabilities incurred and paid or payable by Indemnitee in such proportion as is appropriate to reflect (a) the relative benefits received by the Company on the
one hand and Indemnitee on the other hand from the transaction from which such Proceeding arose, and (b) the relative fault of the Company on the one hand and of Indemnitee on the other in connection with the events which resulted in such
Liabilities, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of Indemnitee on the other shall be determined by reference to, among other things, the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such expenses, judgments, fines or settlement amounts. The Company agrees that it would not be just and equitable if contribution pursuant to this
Section 3 were determined by pro rata allocation or any other method of allocation which does not take account of the foregoing equitable considerations. 
  
 4. Advancement of Expenses. The Company shall advance Expenses to the Indemnitee within 30 days of such request (an “Expense
Advance”); provided, however, that if required by applicable corporate laws such Expenses shall be advanced only upon delivery to the Company of an undertaking by or on behalf of the Indemnitee to repay such amount if it is ultimately
determined that the Indemnitee is not entitled to be indemnified by the Company; and provided further, that the Company shall make such advances only to the extent permitted by law. Expenses incurred by the Indemnitee while not acting in his/her
capacity as a director or officer, including service with respect to employee benefit plans, may be advanced upon such terms and conditions as the Board, in its sole discretion, deems appropriate. Notwithstanding the foregoing, the Company shall not
be required to advance Expenses to Indemnitee in respect of any action arising from or based upon any of the matters set forth in Section 2(b). 
  

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 5. Review Procedure for Indemnification. Notwithstanding the foregoing, (a) the obligations of the
Company under Sections 2 (a), 3 and 4 above shall be subject to the condition that the Reviewing Party shall not have determined (in a written opinion, in any case in which the special independent counsel referred to in Section 7 hereof is involved)
that the Indemnitee would not be permitted to be indemnified under applicable law, and (b) the obligation of the Company to make an Expense Advance pursuant to Section 4 above shall be subject to the condition that, if, when and to the extent that
the Reviewing Party determines that the Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by the Indemnitee (who hereby agrees to reimburse the Company) for all such amounts
theretofore paid; provided, however, that if the Indemnitee has commenced legal proceedings in a court of competent jurisdiction pursuant to Section 6 below to secure a determination that the Indemnitee should be indemnified under applicable law,
any determination made by the Reviewing Party that the Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and the Indemnitee shall not be required to reimburse the Company for any Expense Advance until a
final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or have lapsed). The Indemnitee’s obligation to reimburse the Company for Expense Advances pursuant to this Section 5
shall be unsecured and no interest shall be charged thereon. If there has not been a Change in Control, the Reviewing Party shall be selected by the Board, and if there has been such a Change in Control, other than a Change in Control which has been
approved by a majority of the Company’s Board who were directors immediately prior to such Change in Control, the Reviewing Party shall be the special independent counsel referred to in Section 7 hereof. 
  
 6. Enforcement of Indemnification Rights. If the Reviewing Party
determines that the Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, or if the Indemnitee has not otherwise been paid in full pursuant to Sections 2, 3 and 4 above within 30 days after a
written demand has been received by the Company, the Indemnitee shall have the right to commence litigation in any court in the State of Delaware having subject matter jurisdiction thereof and in which venue is proper to recover the unpaid amount of
the demand (an “Enforcement Proceeding”) and, if successful in whole or in part, the Indemnitee shall be entitled to be paid any and all Expenses in connection with such Enforcement Proceeding. The Company hereby consents to service
of process for such Enforcement Proceeding and to appear in any such Enforcement Proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and the Indemnitee. 
  

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 7. Change in Control. The Company agrees that if there is a Change in Control of the Company,
other than a Change in Control which has been approved by a majority of the Company’s Board who were directors immediately prior to such Change in Control, then with respect to all matters thereafter arising concerning the rights of the
Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or under applicable law or the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for
Indemnifiable Events, the Company shall seek legal advice only from special independent counsel selected by the Indemnitee and approved by the Company, which approval shall not be unreasonably withheld. Such special independent counsel shall not
have otherwise performed services for the Company or the Indemnitee, other than in connection with such matters, within the last five years. Such independent counsel shall not include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement. Such counsel, among other things, shall render its written
opinion to the Company and the Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special independent counsel referred to above
and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities and damages arising out of or relating to this Agreement or the engagement of special independent counsel pursuant to this
Agreement. 
  
 8. Partial Indemnity. If the Indemnitee is
entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses and Liabilities, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify the Indemnitee
for the portion thereof to which the Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that the Indemnitee has been successful on the merits or otherwise in defense of any or all Proceedings
relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, the Indemnitee shall be indemnified against all Expenses incurred in connection therewith. In connection with
any determination by the Reviewing Party or otherwise as to whether the Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be on the Company to establish that the Indemnitee is not so entitled. 
  
 9. Non-exclusivity. The rights of the Indemnitee hereunder shall be in
addition to any other rights the Indemnitee may have under any statute, provision of the Company’s Certificate of Incorporation or Bylaws, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity
and as to action in another capacity while holding such office. To the extent that a change in the DGCL permits greater indemnification by agreement than would be afforded currently under the Company’s Certificate of Incorporation and Bylaws
and this Agreement, it is the intent of the parties hereto that the Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 
  
 10. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing directors’ and officers’ liability
insurance, the Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 
  

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 11. Notification and Defense of Claim. Not later than thirty (30) days after receipt by Indemnitee
of notice of the commencement of any Proceeding, Indemnitee will, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will
not relieve it from any liability which it may have to Indemnitee otherwise than under this Agreement. With respect to any such Proceeding as to which Indemnitee notifies the Company of the commencement thereof: 
  
 (a) The Company will be entitled to participate therein at its own expense;

  
 (b) except as otherwise provided below, to the extent that it
may wish, the Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election to
assume the defense thereof, the Company will not be liable to Indemnitee under this Agreement for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof other than reasonable costs of investigation or
as otherwise provided below. Indemnitee shall have the right to employ its counsel in such action, suit or proceeding but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be
at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the
conduct of the defense of such action or (iii) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of Indemnitee’s separate counsel shall be at the expense of
the Company. 
  
 (c) The Company shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent. 
  
 12. No Presumption. For purposes of this Agreement, to the fullest extent permitted by law, the termination of any Proceeding, action, suit or
claim, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that the Indemnitee did not meet any particular standard of conduct or
have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 
  
 13. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any
affiliate of the Company against the Indemnitee, the Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, or such longer period as may be
required by state law under the circumstances, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such period; provided, however,
that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 
  
 14. Amendment of this Agreement. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of
the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as
specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof. 
  

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 15. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to
the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable
the Company effectively to bring suit to enforce such rights. 
  
 16. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent the Indemnitee has otherwise actually received payment (under
any insurance policy, Bylaw, vote, agreement or otherwise) of the amounts otherwise indemnifiable hereunder. 
  
 17. Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company, spouses, heirs, and personal and legal representatives. The
Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form
and substance satisfactory to the Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. This Agreement shall
continue in effect regardless of whether the Indemnitee continues to serve as a director or officer of the Company or of any other enterprise at the Company’s request. 
  
 18. Severability. The provisions of this Agreement shall be severable in the event that any of the provisions hereof
(including any provision within a single section, paragraph or sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent
permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. 
  

19. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such State without giving effect to the principles of conflicts of laws. 
  
 20. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. 
  

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 21. Notices. All notices, demands, and other communications required or permitted hereunder shall
be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered mail, return receipt requested, and addressed to the Company at: 
  
 Credence Systems Corporation 
 215 Fourier Avenue 
 Fremont, California
94537 
 Attention:
                             
  
 and to the Indemnitee at: 
 _______________ 
 _______________ 
 _______________ 
 _______________

  
 Notice of change of address shall be effective only when done
in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of delivery or on the third business day after mailing. 
  
 22. Entire Agreement. This Agreement sets forth the entire understanding of the parties relating to the subject
matter thereof and supersedes all prior agreements and understandings among or between any of the parties relating to the subject matter thereof. 
  
 23. Survival of Rights. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is a director,
officer, employee or agent of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) and shall
continue thereafter so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal or investigative, by reason of the fact that Indemnitee was a director, officer,
employee or agent of the Company or serving in any other capacity referred to herein. The rights conferred on Indemnitee by this Agreement shall inure to the benefit of Indemnitee’s heirs, executors and administrators. 
  

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 IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day
first set forth above. 
  

	THE COMPANY:
	
	 CREDENCE SYSTEMS CORPORATION

	
	 By:______________________________

	
	 Name:____________________________

	
	 Title:_____________________________



  
  

	INDEMNITEE:
	
	__________________________________
	 Signature

	
	 Print Name:_________________________



  
  

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