Document:

Exhibit 10.13

August 13, 2002

Dear Scott,

         This letter formalizes our prior discussions and agreement on the terms
of potential bonus and severance arrangements,  as previously discussed with the
Board of Directors, as follows:

         The terms and conditions of your original  signed offer letter continue
in full force and effect, except as amended pursuant to the terms and conditions
described in this letter. In the event there is a conflict in terms, definitions
or other  interpretations  between  your  original  signed offer letter and this
letter agreement,  this letter agreement shall supersede those conflicting terms
and govern that aspect of your  employment  arrangement.  Nothing herein changes
the fact that your employment with Virage is for no specified period of time and
constitutes  at-will  employment.  As a result,  Virage is free to terminate its
employment relationship with you at any time, with cause or without cause.

         As of August  13,  2002,  your title has been  changed to Acting  Chief
Financial Officer, Vice President of Finance and Controller,  although Virage is
free to modify your title at any time for any reason or for no reason.

         In the  event  that  you  continue  to be  employed  and  are  actively
performing  duties for Virage through August 13, 2003, then Virage shall pay you
a one-time  lump sum bonus in the gross  amount of Forty  Thousand  Dollars  (US
$40,000),  less applicable withholding (including without limitation withholding
for applicable taxes)  ("Retention  Bonus").  This Retention Bonus is in lieu of
all other  bonuses for the period  August 13, 2002 to August 13,  2003,  and you
will  not be  eligible  for any  other  bonus  based  on  your or the  Company's
performance  for the period  August 13, 2002 to August 13, 2003.  Subsequent  to
August 13, 2003,  you will fully  participate in the Company's  executive  bonus
program and  potentially  earn a target  bonus  (currently  20% of base  salary)
consistent with other  non-commissioned vice presidents of the Company. You will
also be eligible to participate in any other  employee  benefits  offered by the
Company that are applicable to other executive vice presidents at the Company to
the full extent provided for under such benefits.

         Should  the  Company  execute a  definitive  agreement  for a Change of
Control  (as  defined  herein)  and any of the events  described  herein per the
following  paragraphs  occur  such that you earn the  Double  Trigger  Severance
Amount (as defined herein) on or before November 13, 2003, or should you receive
a  Termination  Without Cause  Severance  Amount (as defined  herein),  you will
forego and not receive (or will return) the Retention Bonus referred to above.

<PAGE>

         If, at any time, Virage mutually executes a definitive  agreement for a
Change of Control, and there is (i) a material reduction of your duties,  title,
authority  or  responsibilities,  relative to your duties,  title,  authority or
responsibilities  as in  effect  immediately  prior  to such  reduction,  or the
assignment to you of such reduced duties, title,  authority or responsibilities,
or (ii) a reduction by the Company in your base salary as in effect  immediately
prior to such  reduction  (other  than a  reduction  that  generally  applies to
Company officers), or (iii) a material reduction by the Company in the aggregate
level of employee benefits,  including  participation in the Company's executive
bonus program,  to which you were entitled  immediately  prior to such reduction
with the result  that your  aggregate  benefits  package is  materially  reduced
(other than a reduction that generally applies to Company officers), or (iv) the
relocation of you to a facility or a location more than  thirty-five  (35) miles
from your then present location, or (v) any act or set of facts or circumstances
which would,  under  California  case law or statute  constitute a  constructive
termination of you,  then,  subject to you executing and not revoking a standard
form of  mutual  release  of  claims  with  the  Company  and not  breaking  any
confidentiality or other similar terms and conditions  pursuant to your original
signed offer letter,  you will receive a one-time lump sum severance  payment in
the gross amount of Eighty  Thousand  Dollars (US  $80,000.00),  less applicable
withholding  (including without limitation withholding for applicable taxes), in
accordance  with the  Company's  standard  payroll  practices  ("Double  Trigger
Severance  Amount").  The Company shall pay the Double Trigger  Severance Amount
prior to the  completion of the  associated  Change of Control.  Notwithstanding
anything to the contrary herein,  in no event shall the Double Trigger Severance
Amount be owed or paid if the  definitive  agreement  is  terminated  or expires
prior to the  completion of the  associated  Change of Control or otherwise does
not directly effectuate and result in a corresponding Change of Control.

         If, at any time prior to a Change of Control  but not after  August 13,
2003,  your  employment  with  the  Company  terminates  due  to an  involuntary
termination  by the Company  other than for "Cause" (as defined  herein),  then,
subject to you executing  and not revoking a standard form of mutual  release of
claims with the Company and not breaching any  confidentiality  or other similar
terms and  conditions  pursuant to your original  signed offer letter,  you will
receive a one-time,  lump-sum  payment in the gross amount of a prorated portion
of  Forty  Thousand  Dollars  (US  $40,000.00),   less  applicable   withholding
(including without  limitation  withholding for applicable taxes), in accordance
with  the  Company's  standard  payroll  practices,  with  the  prorated  amount
calculated based on the percentage of time passed from August 13, 2002 until the
effective  date of  termination  compared  with  August 13,  2003  ("Termination
Without Cause Severance Amount").

         For  purposes  of this  Agreement,  "Cause"  shall  mean  (i) an act of
personal dishonesty taken by you in connection with your  responsibilities as an
employee and intended to result in personal enrichment of you, or (ii) you being
convicted of, or plea of nolo contendere to, a felony or misdemeanor, or (iii) a
willful act by you which  constitutes  misconduct  and which is injurious to the
Company,  or (iv) following  delivery to you of a written demand for performance
from the Company which describes the basis for the Company's  reasonable  belief
that you have not substantially or adequately  performed your duties,  continued
indequate  performance  or failure  to meet  reasonable  expectations  of senior
management for your position.

         For  purposes of this  Agreement,  "Change of  Control"  shall mean the
occurrence of any of the following  events in either a single  transaction  or a
series of related transactions:

          (i) Any "person" (as such term is used in Sections  13(d) and 14(d) of
the Securities  Exchange Act of 1934, as amended) becomes the "beneficial owner"
(as defined in Rule 13d-3 under said Act), directly or indirectly, of securities
of the Company  representing  fifty  percent  (50%) or more of the total  voting
power represented by the Company's then outstanding voting securities; or

         (ii) The  consummation of the sale or disposition by the Company of all
or substantially all the Company's assets; or

         (iii) The consummation of 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 fifty percent (50%) of
the total voting power  represented  by the voting  securities of the Company or
such   surviving   entity   outstanding   immediately   after  such   merger  or
consolidation.

<PAGE>

         The terms of your  stock  option  agreements  remain as stated per your
stock option agreements.

         Your signature  below  indicates your assent and agreement to the terms
and conditions of this letter  agreement,  and executes this letter agreement as
of the date first set forth above.

                                  Sincerely,

                                  Paul G. Lego
                                  C.E.O. and President
                                  Virage, Inc.

Agreed to and Accepted by:

Scott Gawel

------------------------------------
Signature

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DateNANOMETRICS INCORPORATED

                       2002 NONSTATUTORY STOCK OPTION PLAN

     1.  Purposes of the Plan.  The purposes of this  Nonstatutory  Stock Option
Plan are:

          o   to attract and retain the best  available  personnel for positions
              of substantial responsibility,

          o   to provide additional incentive to Employees, and

          o   to promote the success of the Company's business.

          Options granted under the Plan will be Nonstatutory Stock Options.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) "Administrator"  means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.

          (b)  "Applicable   Laws"  means  the  requirements   relating  to  the
administration  of stock  option plans under U.S.  state  corporate  laws,  U.S.
federal and state  securities  laws,  the Code,  any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable  laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.

          (c) "Board" means the Board of Directors of the Company.

          (d) "Code" means the Internal Revenue Code of 1986, as amended.

          (e) "Committee" means a committee of Directors  appointed by the Board
in accordance with Section 4 of the Plan.

          (f) "Common Stock" means the Common Stock of the Company.

          (g)   "Company"   means   Nanometrics   Incorporated,   a   California
corporation.

          (h) "Consultant"  means any person,  including an advisor,  engaged by
the Company or a Parent or Subsidiary to render services to such entity.

          (i) "Director" means a member of the Board.

          (j)  "Disability"  means total and permanent  disability as defined in
Section 22(e)(3) of the Code.

<PAGE>

          (k) "Employee"  means any person employed by the Company or any Parent
or  Subsidiary  of the  Company.  A  Service  Provider  shall not cease to be an
Employee in the case of (i) any leave of absence approved by the Company or (ii)
transfers between  locations of the Company or between the Company,  its Parent,
any Subsidiary, or any successor. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute  "employment" by
the Company.

          (l)  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
amended.

          (m) "Fair Market  Value"  means,  as of any date,  the value of Common
Stock determined as follows:

               (i) If the  Common  Stock  is  listed  on any  established  stock
exchange or a national market system,  including  without  limitation the Nasdaq
National Market or The Nasdaq  SmallCap  Market of The Nasdaq Stock Market,  its
Fair  Market  Value  shall be the  closing  sales  price for such  stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of  determination,  as reported in
The  Wall  Street  Journal  or such  other  source  as the  Administrator  deems
reliable;

               (ii) If the  Common  Stock is  regularly  quoted by a  recognized
securities dealer but selling prices are not reported,  the Fair Market Value of
a Share of Common  Stock  shall be the mean  between  the high bid and low asked
prices for the Common  Stock on the last market  trading day prior to the day of
determination,  as reported in The Wall Street  Journal or such other  source as
the Administrator deems reliable;

               (iii) In the  absence  of an  established  market  for the Common
Stock,  the  Fair  Market  Value  shall  be  determined  in  good  faith  by the
Administrator.

          (n) "Notice of Grant" means a written or electronic  notice evidencing
certain terms and conditions of an individual  Option grant. The Notice of Grant
is part of the Option Agreement.

          (o) "Officer"  means a person who is an officer of the Company  within
the  meaning  of Section 16 of the  Exchange  Act and the rules and  regulations
promulgated thereunder.

          (p) "Option" means a nonstatutory stock option granted pursuant to the
Plan,  that is not intended to qualify as an incentive  stock option  within the
meaning of Section 422 of the Code and the regulations promulgated thereunder.

          (q) "Option  Agreement" means an agreement  between the Company and an
Optionee  evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

          (r) "Option  Exchange  Program"  means a program  whereby  outstanding
options are surrendered in exchange for options with a lower exercise price.

          (s) "Optioned Stock" means the Common Stock subject to an Option.

                                      -2-
<PAGE>

          (t) "Optionee" means the holder of an outstanding Option granted under
the Plan.

          (u) "Parent"  means a "parent  corporation,"  whether now or hereafter
existing, as defined in Section 424(e) of the Code.

          (v) "Plan" means this 2002 Nonstatutory Stock Option Plan.

          (w)  "Service  Provider"  means  an  Employee  including  an  Officer,
Consultant or Director.

          (x)  "Share"  means  a share  of the  Common  Stock,  as  adjusted  in
accordance with Section 12 of the Plan.

          (y)  "Subsidiary"  means a  "subsidiary  corporation,"  whether now or
hereafter existing, as defined in Section 424(f) of the Code.

     3. Stock  Subject to the Plan.  Subject to the  provisions of Section 12 of
the Plan, the maximum  aggregate number of Shares which may be optioned and sold
under the Plan is one million  two  hundred  thousand  (1,200,000)  Shares.  The
Shares may be authorized, but unissued, or reacquired Common Stock.

          If an Option  expires or becomes  unexercisable  without  having  been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased  Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated).

     4. Administration of the Plan.

          (a) Administration. The Plan shall be administered by (i) the Board or
(ii) a Committee,  which  committee  shall be constituted to satisfy  Applicable
Laws.

          (b)  Powers of the  Administrator.  Subject to the  provisions  of the
Plan, and in the case of a Committee,  subject to the specific duties  delegated
by the Board to such Committee,  the Administrator shall have the authority,  in
its discretion:

               (i) to determine the Fair Market Value of the Common Stock;

               (ii) to select  the  Service  Providers  to whom  Options  may be
granted hereunder;

               (iii) to determine whether and to what extent Options are granted
hereunder;

               (iv) to  determine  the  number of  shares of Common  Stock to be
covered by each Option granted hereunder;

               (v) to approve forms of agreement for use under the Plan;

                                      -3-
<PAGE>

               (vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder. Such terms and conditions
include,  but are not limited  to, the  exercise  price,  the time or times when
Options  may be  exercised  (which may be based on  performance  criteria),  any
vesting acceleration or waiver of forfeiture  restrictions,  and any restriction
or  limitation  regarding  any  Option or the  shares of Common  Stock  relating
thereto,  based in each case on such factors as the  Administrator,  in its sole
discretion, shall determine;

               (vii) to  reduce  the  exercise  price of any  Option to the then
current Fair Market  Value if the Fair Market Value of the Common Stock  covered
by such Option shall have declined since the date the Option was granted;

               (viii) to institute an Option Exchange Program;

               (ix) to construe and  interpret  the terms of the Plan and awards
granted pursuant to the Plan;

               (x)  to  prescribe,  amend  and  rescind  rules  and  regulations
relating to the Plan,  including  rules and  regulations  relating to  sub-plans
established  for the purpose of qualifying  for  preferred  tax treatment  under
foreign tax laws;

               (xi) to modify or amend each Option  (subject to Section 14(b) of
the Plan), including the discretionary  authority to extend the post-termination
exercisability  period of Options  longer than is otherwise  provided for in the
Plan;

               (xii) to authorize any person to execute on behalf of the Company
any instrument  required to effect the grant of an Option previously  granted by
the Administrator;

               (xiii) to  determine  the terms and  restrictions  applicable  to
Options; and

               (xiv)  to make  all  other  determinations  deemed  necessary  or
advisable for  administering the Plan.

          (c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and  interpretations  shall be final and binding on all Optionees
and any other holders of Options.

     5.  Eligibility.  Options  may be granted to Service  Providers;  provided,
however,  that  notwithstanding  anything to the contrary contained in the Plan,
Options may not be granted to Officers and Directors.

     6.  Limitation.  Neither  the  Plan nor any  Option  shall  confer  upon an
Optionee any right with respect to continuing the Optionee's  relationship  as a
Service Provider with the Company,  nor shall they interfere in any way with the
Optionee's  right or the Company's  right to terminate such  relationship at any
time, with or without cause.

                                      -4-
<PAGE>

     7. Term of Plan.  The Plan shall become  effective upon its adoption by the
Board. It shall continue in effect for ten (10) years,  unless sooner terminated
under Section 14 of the Plan.

     8. Term of Option.  The term of each  Option  shall be stated in the Option
Agreement.

     9. Option Exercise Price and Consideration.

          (a) Exercise Price.  The per share exercise price for the Shares to be
issued   pursuant  to  exercise  of  an  Option  shall  be   determined  by  the
Administrator.

          (b)  Waiting  Period  and  Exercise  Dates.  At the time an  Option is
granted,  the Administrator  shall fix the period within which the Option may be
exercised and shall determine any conditions  which must be satisfied before the
Option may be exercised.

          (c) Form of  Consideration.  The  Administrator  shall  determine  the
acceptable form of consideration for exercising an Option,  including the method
of payment. Such consideration may consist entirely of:

               (i) cash;

               (ii) check;

               (iii) promissory note;

               (iv) other Shares which (A) in the case of Shares  acquired  upon
exercise of an option,  have been owned by the Optionee for more than six months
on the  date of  surrender,  and (B)  have a Fair  Market  Value  on the date of
surrender  equal to the aggregate  exercise price of the Shares as to which said
Option shall be exercised;

               (v)  consideration  received  by the  Company  under  a  cashless
exercise program implemented by the Company in connection with the Plan;

               (vi) a reduction  in the amount of any Company  liability  to the
Optionee,  including any liability attributable to the Optionee's  participation
in any Company-sponsored deferred compensation program or arrangement;

               (vii) such  other  consideration  and  method of payment  for the
issuance of Shares to the extent permitted by Applicable Laws; or

               (viii) any combination of the foregoing methods of payment.

     10. Exercise of Option.

          (a)  Procedure  for  Exercise;  Rights as a  Shareholder.  Any  Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the  Administrator and set
forth in the Option Agreement.  An Option may not be exercised for a fraction of
a Share.

                                      -5-
<PAGE>

               An Option shall be deemed  exercised  when the Company  receives:
(i) written or  electronic  notice of exercise  (in  accordance  with the Option
Agreement)  from the person  entitled  to  exercise  the  Option,  and (ii) full
payment  for the Shares  with  respect to which the  Option is  exercised.  Full
payment may consist of any consideration and method of payment authorized by the
Administrator  and permitted by the Option Agreement and the Plan. Shares issued
upon  exercise of an Option  shall be issued in the name of the  Optionee or, if
requested  by the  Optionee,  in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate  entry on the books
of the Company or of a duly authorized transfer agent of the Company),  no right
to vote or receive  dividends or any other rights as a  shareholder  shall exist
with respect to the Optioned Stock,  notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares  promptly  after the
Option is exercised.  No  adjustment  will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued,  except as
provided in Section 12 of the Plan.

               Exercising  an Option in any manner shall  decrease the number of
Shares  thereafter  available,  both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.

          (b) Termination of Relationship as a Service Provider.  If an Optionee
ceases  to be a  Service  Provider,  other  than  upon the  Optionee's  death or
Disability,  the Optionee  may exercise his or her Option,  but only within such
period of time as is specified in the Option  Agreement,  and only to the extent
that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified  time in the Option  Agreement,  the Option  shall
remain  exercisable for three (3) months  following the Optionee's  termination.
If, on the date of  termination,  the  Optionee  is not  vested as to his or her
entire Option,  the Shares  covered by the unvested  portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option  within the time  specified  by the  Administrator,  the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

          (c)  Disability  of  Optionee.  If an Optionee  ceases to be a Service
Provider  as  a  result  of  the  Optionee's  Disability,  such  Optionee,  such
Optionee's  spouse or any person who acquires the right to act as legal guardian
for such Optionee,  may exercise his or her Option within such period of time as
is specified in the Option Agreement,  to the extent the Option is vested on the
date of  termination  (but in no event later than the  expiration of the term of
such Option as set forth in the Option Agreement). In the absence of a specified
time in the Option  Agreement,  the Option shall remain  exercisable  for twelve
(12)  months  following  the  Optionee's   termination.   If,  on  the  date  of
termination,  the  Optionee  is not vested as to his or her entire  Option,  the
Shares  covered by the unvested  portion of the Option shall revert to the Plan.
If, after  termination,  the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

          (d) Death of Optionee.  If an Optionee dies while a Service  Provider,
the Option may be  exercised  within such period of time as is  specified in the
Option  Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant),  by the  Optionee's

                                      -6-
<PAGE>

estate or by a person who  acquires  the right to exercise the Option by bequest
or inheritance,  but only to the extent that the Option is vested on the date of
death.  In the absence of a specified time in the Option  Agreement,  the Option
shall  remain  exercisable  for twelve  (12)  months  following  the  Optionee's
termination.  If, at the time of death,  the Optionee is not vested as to his or
her entire  Option,  the Shares  covered by the  unvested  portion of the Option
shall  immediately  revert to the  Plan.  The  Option  may be  exercised  by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or  distribution.  If the Option is not so exercised  within the time  specified
herein, the Option shall terminate,  and the Shares covered by such Option shall
revert to the Plan.

          (e) Buyout Provisions.  The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously  granted based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

     11.  Non-Transferability  of Options.  Unless  determined  otherwise by the
Administrator,  an  Option  may not be sold,  pledged,  assigned,  hypothecated,
transferred,  or disposed of in any manner  other than by will or by the laws of
descent  or  distribution  and may be  exercised,  during  the  lifetime  of the
Optionee,   only  by  the  Optionee.   If  the  Administrator  makes  an  Option
transferable,  such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.

     12.  Adjustments  Upon Changes in  Capitalization,  Dissolution,  Merger or
Asset Sale.

          (a) Changes in  Capitalization.  Subject to any required action by the
shareholders  of the Company,  the number of shares of Common  Stock  covered by
each  outstanding  Option,  and the number of shares of Common  Stock which have
been  authorized for issuance under the Plan but as to which no Options have yet
been  granted  or which  have been  returned  to the Plan upon  cancellation  or
expiration of an Option,  as well as the price per share of Common Stock covered
by each such  outstanding  Option,  shall be  proportionately  adjusted  for any
increase or decrease in the number of issued  shares of Common  Stock  resulting
from a  stock  split,  reverse  stock  split,  stock  dividend,  combination  or
reclassification  of the Common Stock,  or any other increase or decrease in the
number  of  issued  shares  of  Common  Stock   effected   without   receipt  of
consideration  by  the  Company;  provided,  however,  that  conversion  of  any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of  consideration."  Such adjustment shall be made by the Board,
whose  determination  in that respect  shall be final,  binding and  conclusive.
Except as  expressly  provided  herein,  no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

          (b)  Dissolution  or  Liquidation.   In  the  event  of  the  proposed
dissolution or liquidation of the Company,  the Administrator  shall notify each
Optionee as soon as  practicable  prior to the  effective  date of such proposed
transaction.  The Administrator in its discretion may provide for an Optionee to
have the right to exercise  his or her Option  until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the  Option  would not  otherwise  be  exercisable.  In  addition,  the
Administrator  may provide that any Company  repurchase option applicable to any
Shares  purchased  upon exercise of an Option shall lapse as to all such

                                      -7-
<PAGE>

Shares, provided the proposed dissolution or liquidation takes place at the time
and in the  manner  contemplated.  To the  extent  it has  not  been  previously
exercised,  an Option will terminate  immediately  prior to the  consummation of
such proposed action.

          (c) Merger or Asset Sale. In the event of a merger of the Company with
or into another  corporation,  or the sale of substantially all of the assets of
the Company, each outstanding Option shall be assumed or an equivalent option or
right substituted by the successor  corporation or a Parent or Subsidiary of the
successor  corporation.  In the event that the successor  corporation refuses to
assume or substitute  for the Option,  the Optionee shall fully vest in and have
the right to  exercise  the Option as to all of the  Optioned  Stock,  including
Shares as to which it would not otherwise be vested or exercisable. If an Option
becomes fully vested and  exercisable in lieu of assumption or  substitution  in
the event of a merger or sale of  assets,  the  Administrator  shall  notify the
Optionee in writing or electronically  that the Option shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice,  and
the Option shall terminate upon the expiration of such period.  For the purposes
of this  paragraph,  the Option shall be  considered  assumed if,  following the
merger or sale of assets,  the option or right  confers the right to purchase or
receive,  for each Share of Optioned Stock,  immediately  prior to the merger or
sale of assets,  the consideration  (whether stock, cash, or other securities or
property)  received  in the merger or sale of assets by holders of Common  Stock
for each Share held on the  effective  date of the  transaction  (and if holders
were offered a choice of consideration,  the type of consideration chosen by the
holders of a majority of the outstanding  Shares);  provided,  however,  that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor  corporation or its Parent,  the Administrator  may, with
the consent of the successor  corporation,  provide for the  consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock to be
solely  common stock of the  successor  corporation  or its Parent equal in fair
market value to the per share consideration  received by holders of Common Stock
in the merger or sale of assets.

     13.  Date of  Grant.  The date of  grant of an  Option  shall  be,  for all
purposes,  the date on which the Administrator makes the determination  granting
such Option,  or such other later date as is  determined  by the  Administrator.
Notice  of the  determination  shall  be  provided  to each  Optionee  within  a
reasonable time after the date of such grant.

     14. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.

          (b) Effect of  Amendment or  Termination.  No  amendment,  alteration,
suspension or  termination  of the Plan shall impair the rights of any Optionee,
unless mutually  agreed  otherwise  between the Optionee and the  Administrator,
which  agreement  must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers  granted to it hereunder  with respect to options  granted  under the
Plan prior to the date of such termination.

                                      -8-
<PAGE>

     15. Conditions Upon Issuance of Shares.

          (a) Legal  Compliance.  Shares  shall not be  issued  pursuant  to the
exercise of an Option  unless the  exercise of such Option and the  issuance and
delivery of such Shares shall comply with  Applicable  Laws and shall be further
subject  to the  approval  of  counsel  for the  Company  with  respect  to such
compliance.

          (b) Investment  Representations.  As a condition to the exercise of an
Option the Company may require the person  exercising  such Option to  represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company,  such a representation  is
required.

     16. Inability to Obtain  Authority.  The inability of the Company to obtain
authority  from any  regulatory  body having  jurisdiction,  which  authority is
deemed by the Company's  counsel to be necessary to the lawful issuance and sale
of any Shares  hereunder,  shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

     17. Reservation of Shares. The Company,  during the term of this Plan, will
at all  times  reserve  and keep  available  such  number  of Shares as shall be
sufficient to satisfy the requirements of the Plan.

                                      -9-
<PAGE>

                            NANOMETRICS INCORPORATED

                       2002 NONSTATUTORY STOCK OPTION PLAN

                             STOCK OPTION AGREEMENT

         Unless  otherwise  defined herein,  the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.

I.       NOTICE OF STOCK OPTION GRANT

         [Optionee's Name and Address]

         You have  been  granted  an  option  to  purchase  Common  Stock of the
Company,  subject  to the  terms  and  conditions  of the Plan  and this  Option
Agreement, as follows:

         Grant Number
                                        ----------------------------------------

         Date of Grant
                                        ----------------------------------------

         Vesting Commencement Date
                                        ----------------------------------------

         Exercise Price per Share       $
                                         ---------------------------------------

         Total Number of Shares Granted
                                        ----------------------------------------

         Total Exercise Price           $
                                         ---------------------------------------

         Type of Option:                Nonstatutory Stock Option

         Term/Expiration Date:
                                        ----------------------------------------

         Vesting Schedule:

         Subject to the  Optionee  continuing  to be a Service  Provider on such
dates,  this Option shall vest and become  exercisable  in  accordance  with the
following schedule:

         One third (1/3) of the Shares  subject to the Option  shall vest twelve
months after the Vesting  Commencement  Date, and one-third  (1/3) of the Shares
subject to the Option  shall vest on each one year  anniversary  of the  Vesting
Commencement Date thereafter.

         Termination Period:

         This Option may be exercised for three months (3) months after Optionee
ceases to be a Service  Provider.  Upon the death or Disability of the Optionee,
this Option may be exercised for

<PAGE>

twelve months (12) after Optionee ceases to be a Service  Provider.  In no event
shall this Option be exercised later than the  Term/Expiration  Date as provided
above.

II. AGREEMENT

     1. Grant of Option.  The Plan Administrator of the Company hereby grants to
the Optionee  named in the Notice of Grant  attached as Part I of this Agreement
(the  "Optionee") an option (the "Option") to purchase the number of Shares,  as
set forth in the Notice of Grant,  at the exercise  price per share set forth in
the Notice of Grant (the "Exercise Price"),  subject to the terms and conditions
of the Plan, which is incorporated herein by reference. Subject to Section 14(b)
of the Plan, in the event of a conflict  between the terms and conditions of the
Plan and the  terms  and  conditions  of this  Option  Agreement,  the terms and
conditions of the Plan shall prevail.

     2. Exercise of Option.

          (a) Right to Exercise.  This Option is exercisable  during its term in
accordance  with the  Vesting  Schedule  set out in the  Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.

          (b) Method of Exercise.  This Option is  exercisable by delivery of an
exercise  notice,  in the form  attached as Exhibit A (the  "Exercise  Notice"),
which shall state the election to exercise  the Option,  the number of Shares in
respect of which the Option is being  exercised (the  "Exercised  Shares"),  and
such other  representations  and  agreements  as may be  required by the Company
pursuant to the provisions of the Plan.  The Exercise  Notice shall be completed
by the Optionee and  delivered to Chief  Financial  Officer of the Company.  The
Exercise Notice shall be accompanied by payment of the aggregate  Exercise Price
as to all  Exercised  Shares.  This Option shall be deemed to be exercised  upon
receipt by the Company of such fully  executed  Exercise  Notice  accompanied by
such aggregate Exercise Price.

          No Shares  shall be issued  pursuant  to the  exercise  of this Option
unless such issuance and exercise  complies with Applicable Laws.  Assuming such
compliance,  for income tax purposes the  Exercised  Shares shall be  considered
transferred  to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.

     3. Method of Payment.  Payment of the aggregate  Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:

          (a) cash;

          (b) check;

          (c)  consideration  received by the Company under a cashless  exercise
program implemented by the Company in connection with the Plan; or

          (d) surrender of other Shares which (i) in the case of Shares acquired
upon  exercise of an option,  have been owned by the  Optionee for more than six
(6) months on the date of

                                      -2-
<PAGE>

surrender,  and (ii) have a Fair Market Value on the date of surrender  equal to
the aggregate Exercise Price of the Exercised Shares.

     4. Non-Transferability of Option. This Option may not be transferred in any
manner  otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by the Optionee.  The terms of
the  Plan  and this  Option  Agreement  shall  be  binding  upon the  executors,
administrators, heirs, successors and assigns of the Optionee.

     5. Term of Option.  This Option may be  exercised  only within the term set
out in the  Notice  of  Grant,  and may be  exercised  during  such term only in
accordance with the Plan and the terms of this Option Agreement.

     6. Tax Consequences.  Some of the federal tax consequences relating to this
Option,  as of the date of this  Option,  are set forth  below.  THIS SUMMARY IS
NECESSARILY INCOMPLETE,  AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE  OPTIONEE  SHOULD  CONSULT A TAX ADVISER  BEFORE  EXERCISING  THIS OPTION OR
DISPOSING OF THE SHARES.

          (a)  Exercising  the Option.  The Optionee may incur  regular  federal
income tax  liability  upon  exercise of an NSO. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess,  if any, of the Fair Market Value of the Exercised  Shares on the
date of exercise  over their  aggregate  Exercise  Price.  If the Optionee is an
Employee or a former Employee, the Company will be required to withhold from his
or her  compensation  or collect from Optionee and pay to the applicable  taxing
authorities an amount in cash equal to a percentage of this compensation  income
at the time of  exercise,  and may  refuse to honor the  exercise  and refuse to
deliver  Shares if such  withholding  amounts are not  delivered  at the time of
exercise.

          (b)  Disposition  of Shares.  If the Optionee  holds NSO Shares for at
least one year,  any gain realized on  disposition of the Shares will be treated
as long-term capital gain for federal income tax purposes.

     7. Entire  Agreement;  Governing  Law. The Plan is  incorporated  herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with  respect to the subject  matter  hereof and  supersede in their
entirety all prior  undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof,  and may not be modified  adversely to the
Optionee's  interest  except by means of a writing  signed  by the  Company  and
Optionee.  This agreement is governed by the internal  substantive laws, but not
the choice of law rules, of California.

     8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING  SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE
ACT OF BEING HIRED,  BEING  GRANTED AN OPTION OR PURCHASING  SHARES  HEREUNDER).
OPTIONEE FURTHER  ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT,  THE TRANSACTIONS

                                      -3-
<PAGE>

CONTEMPLATED  HEREUNDER  AND  THE  VESTING  SCHEDULE  SET  FORTH  HEREIN  DO NOT
CONSTITUTE  AN EXPRESS OR IMPLIED  PROMISE OF CONTINUED  ENGAGEMENT AS A SERVICE
PROVIDER  FOR THE  VESTING  PERIOD,  FOR ANY  PERIOD,  OR AT ALL,  AND SHALL NOT
INTERFERE WITH OPTIONEE'S  RIGHT OR THE COMPANY'S RIGHT TO TERMINATE  OPTIONEE'S
RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

         By your  signature and the  signature of the  Company's  representative
below,  you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement.  Optionee has
reviewed  the Plan and  this  Option  Agreement  in their  entirety,  has had an
opportunity  to obtain the  advice of counsel  prior to  executing  this  Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding,  conclusive and final all decisions
or  interpretations of the Administrator upon any questions relating to the Plan
and Option  Agreement.  Optionee  further  agrees to notify the Company upon any
change in the residence address indicated below.

OPTIONEE                                 NANOMETRICS INCORPORATED

------------------------------------     ---------------------------------------
Signature                                By

------------------------------------     ---------------------------------------
Print Name                               Title

------------------------------------
Residence Address

------------------------------------

                                      -4-
<PAGE>

                                    EXHIBIT A

                            NANOMETRICS INCORPORATED

                       2002 NONSTATUTORY STOCK OPTION PLAN

                                 EXERCISE NOTICE

NANOMETRICS INCORPORATED
1550 Buckeye Drive
Milpitas CA 95035

Attention:  Chief Financial Officer

     1. Exercise of Option. Effective as of today, ________________,  _____, the
undersigned  ("Purchaser") hereby elects to purchase  ______________ shares (the
"Shares") of the Common Stock of Nanometrics  Incorporated (the "Company") under
and pursuant to the Nanometrics Incorporated 2002 Nonstatutory Stock Option Plan
(the "Plan") and the Stock Option Agreement dated,  _________,  ___ (the "Option
Agreement").  The purchase price for the Shares shall be $________,  as required
by the Option Agreement.

     2. Delivery of Payment. Purchaser herewith delivers to the Company the full
purchase price for the Shares.

     3. Representations of Purchaser.  Purchaser acknowledges that Purchaser has
received,  read and understood  the Plan and the Option  Agreement and agrees to
abide by and be bound by their terms and conditions.

     4.  Rights  as  Shareholder.  Until  the  issuance  (as  evidenced  by  the
appropriate  entry on the books of the Company or of a duly authorized  transfer
agent of the  Company) of the Shares,  no right to vote or receive  dividends or
any other  rights as a  shareholder  shall  exist with  respect to the  Optioned
Stock,  notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as  practicable  after exercise of the Option.
No  adjustment  will be made for a dividend  or other right for which the record
date is prior to the date of  issuance,  except as provided in Section 12 of the
Plan.

     5. Tax  Consultation.  Purchaser  understands  that  Purchaser  may  suffer
adverse tax  consequences as a result of Purchaser's  purchase or disposition of
the Shares.  Purchaser  represents  that  Purchaser has  consulted  with any tax
consultants Purchaser deems advisable in connection with

<PAGE>

the purchase or  disposition  of the Shares and that Purchaser is not relying on
the Company for any tax advice.

     6. Entire  Agreement;  Governing  Law.  The Plan and Option  Agreement  are
incorporated  herein  by  reference.  This  Agreement,  the Plan and the  Option
Agreement  constitute  the entire  agreement  of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements  of the  Company and  Purchaser  with  respect to the subject  matter
hereof, and may not be modified adversely to the Purchaser's  interest except by
means of a writing  signed by the  Company  and  Purchaser.  This  agreement  is
governed by the internal  substantive  laws, but not the choice of law rules, of
California.

Submitted by:                            Accepted by:

PURCHASER                                NANOMETRICS INCORPORATED

------------------------------------     ---------------------------------------
Signature                                By

------------------------------------     ---------------------------------------
Print Name                               Title

                                         ---------------------------------------
                                         Date Received

Address:                                 Address: 1550 Buckeye Drive
        ----------------------------              Milpitas, CA 95035

        ----------------------------

        ----------------------------

                                      -2-

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