AMENDMENT TO AND RESTATEMENT OF SALARY REDUCTION AGREEMENT

Exhibit 10.9

AMENDMENT TO AND RESTATEMENT OF

SALARY REDUCTION AGREEMENT

WHEREAS, VINCENT J. COATES and, pursuant to a resolution of its Board of Directors at its meeting of February 20, 1985, NANOMETRICS INCORPORATED, a California corporation, entered into a Salary Reduction Agreement (the “Salary Reduction Agreement”) dated May 1, 1985; and

WHEREAS, VINCENT J. COATES and, pursuant to a resolution of its Board of Directors at its meeting of August 21, 1996, NANOMETRICS INCORPORATED, a California corporation, decided to amend and restate such Salary Reduction Agreement, a copy of which Amendment to and Restatement of Salary Reduction Agreement is attached hereto is Exhibit 1; and

WHEREAS, the parties wish to amend such Salary Reduction Agreement to reflect subsequent salary adjustments and to clarify that Mr. Coates’ salary shall continue for five (5) years from the date upon which he is forced to resign from his position as, or is otherwise removed from his position as, Chairman of the Board of NANOMETRICS INCORPORATED and at the rate which he is receiving on such relinquishment date, and that all benefits for which Mr. Coates remains eligible, and the conversion of such benefits, including health and life insurance benefits, shall be continued at Company expense during such five (5) year period at Mr. Coates’ request.

NOW, THEREFORE, IT IS AGREED AS FOLLOWS: As approved and adopted by resolution of the Board of Directors at its meeting held on June 18, 1998, the Salary Reduction Agreement between Mr. Coates and NANOMETRICS INCORPORATED dated August 21, 1996, is hereby amended, and the provisions of said Salary Reduction Agreement are hereby restated, in their entirety, effective April 16, 1998 to read as follows:

“SALARY REDUCTION AGREEMENT

This Agreement is entered into this 18th day of June, 1998 by and between Vincent J. Coates (“Mr. Coates”), a California resident and Nanometrics Incorporated, a California corporation (the “Company”).

RECITALS

WHEREAS, Mr. Coates is currently employed as Chairman of the Board of the Company, a position which he has held since the inception of the Company in 1975, and

WHEREAS, Mr. Coates’ annual base salary was Three Hundred Thousand Dollars ($300,000) per year when he entered into a Salary Reduction Agreement, dated May 1, 1985, and

WHEREAS, Mr. Coates and the Company and its Board of Directors have agreed that, in light of the fact that the Company has acquired competent staff to perform duties previously performed by Mr. Coates, and Mr. Coates is better able now to delegate his duties to his staff, the Company’s reliance upon Mr. Coates has decreased, and that it would be appropriate to reduce his annual base salary to reflect the decrease in his responsibilities;

NOW, THEREFORE, the parties hereby agree as follows:

1. Effective as of March 1, 1985, Mr. Coates’ salary was reduced from an annual base rate of $300,000 to an annual base rate of $200,000, and his salary has since varied as follows:

5/22/96 Compensation Committee/Board of Directors’ decision to maintain Mr. Coates’ salary at same level.

5/15/97 Compensation Committee/Board of Directors’ decision to increase Mr. Coates’ salary to $200,000/year

2. All additional benefits which Mr. Coates previously enjoyed as an officer and employee of the Company have continued and shall continue, based upon the new annual base salary.

3. The parties hereby expressly agree that this Agreement is intended solely to set out the parties’ understanding with respect to compensation and is not intended to constitute a contract of employment for any period of time. Mr. Coates understands that he is, and following the execution of this Agreement, remains, an at-will employee of the Company.

4. Effective April 16, 1998, in the event that Mr. Coates is forced because of a merger, acquisition or for any reason to resign or is otherwise removed from or loses his position as Chairman of the Board of NANOMETRICS INCORPORATED, as such position has been defined in terms of responsibilities and compensation as of this date, his salary will continue on normal paydays with regular withholding for five (5)

years from that date at the base salary rate which he received at the time of such relinquishment. In addition, during such five (5) year period, any Company benefits for which Mr. Coates remains eligible, shall be continued at Company expense, including life and health insurance coverage (medical, dental and prescription) and including any conversion of such coverage, e.g., conversion of health insurance coverage to COBRA and the conversion of COBRA to individual coverage, upon Mr. Coates’ request. The Company shall pay any portion of such benefit(s) which Mr. Coates would ordinarily be required to pay during such five (5) year period.

5. Should Mr. Coates relinquish his position as Chairman of the Board and as an employee but not as a member of the Board of Directors, he shall be eligible to collect fees as an outside director as long as he remains a Director. He shall be eligible for travel and other normal incidental expenses incurred in connection with attendance at Board and Committee meetings.

6. This Agreement shall be governed by and construed in accordance with the laws of the State of California.”

IN WITNESS WHEREOF, the parties hereto have executed this AMENDMENT TO AND RESTATEMENT OF SALARY REDUCTION AGREEMENT effective as of the 16th day of April 1998.