Our systems revenue was $49.2 million or 87% of revenues for the three month period ended June 30, 2006 compared to $16.8 million or 79% of revenues for the three month period ended June 30, 2005.  For the six month period ended June 30, 2006, systems revenue was $74.0 million or 84% of revenues compared to $34.6 million or 78% of revenues for the six month period ended June 30, 2005.   The increase reflects additional revenues of $40.5 million related to the August Technology acquisition and an increase in metrology systems revenues of $4.2 million. Systems revenue generated by our latest product releases and major enhancements in each of our product families amounted to 43% and 42% of total revenues for the three and six month periods ended June 30, 2006 compared to 55% and 35% of total revenues for the three and six month periods ended June 30, 2005. Parts and services revenues were $6.1 million or 11% of revenues for the three month period ended June 30, 2006 compared to $4.3 million or 20% of revenues for the three month period ended June 30, 2005.   For the six month period ended June 30, 2006, parts and services revenues were $12.5 million or 14% of revenues compared to $9.1 million or 20% of revenues for the six month period ended June 30, 2005.   The increase reflects additional parts revenues of $1.4 million related to the August Technology acquisition as well as customers continuing to spend more on repair and maintenance of their existing equipment. Parts and services revenues are generated from part sales, maintenance service contracts, system upgrades, as well as time and material billable service calls. In periods of prolonged recovery, we expect systems revenues as a percentage of total revenue to increase and parts and service revenues as a percentage of total revenue to decrease as customers buy new equipment.

        Deferred revenues of $9.7 million are recorded in other current liabilities at June 30, 2006 and primarily consisted of $3.4 million for deferred maintenance agreements and $6.3 million for systems awaiting acceptance and outstanding deliverables.

        Gross Profit.   Our gross profit has been and will continue to be affected by a variety of factors, including inventory step-up from purchase accounting, manufacturing efficiencies, excess and obsolete inventory write-offs, pricing by competitors or suppliers, new product introductions, product sales mix, production volume, customization and reconfiguration of systems, international and domestic sales mix, and parts and service margins.  Our gross profit was $29.7 million and $38.9 million for the three and six month periods ended June 30, 2006, compared to $10.1 million and $20.9 million for the three and six month periods ended June 30, 2005.  Our gross profit represented 52.4% and 44.0% of our revenues for the three and six month periods ended June 30, 2006 and 47.3% and 47.0% of our revenues for the same periods in the prior year.  The decrease in gross profit as a percentage of revenue for the six month period ended June 30, 2006, compared to the six month period ended June 30, 2005 is primarily due to a $3.0 million charge for the sale of inventory written-up to fair value upon acquisition, $2.4 million in charges related to duplicative inventory and $0.9 million for charges related to slow moving inventory.

        Research and Development. The thin film transparent, opaque process control and macro-defect inspection market is characterized by continuous technological development and product innovations. We believe that the rapid and ongoing development of new products and enhancements to existing products, including the transition to copper and low-k dielectrics, the progression to 300 mm wafers, the continuous shrinkage in critical dimensions, and the evolution of ultra-thin gate process control, is critical to our success. Accordingly, we devote a significant portion of our technical, management and financial resources to research and development programs. Research and development expenditures consist primarily of salaries and related expenses of employees engaged in research, design and development activities. They also include consulting fees and the cost of related supplies. Our research and development expense was $7.3 million and $12.6 million for the three and six month period ended June 30, 2006, compared to $3.0 million and $6.4 million for the same periods in the prior year.  Research and development expense represented 12.9% and 14.3% of our revenues for the three and six month periods ended June 30, 2006, compared to 14.1% and 14.3% of revenues for the same periods in the prior year.   The year-over-year dollar increase in research and development expenses primarily reflects additional research and development cost of $5.3 million related to the merged activities of August Technology and increased compensation costs.  We anticipate research and development expense will be approximately 13% of revenues for the three month period ending September 30, 2006.

        In-Process Research and Development.    The acquisition of August Technology resulted in our recording of a one-time expense of $9.9 million for the write-off of in-process research and development, or IPRD. At the time of the acquisition, we determined that the IPRD had not reached technological feasibility and that it did not have an alternative future use. The purchased in-process technology projects, which are comprised of macro defect inspection and software projects, had a value assigned to them of $6.9 million and $3.0 million, respectively. The defect inspection projects, relate to the next generation of our AXi defect detection systems with enhanced defect capture capabilities, and were approximately 90% complete as of the date of acquisition. The estimated costs to complete these projects consist primarily of internal engineering labor costs and are estimated to be completed by the third quarter of 2006. The software projects, relate to new enhancement features to our next generation inspection products, and were approximately 50% complete as of the date of acquisition, with the remaining cost to complete consisting primarily of internal software development labor cost. We estimate that the software projects will be completed in the fourth quarter 2006. We currently anticipate revenue to be generated from the inspection and software projects to begin in the third quarter of 2006 and the first half 2007, respectively.  If we are not successful in completing these projects on a timely basis, the future sales of our inspection products may be adversely affected resulting in erosion of our market share.

           Selling, General and Administrative.    Selling, general and administrative expense is primarily comprised of salaries and related costs for sales, marketing, and general administrative personnel, as well as commissions and other non-personnel related expenses.  Our selling, general and administrative expense was $9.0 million and $16.0 million the three and six month periods ended June 30, 2006, compared to $4.8 million and $10.2 million for the same periods in the prior year.  Selling, general and administrative expense represented 16.0% and 18.1% of our revenues for the three and six month periods ended June 30, 2006 compared to 22.6% and 22.9% of our revenues for the same periods in the prior year.  The year-over-year dollar increase in selling, general and administrative expense was primarily due to additional selling, general and administrative cost of $4.9 million related to the merged activities of August Technology and increased compensation costs.  We currently anticipate that selling, general and administrative expenses will represent approximately 16% of revenue for the three month period ending September 30, 2006.

        Interest income and other, net.    Interest income and other, net was $0.8 million and $1.5 million for the three and six month periods ended June 30, 2006, compared to $0.4 million and $0.8 million for the same periods in the prior year.  Interest income and other, net consisted primarily of interest income, realized gains and losses on sales of marketable securities and rental income.  The year-over-year increases in interest income and other, net in both the three and six month period ended June 30, 2006 were primarily attributable to higher interest rates.

        Income Taxes.    We use the asset and liability method of accounting for income taxes prescribed by SFAS No. 109, "Accounting for Income Taxes."  Income tax expense was $5.0 million and $3.8 million for the three and six month periods ended June 30, 2006 compared to income tax expense of $0.6 million and $1.1 million for the same periods in the prior year.  Our effective tax rates for the six month period ended June 30, 2006 is 4,319.1%, compared to 24.0% in the prior year period.  Our effective tax rate is different than the expected combined federal and state tax rate of 41% primarily as a result of the nondeductibility of the IPRD charge for tax purposes and the expiration of the research and development tax credit.

Liquidity and Capital Resources

        At June 30, 2006, we had $74.4 million of cash, cash equivalents and marketable securities and $170.9 million in working capital.  At December 31, 2005, we had $80.8 million of cash, cash equivalents and marketable securities and $125.3 million in working capital.

        Typically during periods of revenue growth, changes in accounts receivable and inventories represent a use of cash as we incur costs and expend cash in advance of receiving cash from our customers.   Similarly, during periods of declining revenue, changes in accounts receivable and inventories represent a source of cash as inventory purchases decline and revenue from prior periods is collected. 

        Operating activities used $10.9 million and provided $2.0 million in cash for the six month periods ended June 30, 2006 and 2005, respectively.  The net cash used by operating activities during the six month period ended June 30, 2006 was primarily a result of an increase in accounts receivable of $32.0 million and an increase in inventories of $4.9 million, partially offset by profit before depreciation, amortization, IPRD and provision for doubtful accounts and inventory valuation of $13.2 million, an increase in deferred revenue of $5.5 million, an increase in accounts payable and accrued liabilities of $4.5 million, an increase in income tax payable of $1.6 million and an increase in other current liabilities of $0.8 million.  The increase in receivables is primarily due to the timing of shipments towards the end of the quarter and a higher percentage of accounts receivable from customers in Japan which have longer collection times.   The net cash provided by operating activities during the six month period ended June 30, 2005 was primarily a result of a decrease in inventories of $2.8 million, an increase in other current liabilities of $1.5 million, profit before depreciation and amortization of $4.9 million and an increase in deferred revenue of $0.9 million, partially offset by an increase in accounts receivable of $8.2 million.

        Net cash used in investing activities during the six month period ended June 30, 2006 of $5.1 million was due to purchases of marketable securities of $39.8 million, the merger with August Technology, net of cash acquired, of $12.0 million, capital expenditures of $3.9 million and capitalized software of $0.8 million, partially offset by proceeds from sales of marketable securities of $51.4 million.  Net cash provided by investing activities during the six month period ended June 30, 2005 of $10.6 million was primarily due to proceeds from sales of marketable securities of $34.7 million, offset by purchases of marketable securities of $22.8 million, capitalized software of $0.5 million, capital expenditures of $0.5 million and acquisition costs for business combinations of $0.3 million.

        Net cash provided by financing activities for the six month period ended June 30, 2006 of $7.8 million was due to proceeds received and tax benefit for sales of shares through share-based compensation plans.  Net cash provided by financing activities for the six month period ended June 30, 2005 of $1.2 million was a result of proceeds received from sales of shares through share-based compensation plans.

        From time to time we evaluate whether to acquire new or complementary businesses, products and/or technologies.  We may fund all or a portion of the purchase price for these acquisitions in cash.  On February 15, 2006, we announced that our merger with August Technology Corporation had been completed.  Under the terms of the agreement, we paid an aggregate of $37.2 million in cash and issued an aggregate of 11,298,265 shares of our common stock to former August Technology shareholders.

       Our future capital requirements will depend on many factors, including the timing and amount of our revenues and our investment decisions, which will affect our ability to generate additional cash.   We believe that our existing cash, cash equivalents and marketable securities will be sufficient to meet our anticipated cash requirements for working capital and capital expenditures for the foreseeable future.  Thereafter, if cash generated from operations and financing activities is insufficient to satisfy our working capital requirements, we may seek additional funding through bank borrowings, sales of securities or other means.  There can be no assurance that we will be able to raise any such capital on terms acceptable to us or at all.

Factors that May Affect Future Results

Cyclicality in the semiconductor device industry has led to substantial decreases in demand for our systems and may from time to time continue to do so

        Our operating results are subject to significant variation due to the cyclical nature of the semiconductor device industry. Our business depends upon the capital expenditures of semiconductor device manufacturers, which, in turn, depend upon the current and anticipated market demand for semiconductors and products using semiconductors. The timing, length and severity of the up-and-down cycles in the semiconductor equipment industry are difficult to predict. This cyclical nature of the industry in which we operate affects our ability to accurately predict future revenue and, thus, future expense levels. When cyclical fluctuations result in lower than expected revenue levels, operating results may be adversely affected and cost reduction measures may be necessary in order for us to remain competitive and financially sound. During a down cycle, we must be in a position to adjust our cost and expense structure to prevailing market conditions and to continue to motivate and retain our key employees. In addition, during periods of rapid growth, we must be able to increase manufacturing capacity and personnel to meet customer demand. We can provide no assurance that these objectives can be met in a timely manner in response to industry cycles. If we fail to respond to industry cycles, our business could be seriously harmed.

We obtain some of the components and subassemblies included in our systems from a limited group of suppliers, and the partial or complete loss of one of these suppliers could cause production delays and a substantial loss of revenues

        We obtain some of the components and subassemblies included in our systems from a limited group of suppliers and do not have long-term contracts with many of our suppliers. Our dependence on limited source suppliers of components and our lack of long-term contracts with many of our suppliers exposes us to several risks, including a potential inability to obtain an adequate supply of components, price increases, late deliveries and poor component quality. Disruption or termination of the supply of these components could delay shipments of our systems, damage our customer relationships and reduce our sales. From time to time in the past, we have experienced temporary difficulties in receiving shipments from our suppliers. The lead-time required for shipments of some of our components can be as long as four months. In addition, the lead time required to qualify new suppliers for lasers could be as long as a year, and the lead time required to qualify new suppliers of other components could be as long as nine months. If we are unable to accurately predict our component needs, or if our component supply is disrupted, we may miss market opportunities by not being able to meet the demand for our systems. Further, a significant increase in the price of one or more of these components or subassemblies could seriously harm our results of operations and cash flows.

Our largest customers account for a significant portion of our revenues, and our revenues and cash flows would significantly decline if one or more of these customers were to purchase significantly fewer of our systems or they delayed or cancelled a large order

        In 2003, 2004,  2005 and the six months ended June 30, 2006, sales to end user customers that individually represented at least five percent of our revenues accounted for, in the aggregate, 59.4%, 53.4%, 62.6% and 43.4% of our revenues.  In 2003, 2004, 2005 and the six months ended June 30, 2006, sales to Intel Corporation, a key customer, accounted for 35.3%, 23.2%, 20.3% and 14.3% of our revenues, respectively.  We operate in the highly concentrated, capital-intensive semiconductor device manufacturing industry. Historically, a significant portion of our revenues in each quarter and year has been derived from sales to relatively few customers, and this trend is expected to continue. If any of our key customers were to purchase significantly fewer of our systems in the future, or if a large order were delayed or cancelled, our revenues and cash flows would significantly decline. We expect that we will continue to depend on a small number of large customers for a significant portion of our revenues for at least the next several years. In addition, as large semiconductor device manufacturers seek to establish closer relationships with their suppliers, we expect that our customer base will become even more concentrated.

Our operating results have varied and will likely continue to vary significantly from quarter to quarter in the future, causing volatility in our stock price

        Our quarterly operating results have varied in the past and will likely continue to vary significantly from quarter to quarter in the future, causing volatility in our stock price. Some of the factors that may influence our operating results and subject our stock to extreme price and volume fluctuations include:

                * changes in customer demand for our systems, which is influenced by economic conditions in the semiconductor device industry, demand for products that use semiconductors, market acceptance of our systems and products of our customers and changes in our product offerings;

                * seasonal variations in customer demand, including the tendency of European sales to slow significantly in the third quarter of each year;

                * the timing, cancellation or delay of customer orders, shipments and acceptance;

                * product development costs, including increased research, development, engineering and marketing expenses associated with our introduction of new products and product enhancements; and

                * the levels of our fixed expenses, including research and development costs associated with product development, relative to our revenue levels.

        In light of these factors and the cyclical nature of the semiconductor industry, we expect to continue to experience significant fluctuations in quarterly and annual operating results. Moreover, many of our expenses are fixed in the short-term which, together with the need for continued investment in research and development, marketing and customer support, limits our ability to reduce expenses quickly. As a result, declines in net sales could harm our business and the price of our common stock could substantially decline.

Our revenue may vary significantly each quarter due to relatively small fluctuations in our unit sales

        During any quarter, a significant portion of our revenue may be derived from the sale of a relatively small number of systems. Our transparent film measurement systems range in selling price from approximately $30,000 to $1.0 million per system, our opaque film measurement systems range in selling price from approximately $900,000 to $2.0 million per system and our macro-defect detection systems range in selling price from approximately $250,000 to $1.4 million per system. Accordingly, a small change in the number of systems we sell may also cause significant changes in our operating results. This, in turn, could cause fluctuations in the market price of our common stock.

Variations in the amount of time it takes for us to sell our systems may cause fluctuations in our operating results, which could cause our stock price to decline

        Variations in the length of our sales cycles could cause our revenues and cash flows, and consequently, our business, financial condition, operating results and cash flows, to fluctuate widely from period to period. This variation could cause our stock price to decline. Our customers generally take a long time to evaluate our film metrology systems and many people are involved in the evaluation process. We expend significant resources educating and providing information to our prospective customers regarding the uses and benefits of our systems in the semiconductor fabrication process. The length of time it takes for us to make a sale depends upon many factors including, but not limited to:

                * the efforts of our sales force;

                * the complexity of the customer's fabrication processes;

                * the internal technical capabilities and sophistication of the customer;

                * the customer's budgetary constraints; and

                * the quality and sophistication of the customer's current metrology equipment.

        Because of the number of factors influencing the sales process, the period between our initial contact with a customer and the time when we recognize revenue from that customer, if ever, and receive payment varies widely in length.  Our sales cycles, including the time it takes for us to build a product to customer specifications after receiving an order to the time we recognize revenue, typically range from six to 15 months. Sometimes our sales cycles can be much longer, particularly with customers in Japan. During these cycles, we commit substantial resources to our sales efforts in advance of receiving any revenue, and we may never receive any revenue from a customer despite our sales efforts. If we do make a sale, our customers often purchase only one of our systems, and then evaluate its performance for a lengthy period before purchasing any more of our systems. The number of additional products a customer purchases, if any, depends on many factors, including a customer's capacity requirements. The period between a customer's initial purchase and any subsequent purchases can vary from six months to a year or longer, and variations in the length of this period could cause further fluctuations in our operating results and possibly in our stock price.

If we are not successful in developing new and enhanced products for the semiconductor device manufacturing industry we will lose market share to our competitors

        We operate in an industry that is subject to evolving industry standards, rapid technological changes, rapid changes in consumer demands and the rapid introduction of new, higher performance systems with shorter product life cycles. To be competitive in our demanding market, we must continually design, develop and introduce in a timely manner new film metrology systems that meet the performance and price demands of semiconductor device manufacturers. We must also continue to refine our current systems so that they remain competitive. We expect to continue to make significant investments in our research and development activities. We may experience difficulties or delays in our development efforts with respect to new systems, and we may not ultimately be successful in developing them, as not all research and development activities result in viable commercial products. Any significant delay in releasing new systems could adversely affect our reputation, give a competitor a first-to-market advantage or cause a competitor to achieve greater market share.

If new products developed by us do not gain general market acceptance, we will be unable to generate revenues and recover our research and development costs

        Metrology and inspection product development is inherently risky because it is difficult to foresee developments in semiconductor device manufacturing technology, coordinate technical personnel, and identify and eliminate system design flaws. Any new systems we introduce may not achieve or sustain a significant degree of market acceptance and sales.

        We expect to spend a significant amount of time and resources developing new systems and refining our existing systems. In light of the long product development cycles inherent in our industry, these expenditures will be made well in advance of the prospect of deriving revenue from the sale of those systems. Our ability to commercially introduce and successfully market new systems is subject to a wide variety of challenges during the development cycle, including start-up bugs, design defects, and other matters that could delay introduction of these systems. In addition, since our customers are not obligated by long-term contracts to purchase our systems, our anticipated product orders may not materialize, or orders that are placed may be cancelled. As a result, if we do not achieve market acceptance of new products, we may be unable to generate sufficient revenues and cash flows to recover our research and development costs.

Even if we are able to develop new products that gain market acceptance, sales of these new products could impair our ability to sell existing products

        Competition from our new systems could have a negative effect on sales of our existing systems and the prices that we could charge for these systems. We may also divert sales and marketing resources from our current systems in order to successfully launch and promote our new or next generation systems. This diversion of resources could have a further negative effect on sales of our current systems and the value of inventory.

If our relationships with our large customers deteriorate, our product development activities could be adversely affected

        The success of our product development efforts depends on our ability to anticipate market trends and the price, performance and functionality requirements of semiconductor device manufacturers. In order to anticipate these trends and ensure that critical development projects proceed in a coordinated manner, we must continue to collaborate closely with our largest customers. Our relationships with these and other customers provide us with access to valuable information regarding trends in the semiconductor device industry, which enables us to better plan our product development activities. If our current relationships with our large customers are impaired, or if we are unable to develop similar collaborative relationships with important customers in the future, our product development activities could be adversely affected.

Our ability to reduce costs is limited by our ongoing need to invest in research and development and to provide customer support activities

        Our industry is characterized by the need for continual investment in research and development as well as customer service and support. As a result, our operating results could be materially affected if operating costs associated with our research and development as well as customer support activities increase in the future or we are unable to reduce those activities.

We may fail to adequately protect our intellectual property and, therefore, lose our competitive advantage

        Our future success and competitive position depend in part upon our ability to obtain and maintain proprietary technology for our principal product families, and we rely, in part, on patent, trade secret and trademark law to protect that technology. If we fail to adequately protect our intellectual property, it will give our competitors a significant advantage. We own or have licensed a number of patents relating to our transparent and opaque thin film metrology and macro-defect inspection systems, and have filed applications for additional patents. Any of our pending patent applications may be rejected, and we may be unable to develop additional proprietary technology that is patentable in the future.

        In addition, the patents that we do own or that have been issued or licensed to us may not provide us with competitive advantages and may be challenged by third parties. Further, third parties may also design around these patents. In addition to patent protection, we rely upon trade secret protection for our confidential and proprietary information and technology. We routinely enter into confidentiality agreements with our employees and other third parties. However, in the event that a confidentiality agreement is breached, we may not have adequate remedies. Our confidential and proprietary information and technology might also be independently developed by, or become otherwise known to, third parties.

Successful infringement claims by third parties could result in substantial damages, lost product sales and the loss of important intellectual property rights

        Our commercial success depends in part on our ability to avoid infringing or misappropriating patents or other proprietary rights owned by third parties. From time to time we may receive communications from third parties asserting that our products or systems infringe, or may infringe, the proprietary rights of these third parties. These claims of infringement may lead to protracted and costly litigation, which could require us to pay substantial damages or have the sale of our products or systems stopped by an injunction. Infringement claims could also cause product or system delays or require us to redesign our products or systems, and these delays could result in the loss of substantial revenues. We may also be required to obtain a license from the third party or cease activities utilizing the third party's proprietary rights. We may not be able to enter into such a license or such a license may not be available on commercially reasonable terms. Accordingly, the loss of important intellectual property rights could hinder our ability to sell our systems, or make the sale of these systems more expensive.

Protection of our intellectual property rights, or the efforts of third parties to enforce their own intellectual property rights against us, has in the past resulted and may in the future result in costly and time-consuming litigation

        We may be required to initiate litigation in order to enforce any patents issued to or licensed by us, or to determine the scope or validity of a third party's patent or other proprietary rights. In addition, we may be subject to lawsuits by third parties seeking to enforce their own intellectual property rights. Any litigation, regardless of outcome, could be expensive and time consuming, and could subject us to significant liabilities or require us to re-engineer our products or obtain expensive licenses from third parties.

Our efforts to protect our intellectual property may be less effective in certain foreign countries, where intellectual property rights are not as well protected as in the United States

        In 2003, 2004, 2005 and the six months ended June 30, 2006, 65.4%, 69.1%, 77.5% and 71.3%, respectively, of our revenue was derived from sales in foreign countries, including certain countries in Asia, such as Taiwan, China, Korea, Singapore and Japan and certain Western European countries. The laws of some foreign countries do not protect our proprietary rights to as great an extent as do the laws of the United States, and many U.S. companies have encountered substantial problems in protecting their proprietary rights against infringement abroad. For example, Taiwan is not a signatory of the Patent Cooperation Treaty, which is designed to specify rules and methods for defending intellectual property internationally. The publication of a patent in Taiwan prior to the filing of a patent in Taiwan would invalidate the ability of a company to obtain a patent in Taiwan. Similarly, in contrast to the United States where the contents of patents remain confidential during the patent application process, in Taiwan the contents of a patent are published upon filing which provides competitors an advance view of the contents of a patent application prior to the establishment of patent rights. Consequently, there is a risk that Rudolph may be unable to adequately protect its proprietary rights in certain foreign countries. If this occurs, it would be easier for our competitors to develop and sell competing products in these countries.

Our current and potential competitors have significantly greater resources than we do, and increased competition could impair sales of our products or cause us to reduce our prices

        The market for semiconductor capital equipment is highly competitive. We face substantial competition from established companies in each of the markets we serve. We principally compete with KLA-Tencor, Therma-Wave and Camtek. We compete to a lesser extent with companies such as Dai Nippon Screen, Nanometrics, Sopra and Vistec. Each of our products also competes with products that use different metrology techniques. Some of our competitors have greater financial, engineering, manufacturing and marketing resources, broader product offerings and service capabilities and larger installed customer bases than we do. As a result, these competitors may be able to respond more quickly to new or emerging technologies or market developments by devoting greater resources to the development, promotion and sale of products, which, in turn, could impair sales of our products. Further, there may be significant merger and acquisition activity among our competitors and potential competitors, which, in turn, may provide them with a competitive advantage over us by enabling them to rapidly expand their product offerings and service capabilities to meet a broader range of customer needs.

        Many of our customers and potential customers in the semiconductor device manufacturing industry are large companies that require global support and service for their semiconductor capital equipment. We believe that our global support and service infrastructure is sufficient to meet the needs of our customers and potential customers. However, some of our competitors have more extensive infrastructures than we do, which could place us at a disadvantage when competing for the business of global semiconductor device manufacturers. Many of our competitors are investing heavily in the development of new systems that will compete directly with our systems. We have from time to time selectively reduced prices on our systems in order to protect our market share, and competitive pressures may necessitate further price reductions. We expect our competitors in each product area to continue to improve the design and performance of their products and to introduce new products with competitive prices and performance characteristics. These product introductions would likely require us to decrease the prices of our systems and increase the level of discounts that we grant our customers.

Because of the high cost of switching equipment vendors in our markets, it is sometimes difficult for us to win customers from our competitors even if our systems are superior to theirs

        We believe that once a semiconductor device manufacturer has selected one vendor's capital equipment for a production-line application, the manufacturer generally relies upon that capital equipment and, to the extent possible, subsequent generations of the same vendor's equipment, for the life of the application. Once a vendor's equipment has been installed in a production line application, a semiconductor device manufacturer must often make substantial technical modifications and may experience production-line downtime in order to switch to another vendor's equipment. Accordingly, unless our systems offer performance or cost advantages that outweigh a customer's expense of switching to our systems, it will be difficult for us to achieve significant sales to that customer once it has selected another vendor's capital equipment for an application.

We must attract and retain key personnel with knowledge of semiconductor device manufacturing and metrology equipment to help support our future growth, and competition for such personnel in our industry is high

        Our success depends to a significant degree upon the continued contributions of our key management, engineering, sales and marketing, customer support, finance and manufacturing personnel. The loss of any of these key personnel, each of whom would be extremely difficult to replace, could harm our business and operating results. During downturns in our industry, we have often experienced significant employee attrition, and we may experience further attrition in the event of future downturns. Although we have employment and noncompetition agreements with key members of our senior management team, including Messrs. McLaughlin, Loiterman and Roth, these individuals or other key employees may still leave us. We do not have key person life insurance on any of our executives. In addition, to support our future growth, we will need to attract and retain additional qualified employees. Competition for such personnel in our industry is intense, and we may not be successful in attracting and retaining qualified employees.

Any prolonged disruption in the operations of our manufacturing facilities could have a material adverse effect on our revenues

        Our manufacturing processes are highly complex and require sophisticated and costly equipment and a specially designed facility. As a result, any prolonged disruption in the operations of our manufacturing facilities, whether due to technical or labor difficulties, start-up of our new location, destruction of or damage as a result of a fire or any other reason, could seriously harm our ability to satisfy our customer order deadlines. If we cannot timely deliver our systems, our results from operations and cash flows could be materially and adversely affected.

Because we derive a significant portion of our revenues from sales in Asia, our sales and results of operations could be adversely affected by the instability of Asian economies

        Our sales to customers in Asian markets represented approximately 39.9%, 59.6%, 56.3% and 60.8% of our revenues in 2003, 2004, 2005 and the six months ended June 30, 2006, respectively. Countries in the Asia Pacific region, including Japan, Korea, China, Singapore and Taiwan, each of which accounted for a significant portion of our business in that region, have experienced currency, banking and equity market weaknesses in the past. We expect that political or economic instability in the Asian markets we service could adversely affect our results of operations and cash flows in future periods.

Our significant level of international sales subjects us to operational, financial and political risks, such as unexpected changes in regulatory requirements, tariffs, political and economic instability, outbreaks of hostilities, and difficulties in managing foreign sales representatives and foreign branch operations

        International sales accounted for approximately 65.4%, 69.1% , 77.5% and 71.3%, respectively, of our revenues in 2003, 2004, 2005 and the six months ended June 30, 2006. We anticipate that international sales will account for a significant portion of our revenue during at least the next five years. Due to the significant level of our international sales, we are subject to a number of material risks, including:

        Unexpected changes in regulatory requirements including tariffs and other market barriers. The semiconductor device industry is a high-visibility industry in many of the European and Asian countries in which we sell our products. Because the governments of these countries have provided extensive financial support to our semiconductor device manufacturing customers in these countries, we believe that our customers could be disproportionately affected by any trade embargoes, excise taxes or other restrictions imposed by their governments on trade with United States companies such as ourselves. Any restrictions of these types could result in a reduction in our sales to customers in these countries.

        Political and economic instability. We are subject to various global risks related to political and economic instabilities in countries in which we derive sales. If terrorist activities, armed conflict, civil or military unrest or political instability occurs outside of the U.S., these events may result in reduced demand for our products. There is considerable political instability in Taiwan related to its disputes with China and in South Korea related to its disputes with North Korea. In addition, several Asian countries, particularly Japan, have experienced significant economic instability. An outbreak of hostilities or other political upheaval in China, Taiwan or South Korea, or an economic downturn in Japan or other countries, would likely harm the operations of our customers in these countries. The effect of these types of events on our revenues and cash flows could be material because we derive substantial revenues from sales to semiconductor device foundries in Taiwan such as TSMC and UMC, from memory chip manufacturers in South Korea such as Hynix and Samsung, and from semiconductor device manufacturers in Japan such as NEC and Toshiba.

        Difficulties in staffing and managing foreign branch operations. During periods of tension between the governments of the United States and certain other countries, it is often difficult for United States companies such as ourselves to staff and manage operations in such countries.

Since a substantial portion of our revenues and cash flows are derived from sales in other countries but denominated in U.S. dollars, we could experience a significant decline in sales or experience collection problems in the event the dollar becomes more expensive relative to local currencies

        A substantial portion of our international sales are denominated in U.S. dollars. As a result, if the dollar rises in value in relation to foreign currencies, our systems will become more expensive to customers outside the United States and less competitive with systems produced by competitors outside the United States. These conditions could negatively impact our international sales. Foreign sales also expose us to collection risk in the event it becomes more expensive for our foreign customers to convert their local currencies into U.S. dollars.

Terrorist attacks and terrorist threats may disrupt our operations and negatively impact our revenues, costs and stock price

        The terrorist attacks in September 2001 in the United States, the U.S. response to these attacks and the resulting decline in consumer confidence has had a substantial adverse impact on the economy. Any similar future events may disrupt our operations or those of our customers and suppliers. In addition, these events have had, and may continue to have, an adverse impact on the U.S. and world economy in general and consumer confidence and spending in particular, which could harm our sales. In addition, any of these events could increase volatility in the U.S. and world financial markets, which, in turn, could adversely affect our stock price, limit the capital resources available to us and our customers or suppliers and/or have a significant impact on our operating results and cash flows.

We may choose to acquire new and complementary businesses, products or technologies instead of developing them ourselves, and may be unable to complete these acquisitions or may not be able to successfully integrate an acquired business in a cost-effective and non-disruptive manner

        Our success depends on our ability to continually enhance and broaden our product offerings in response to changing technologies, customer demands and competitive pressures. To this end, we may, from time to time, engage in the process of identifying, analyzing and negotiating possible acquisition transactions and we expect to continue to do so in the future. We may choose to acquire new and complementary businesses, products, or technologies instead of developing them ourselves. We may, however, face competition for acquisition targets from larger and more established companies with greater financial resources, making it more difficult for us to complete acquisitions. We cannot provide any assurance that we will be successful in consummating future acquisitions on favorable terms or that we will realize the benefits that we anticipate from one or more acquisitions that we consummate. Integrating any business, product or technology we acquire could be expensive and time-consuming, disrupt our ongoing business and/or distract our management. Our inability to consummate one or more acquisitions on such favorable terms or our failure to realize the intended benefits from one or more acquisitions, could have a material adverse effect on our business, liquidity, financial position and/or results of operations, including as a result of our incurrence of indebtedness and related interest expense and our assumption of unforeseen contingent liabilities. In addition, in order to finance any acquisitions, we might need to raise additional funds through public or private equity or debt financings. In that event, we could be forced to obtain financing on terms that are not favorable to us and, in the case of equity financing, that result in dilution to our stockholders. In addition, any amortization of intangible assets, write-down of impaired assets or other assets or charges resulting from the costs of acquisitions and purchase accounting could harm our business and operating results.

Although Rudolph expects that the merger with August Technology will result in benefits to the combined company, Rudolph may not realize those benefits because of integration and other challenges

        On February 15, 2006, we completed the merger with August Technology Corporation. Rudolph's failure to meet the challenges involved in integrating the global operations of Rudolph and August Technology successfully or otherwise to realize any of the anticipated benefits of the merger, could seriously harm Rudolph's financial positions, results of operations and cash flows. Realizing the benefits of the merger will depend in part on the successful integration of technology, operations and personnel. The integration of the companies is a complex, time-consuming and expensive process that, without proper planning and implementation, could significantly disrupt the respective business of Rudolph. The challenges involved in this integration include, but are not limited to, the following:

                * communicating a strategic vision to the market regarding Rudolph following the merger and executing on that strategic vision;

                * consolidating operations, including rationalizing corporate information technology and administrative infrastructures;

                * combining diverse product and service offerings;

                * coordinating sales and marketing efforts to effectively communicate the capabilities of Rudolph following the merger;

                * overcoming any perceived adverse changes in business focus, including demonstrating to existing customers of both Rudolph and the former August Technology that the merger will not result in adverse changes in customer service standards or business focus and helping customers conduct business easily with Rudolph following the merger;

                * coordinating and harmonizing research and development activities to accelerate introduction of new products and technologies with reduced cost;

                * preserving customer, distribution, reseller, manufacturing, supplier, marketing and other important relationships of both Rudolph and the former August Technology and resolving any potential conflicts that may arise;

                * minimizing the diversion of management attention from ongoing business concerns;

                * retaining key employees and maintaining employee morale;

                * addressing differences in the business cultures of Rudolph and the former August Technology;

                * addressing the effects of August Technology's employment contracts and the differences between Rudolph's and August Technology's employee bonus plans;

                * overcoming challenges involved with managing two large groups of employees in geographically disparate areas;

                * coordinating and combining international operations, relationships and facilities, which may be subject to additional constraints imposed by geographic distance, local laws and regulations;

                * addressing any challenges involved with Rudolph's ability to earn profits with the expensing of in-process research and development and the amortization of the fair value of property, plants, equipment and intangible assets; and

                * overcoming the challenges involved with integrating August Technology's and Rudolph's diverse enterprise resource planning systems worldwide and minimizing any disruptions that may be caused by such integration.

        Rudolph may not successfully integrate the operations of Rudolph and August Technology in a timely manner and Rudolph may not realize the anticipated benefits and synergies of the merger to the extent, or in the timeframe, anticipated. The anticipated benefits of the merger are based on projections and assumptions, including successful integration, not actual experience. The failure to integrate the businesses of Rudolph and August Technology or to realize any of the anticipated benefits of the merger could seriously hinder Rudolph's plans for product development as well as business and market expansion following the merger.

If we deliver systems with defects, our credibility will be harmed and the sales and market acceptance of our systems will decrease

        Our systems are complex and have occasionally contained errors, defects and bugs when introduced. When this occurs, our credibility and the market acceptance and sales of our systems could be harmed. Further, if our systems contain errors, defects or bugs, we may be required to expend significant capital and resources to alleviate these problems. Defects could also lead to product liability as a result of product liability lawsuits against us or against our customers. We have agreed to indemnify our customers under certain circumstances against liability arising from defects in our systems. Our product liability policy currently provides $2.0 million of coverage per claim, with an overall umbrella limit of $5.0 million. In the event of a successful product liability claim, we could be obligated to pay damages significantly in excess of our product liability insurance limits.

Provisions of our charter documents and Delaware law, as well as our stockholder rights plan, could discourage potential acquisition proposals and/or delay, deter or prevent a change in control of our company

        Provisions of our certificate of incorporation and bylaws, as well as our recently adopted stockholders rights plan, may inhibit changes in control of our company not approved by our board of directors. These provisions also limit the circumstances in which a premium can be paid for the common stock, and in which a proxy contest for control of our board may be initiated. These provisions provide for:

                * a prohibition on stockholder actions through written consent;

                * a requirement that special meetings of stockholders be called only by our chief executive officer or board of directors;

                * advance notice requirements for stockholder proposals and director nominations by stockholders;

                * limitations on the ability of stockholders to amend, alter or repeal our by-laws;

                * the authority of our board to issue, without stockholder approval, preferred stock with such terms as the board may determine; and

                * the authority of our board, without stockholder approval, to adopt a Stockholders Rights Plan. Such a Shareholders Rights Plan was adopted by the board of directors on June 27, 2005.

        We are also entitled to avail ourselves of the protections of Section 203 of the Delaware General Corporation Law, which could inhibit changes in control of us.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

       We are exposed to changes in interest rates primarily from our investments in certain available-for-sale securities. Our available-for-sale securities consist primarily of fixed income investments (U.S. Treasury and Agency securities and corporate bonds). We continually monitor our exposure to changes in interest rates and credit ratings of issuers from our available-for-sale securities. It is possible that we are at risk if interest rates or credit ratings of issuers change in an unfavorable direction. The magnitude of any gain or loss will be a function of the difference between the fixed rate of the financial instrument and the market rate and our financial condition and results of operations could be materially affected. Based on sensitivity analysis performed on our financial investments held as of June 30, 2006, an immediate adverse change of 10% in interest rates (e.g. 3.00% to 3.30%) would result in a $0.2 million decrease in the fair value of our available for sale securities.

Foreign Currency Risk

        We have branch operations in Taiwan, Singapore, China and Korea and wholly-owned subsidiaries in Europe and Japan, which are subject to currency fluctuations. We have determined that the functional currency of our foreign operations is the local currency in our international operations, which incur most of their expenses in the local currency. These foreign branches and subsidiaries are limited in their operations and level of investment so that the risk of currency fluctuations is not material. A substantial portion of our international sales are denominated in U.S. dollars and, as a result, we have relatively little exposure to foreign currency exchange risk with respect to these sales. Substantially all our sales in Japan are denominated in Japanese yen. From time to time, we may enter into forward exchange contracts to economically hedge a portion of, but not all, existing and anticipated foreign currency denominated transactions expected to occur within 12 months. The change in fair value of the forward contracts is recognized in the Consolidated Statements of Operations each reporting period. As of June 30, 2006, we had sixteen forward contracts outstanding with a total notional contract value of $7.0 million. We do not use derivative financial instruments for trading or speculative purposes.

        The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as appropriate, to allow for timely decisions regarding required disclosure. The disclosure controls and procedures are designed to provide reasonable assurance of achieving the desired control objectives. As of June 30, 2006, an evaluation was carried out under the supervision and with the participation of the Company's management, including the CEO and CFO. Based on this evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level.

        There have been no significant changes in the Company's internal controls over financial reporting during the Company's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

         Exhibit No.     Description

2.1             Agreement and Plan of Merger, dated as of June 27, 2005, by and among the Registrant, NS
                  Merger Sub, Inc. and August Technology Corporation (incorporated by reference to
                  Exhibit 99.2 to the Company's Schedule 13D filed with the SEC on July 7, 2005).

2.2             Amendment No. 1, dated as of December 8, 2005, by and among the Registrant, NS Merger
                  Sub, Inc. and August Technology Corporation, to the Agreement and Plan of Merger, dated
                  as of June 27, 2005, by and among the Registrant, NS Merger Sub, Inc. and August
                  Technology Corporation (incorporated by reference to Exhibit 2.1 to the Registrant's
                  Current Report on Form 8-K filed with the SEC on December 9, 2005).

3.1              Restated Certificate of Incorporation of Registrant (incorporated herein by reference to
                   Exhibit (3.1(b)) to the Registrant's Registration Statement on Form S-1, as amended
                   (SEC File No. 333-86871 filed on September 9, 1999).

3.2              Amended and Restated Bylaws of Registrant (incorporated herein by reference to
                   Exhibit (3.2(b) to the Registrant's Registration Statement on Form S-1, as amended
                   (SEC File No. 333-86871), filed on September 9, 1999.

3.3              Amendment to Restated Bylaws of Registrant (incorporated by reference to Exhibit 3.1
                   to the Registrant's Current Report on Form 8-K filed with the Commission on
                   February 15, 2006, No. 000-27965).

10.14          Form of Restricted Stock Unit Purchase Agreements pursuant to the
                   Rudolph Technologies, Inc. 1999 Stock Plan

31.1             Certification of Paul F. McLaughlin, Chief Executive Officer, pursuant to Securities Exchange
                    Act Rule 13a-14(a).

31.2             Certification of  Steven R. Roth, Chief Financial Officer, pursuant to Securities Exchange Act
                    Rule 13a-14(a).

32.1             Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002, signed by Paul F. McLaughlin, Chief Executive Officer
                    of Rudolph Technologies, Inc.

32.2             Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002, signed by Steven R. Roth, Chief Financial Officer of
                    Rudolph Technologies, Inc.

Rudolph Technologies, Inc.
Restricted Stock Unit Purchase Agreement
(Director Initial Grant Agreement)

            THIS AGREEMENT, dated ____________, 200__ (the "Award Date"), is made between Rudolph Technologies, Inc., a Delaware corporation hereinafter referred to as the "Company," and ________________________ (the "Participant"). Participant [    ] is [   ] is not a Section 16 Insider of the Company.

1.     Definitions.     All capitalized terms used in this Agreement without definition shall have the meanings ascribed in the Company's 1999 Stock Plan, as amended from time to time (the "Plan").

2.     Award of Restricted Stock Units.

            (a)     Award.     In consideration of the Participant's agreement to remain in the service or employ of the Company or one of its Subsidiaries, and for other good and valuable consideration which the Committee has determined exceeds the aggregate par value of the shares of the common stock of the Company (the "Common Stock") subject to the Award (as defined below), as of the Award Date, the Company issues to the Participant the Award described in this Agreement (the "Award"). The number of Restricted Stock Units (the "RSUs") subject to the Award (which shall be subject to adjustment in accordance with Section 13 of the Plan) is set forth on the signature page hereof. Upon Award, all RSUs shall be issued to the Participant's employee stock plan account established at E*Trade Financial Corp ("E*Trade") or other stock plan administrator as determined by Company.

            (b)     Purchase Price; Book Entry Form.     The purchase price of the shares underlying the RSUs (the "Shares") is zero dollars ($0.00) per share. The Shares will be issued in uncertificated form. The Shares will be recorded in the name of the Participant in the books and records of the Company's transfer agent with appropriate notations regarding the restrictions on transfer imposed pursuant to this Agreement. Upon vesting and the satisfaction of all conditions set forth in Section 3(d), the Company shall cause certificates representing the Shares to be issued to the Participant.

            (c)      Plan.     The Award granted hereunder is subject to the terms and provisions of the Plan, including without limitation, Article 13 thereof. The Award shall constitute a Stock Purchase Right as described in Section 11 of the Plan.

3.     Restrictions.

            (a)      Forfeiture.     Any Award which is not vested as of the date the Participant ceases to be an employee of the Company or one of its Subsidiaries or other Service Provider shall thereupon be forfeited immediately and without any further action by the Company. For purposes of this Agreement, "Restrictions" shall mean the restrictions on sale or other transfer set forth in Section 5 and the exposure to forfeiture set forth in this Section 3(a) and Section 3(d)(iii).

            (b)      Vesting and Lapse of Restrictions.      Subject to Sections 3(a) and 3(c), the Award shall vest and Restrictions shall lapse with respect to fifty percent (50%) of the Shares subject to the Award on each of the first two (2) anniversaries of the Award Date, provided that the Participant remains continuously as a Director or in the service of the Company or a Subsidiary or otherwise as a Service Provider from the Award Date through such date.

            (c)      Acceleration of Vesting.      Notwithstanding Sections 3(a) and 3(b), the Award shall become fully vested and all Restrictions applicable to such Award shall lapse 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, and the successor corporation refuses to assume or substitute its stock for the Award. Should the successor corporation assume the Award, then no acceleration shall apply.

            (d)      Tax Withholding; Conditions to Issuance of Certificates.      Notwithstanding any other provision of this Agreement (including without limitation Section 2(b)):

                    (i) No new certificate shall be delivered to the Participant or his legal representative unless and until the Participant or his legal representative shall have paid to the Company the full amount of all federal and state withholding or other taxes applicable to the taxable income of Participant resulting from the grant of the RSUs or the lapse or removal of the Restrictions (the "Taxes").

                    (ii) Prior to the initial vesting anniversary date, Participant must notify E*Trade of his/her election as to which of the following three (3) methods Participant elects to be utilized to satisfy the tax obligations related to the vested Shares. In the event that Participant does not so notify E*Trade prior to the vesting anniversary date, the method set forth in Section 3(d)(ii)(C) below shall be applied. In the event Participant desires to change his/her election after the initial vesting anniversary date, Participant must notify E*Trade of such change prior to the next vesting anniversary date, provided, however, that if no such notification is given the tax treatment in place as of the initial vesting anniversary date shall apply. The three (3) methods by which Participant may pay the required amount of the Taxes are as follows:

                            (A) Participant may pay the required amount via: (1) a cash transfer to E*Trade within five (5) days of the vesting anniversary date, or (2) a check made out to Rudolph Technologies, Inc.;

                            (B) as of the vesting anniversary date, E*Trade may sell all of the Shares vested on the anniversary date, apply the appropriate amount to the Taxes and transfer the remainder in cash to the Participant; or

                            (C) as of the vesting anniversary date, E*Trade may sell a sufficient number of Shares vested on the anniversary date to cover the appropriate amount for the Taxes and the balance of Shares shall be retained in the E*Trade account on behalf of Participant.

                    (iii) The following restrictions apply:

                            (A) If Participant is not designated as a Section 16 Insider as set forth above and Participant elects under Section 3(d)(ii)(A), all tax obligations must be satisfied within ninety (90) days of the vesting anniversary date. If such Taxes are not paid within the ninety (90) day timeframe, the amount of Shares vested on the most recent anniversary date shall be forfeited immediately and without any further action by the Company.

                            (B) If Participant is designated as a Section 16 Insider as set forth above, the following applies:

                                        (1) in the event that Participant elects to satisfy the Taxes via Section 3(d)(ii)(B) or 3(d)(ii)(C) above but the anniversary vesting date for Shares falls within a closed "Trading Window" of the Company (as defined in Rudolph Technologies, Inc. Insider Trading Compliance Program), the Participant shall be required to discharge the tax obligations in accordance with Section 3(d)(ii)(A) notwithstanding the election which the Participant had made.

                                        (2) in the event that Participant elects to pay the Taxes in cash under Section 3(d)(ii)(A) or is required to pay in cash as a result of Section 3(d)(iii)(B)(1), all tax obligations must be satisfied within ninety (90) days of the vesting anniversary date. If such Taxes are not paid within the ninety (90) day timeframe, the amount of Shares vested on the most recent anniversary date shall be forfeited immediately and without any further action by the Company.

                    (iv) The Company shall not be required to issue or deliver any certificate or certificates for any Shares prior to the fulfillment of all of the following conditions:

                            (A) the admission of the Shares to listing on all stock exchanges on which such Common Stock is then listed,

                            (B) the completion of any registration or other qualification of the Shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or other governmental regulatory body, which the Committee shall, in its sole and absolute discretion, deem necessary and advisable,

                            (C) the obtaining of any approval or other clearance from any state or federal governmental agency that the Committee shall, in its absolute discretion, determine to be necessary or advisable, and

                            (D) the lapse of any such reasonable period of time following the date the Restrictions lapse as the Committee may from time to time establish for reasons of administrative convenience.

4.    Section 83(b) Election.      Participant understands that Section 83(a) of the Code taxes as ordinary income the difference between the amount, if any, paid for the Shares of Common Stock and the Fair Market Value of such Shares at the time the Restrictions on such Shares lapse. Participant understands that, notwithstanding the preceding sentence, Participant may elect to be taxed at the time of the Award Date, rather that at the time the Restrictions lapse, by filing an election under Section 83(b) of the Code (an "83(b) Election") with the Internal Revenue Service within 30 days of the Award Date. In the event Participant files an 83(b) Election, Participant will recognize ordinary income in an amount equal to the difference between the amount, if any, paid for the Shares of Common Stock and the Fair Market Value of such Shares as of the Award Date. Participant further understands that an additional copy of such 83(b) Election form should be filed with his or her federal income tax return for the calendar year in which the date of this Agreement falls. Participant acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to the award of the RSUs hereunder, and does not purport to be complete. PARTICIPANT FURTHER ACKNOWLEDGES THAT THE COMPANY IS NOT RESPONSIBLE FOR FILING THE PARTICIPANT'S 83(b) ELECTION, AND THE COMPANY HAS DIRECTED PARTICIPANT TO SEEK INDEPENDENT ADVICE REGARDING THE APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE, THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH PARTICIPANT MAY RESIDE, AND THE TAX CONSEQUENCES OF PARTICIPANT'S DEATH.

5.     Restricted Stock Units Not Transferable.      No RSUs or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that this Section 5 shall not prevent transfers by will or by applicable laws of descent and distribution.

6.     Rights as Stockholder.     Until the Participant has satisfied all requirements for vesting and the satisfaction of all conditions set forth in Section 3(d) of this Agreement, the Participant shall not be deemed to be a shareholder or to have any of the rights of a shareholder with respect to any Shares of stock subject to the Award..

7.     Not a Contract of Employment.      Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue to serve as an employee or other Service Provider of the Company or any of its Subsidiaries.

8.     Governing Law.     The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.

9.     Conformity to Securities Laws.      The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act of 1933, as amended, and the Exchange Act, and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission, including without limitation Rule 16b-3 under the Exchange Act. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Awards are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

10.     Amendment, Suspension and Termination.      The Awards may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Committee or the Board, provided, that, except as may otherwise be provided by the Plan, neither the amendment, suspension nor termination of this Agreement shall, without the consent of the Participant, alter or impair any rights or obligations under any Award.

11.     Notices.     Notices required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the Participant to his address shown in the Company records, and to the Company at its principal executive office.

The Participant represents that he/she has read this Agreement and the Plan and is familiar with the terms and provisions of each. The Participant acknowledges that the Award is issued pursuant to, and is subject to the terms and conditions of, the Plan, and the Participant will be bound by the terms of the Plan as if it were set forth verbatim in this Agreement. The Participant agrees to comply with all rules the Company may establish with respect to the Plan. The Participant agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee with respect to any questions arising under the Plan or this Agreement. The Participant further acknowledges and agrees that this Agreement (and the Plan) constitutes the entire agreement between the parties with respect to the Award and that this Agreement (and the Plan) supersedes any and all prior agreements, whether written or oral, between the parties with respect to the Award.

                                        IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the date first set forth above.

RUDOLPH TECHNOLOGIES, INC.                                      PARTICIPANT By:

___________________________                                  ________________________________
Name:
Title:                                                                                          Residence Address:
                                                                                                  "STREET1"
                                                                                                  "STREET2"
                                                                                                  "CITY", "STATE" "ZIP"
                                                                                                  "COUNTRY"

                                                                                                  Aggregate number of Restricted Stock Units subject to the Award: __________________

Rudolph Technologies, Inc.
Restricted Stock Unit Purchase Agreement
(Director Annual Grant Agreement)

THIS AGREEMENT, dated ____________, 200__ (the "Award Date"), is made between Rudolph Technologies, Inc., a Delaware corporation hereinafter referred to as the "Company," and ________________________ (the "Participant"). Participant [    ] is [   ] is not a Section 16 Insider of the Company.

1.     Definitions.     All capitalized terms used in this Agreement without definition shall have the meanings ascribed in the Company's 1999 Stock Plan, as amended from time to time (the "Plan").

2.     Award of Restricted Stock Units.

            (a)      Award.     In consideration of the Participant's agreement to remain in the service or employ of the Company or one of its Subsidiaries, and for other good and valuable consideration which the Committee has determined exceeds the aggregate par value of the shares of the common stock of the Company (the "Common Stock") subject to the Award (as defined below), as of the Award Date, the Company issues to the Participant the Award described in this Agreement (the "Award"). The number of Restricted Stock Units (the "RSUs") subject to the Award (which shall be subject to adjustment in accordance with Section 13 of the Plan) is set forth on the signature page hereof. Upon Award, all RSUs shall be issued to the Participant's employee stock plan account established at E*Trade Financial Corp ("E*Trade") or other stock plan administrator as determined by Company.

            (b)      Purchase Price; Book Entry Form.      The purchase price of the shares underlying the RSUs (the "Shares") is zero dollars ($0.00) per share. The Shares will be issued in uncertificated form. The Shares will be recorded in the name of the Participant in the books and records of the Company's transfer agent with appropriate notations regarding the restrictions on transfer imposed pursuant to this Agreement. Upon vesting and the satisfaction of all conditions set forth in Section 3(d), the Company shall cause certificates representing the Shares to be issued to the Participant.

            (c)      Plan.     The Award granted hereunder is subject to the terms and provisions of the Plan, including without limitation, Article 13 thereof. The Award shall constitute a Stock Purchase Right as described in Section 11 of the Plan.

3.     Restrictions.

            (a)      Forfeiture.     Any Award which is not vested as of the date the Participant ceases to be an employee of the Company or one of its Subsidiaries or other Service Provider shall thereupon be forfeited immediately and without any further action by the Company. For purposes of this Agreement, "Restrictions" shall mean the restrictions on sale or other transfer set forth in Section 5 and the exposure to forfeiture set forth in this Section 3(a) and Section 3(d)(iii).

            (b)      Vesting and Lapse of Restrictions.      Subject to Sections 3(a) and 3(c), the Award shall vest and Restrictions shall lapse with respect to one hundred percent (100%) of the Shares subject to the Award on the first anniversary of the Award Date, provided that the Participant remains continuously as a Director or in the service of the Company or a Subsidiary or otherwise as a Service Provider from the Award Date through such date.

            (c)      Acceleration of Vesting.      Notwithstanding Sections 3(a) and 3(b), the Award shall become fully vested and all Restrictions applicable to such Award shall lapse 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, and the successor corporation refuses to assume or substitute its stock for the Award. Should the successor corporation assume the Award, then no acceleration shall apply.

            (d)      Tax Withholding; Conditions to Issuance of Certificates.      Notwithstanding any other provision of this Agreement (including without limitation Section 2(b)):

                    (i)      No new certificate shall be delivered to the Participant or his legal representative unless and until the Participant or his legal representative shall have paid to the Company the full amount of all federal and state withholding or other taxes applicable to the taxable income of Participant resulting from the grant of the RSUs or the lapse or removal of the Restrictions (the "Taxes").

                    (ii)      Prior to the initial vesting anniversary date, Participant must notify E*Trade of his/her election as to which of the following three (3) methods Participant elects to be utilized to satisfy the tax obligations related to the vested Shares. In the event that Participant does not so notify E*Trade prior to the vesting anniversary date, the method set forth in Section 3(d)(ii)(C) below shall be applied. In the event Participant desires to change his/her election after the initial vesting anniversary date, Participant must notify E*Trade of such change prior to the next vesting anniversary date, provided, however, that if no such notification is given the tax treatment in place as of the initial vesting anniversary date shall apply. The three (3) methods by which Participant may pay the required amount of the Taxes are as follows:

                            (A)      Participant may pay the required amount via:

                                        (1)      a cash transfer to E*Trade within five (5) days of the vesting anniversary date, or

                                        (2)      a check made out to Rudolph Technologies, Inc.;

                            (B)      as of the vesting anniversary date, E*Trade may sell all of the Shares vested on the anniversary date, apply the appropriate amount to the Taxes and transfer the remainder in cash to the Participant; or

                            (C)      as of the vesting anniversary date, E*Trade may sell a sufficient number of Shares vested on the anniversary date to cover the appropriate amount for the Taxes and the balance of Shares shall be retained in the E*Trade account on behalf of Participant.

                    (iii)      The following restrictions apply:

                            (A)      If Participant is not designated as a Section 16 Insider as set forth above and Participant elects under Section 3(d)(ii)(A), all tax obligations must be satisfied within ninety (90) days of the vesting anniversary date. If such Taxes are not paid within the ninety (90) day timeframe, the amount of Shares vested on the most recent anniversary date shall be forfeited immediately and without any further action by the Company.

                            (B)      If Participant is designated as a Section 16 Insider as set forth above, the following applies:

                                        (1)      in the event that Participant elects to satisfy the Taxes via Section 3(d)(ii)(B) or 3(d)(ii)(C) above but the anniversary vesting date for Shares falls within a closed "Trading Window" of the Company (as defined in Rudolph Technologies, Inc. Insider Trading Compliance Program), the Participant shall be required to discharge the tax obligations in accordance with Section 3(d)(ii)(A) notwithstanding the election which the Participant had made.

                                        (2)      in the event that Participant elects to pay the Taxes in cash under Section 3(d)(ii)(A) or is required to pay in cash as a result of Section 3(d)(iii)(B)(1), all tax obligations must be satisfied within ninety (90) days of the vesting anniversary date. If such Taxes are not paid within the ninety (90) day timeframe, the amount of Shares vested on the most recent anniversary date shall be forfeited immediately and without any further action by the Company.

                    (iv)      The Company shall not be required to issue or deliver any certificate or certificates for any Shares prior to the fulfillment of all of the following conditions:

                            (A)      the admission of the Shares to listing on all stock exchanges on which such Common Stock is then listed,

                            (B)      the completion of any registration or other qualification of the Shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or other governmental regulatory body, which the Committee shall, in its sole and absolute discretion, deem necessary and advisable,

                            (C)      the obtaining of any approval or other clearance from any state or federal governmental agency that the Committee shall, in its absolute discretion, determine to be necessary or advisable, and

                            (D)      the lapse of any such reasonable period of time following the date the Restrictions lapse as the Committee may from time to time establish for reasons of administrative convenience.

4.     Section 83(b) Election.      Participant understands that Section 83(a) of the Code taxes as ordinary income the difference between the amount, if any, paid for the Shares of Common Stock and the Fair Market Value of such Shares at the time the Restrictions on such Shares lapse. Participant understands that, notwithstanding the preceding sentence, Participant may elect to be taxed at the time of the Award Date, rather that at the time the Restrictions lapse, by filing an election under Section 83(b) of the Code (an "83(b) Election") with the Internal Revenue Service within 30 days of the Award Date. In the event Participant files an 83(b) Election, Participant will recognize ordinary income in an amount equal to the difference between the amount, if any, paid for the Shares of Common Stock and the Fair Market Value of such Shares as of the Award Date. Participant further understands that an additional copy of such 83(b) Election form should be filed with his or her federal income tax return for the calendar year in which the date of this Agreement falls. Participant acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to the award of the RSUs hereunder, and does not purport to be complete. PARTICIPANT FURTHER ACKNOWLEDGES THAT THE COMPANY IS NOT RESPONSIBLE FOR FILING THE PARTICIPANT'S 83(b) ELECTION, AND THE COMPANY HAS DIRECTED PARTICIPANT TO SEEK INDEPENDENT ADVICE REGARDING THE APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE, THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH PARTICIPANT MAY RESIDE, AND THE TAX CONSEQUENCES OF PARTICIPANT'S DEATH.

5.     Restricted Stock Units Not Transferable.      No RSUs or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that this Section 5 shall not prevent transfers by will or by applicable laws of descent and distribution.

6.     Rights as Stockholder.     Until the Participant has satisfied all requirements for vesting and the satisfaction of all conditions set forth in Section 3(d) of this Agreement, the Participant shall not be deemed to be a shareholder or to have any of the rights of a shareholder with respect to any Shares of stock subject to the Award..

7.     Not a Contract of Employment.      Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue to serve as an employee or other Service Provider of the Company or any of its Subsidiaries.

8.     Governing Law.     The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.

9.     Conformity to Securities Laws.      The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act of 1933, as amended, and the Exchange Act, and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission, including without limitation Rule 16b-3 under the Exchange Act. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Awards are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

10.     Amendment, Suspension and Termination.      The Awards may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Committee or the Board, provided, that, except as may otherwise be provided by the Plan, neither the amendment, suspension nor termination of this Agreement shall, without the consent of the Participant, alter or impair any rights or obligations under any Award.

11.     Notices.     Notices required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the Participant to his address shown in the Company records, and to the Company at its principal executive office.

The Participant represents that he/she has read this Agreement and the Plan and is familiar with the terms and provisions of each. The Participant acknowledges that the Award is issued pursuant to, and is subject to the terms and conditions of, the Plan, and the Participant will be bound by the terms of the Plan as if it were set forth verbatim in this Agreement. The Participant agrees to comply with all rules the Company may establish with respect to the Plan. The Participant agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee with respect to any questions arising under the Plan or this Agreement. The Participant further acknowledges and agrees that this Agreement (and the Plan) constitutes the entire agreement between the parties with respect to the Award and that this Agreement (and the Plan) supersedes any and all prior agreements, whether written or oral, between the parties with respect to the Award.

                            IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the date first set forth above.

RUDOLPH TECHNOLOGIES, INC.                                      PARTICIPANT

By: ___________________________                              ________________________________
Name:
Title:
                                                                                                Residence Address:
                                                                                                "STREET1"
                                                                                                "STREET2"
                                                                                                "CITY", "STATE" "ZIP"
                                                                                                "COUNTRY"

                                                                                                Aggregate number of Restricted Stock Units subject to the Award: __________________

Rudolph Technologies, Inc. Restricted
Stock Unit Purchase Agreement
(Standard Employee Agreement)

THIS AGREEMENT, dated ____________, 200__ (the "Award Date"), is made between Rudolph Technologies, Inc., a Delaware corporation hereinafter referred to as the "Company," and ________________________ (the "Participant"). Participant [     ] is [    ] is not a Section 16 Insider of the Company.

1.     Definitions.     All capitalized terms used in this Agreement without definition shall have the meanings ascribed in the Company's 1999 Stock Plan, as amended from time to time (the "Plan").

2.     Award of Restricted Stock Units.

            (a)     Award.     In consideration of the Participant's agreement to remain in the service or employ of the Company or one of its Subsidiaries, and for other good and valuable consideration which the Committee has determined exceeds the aggregate par value of the shares of the common stock of the Company (the "Common Stock") subject to the Award (as defined below), as of the Award Date, the Company issues to the Participant the Award described in this Agreement (the "Award"). The number of Restricted Stock Units (the "RSUs") subject to the Award (which shall be subject to adjustment in accordance with Section 13 of the Plan) is set forth on the signature page hereof. Upon Award, all RSUs shall be issued to the Participant's employee stock plan account established at E*Trade Financial Corp ("E*Trade") or other stock plan administrator as determined by Company.

            (b)     Purchase Price; Book Entry Form.     The purchase price of the shares underlying the RSUs (the "Shares") is zero dollars ($0.00) per share. The Shares will be issued in uncertificated form. The Shares will be recorded in the name of the Participant in the books and records of the Company's transfer agent with appropriate notations regarding the restrictions on transfer imposed pursuant to this Agreement. Upon vesting and the satisfaction of all conditions set forth in Section 3(d), the Company shall cause certificates representing the Shares to be issued to the Participant.

            (c)      Plan.     The Award granted hereunder is subject to the terms and provisions of the Plan, including without limitation, Article 13 thereof. The Award shall constitute a Stock Purchase Right as described in Section 11 of the Plan.

3.     Restrictions.

            (a)      Forfeiture.     Any Award which is not vested as of the date the Participant ceases to be an employee of the Company or one of its Subsidiaries or other Service Provider shall thereupon be forfeited immediately and without any further action by the Company. For purposes of this Agreement, "Restrictions" shall mean the restrictions on sale or other transfer set forth in Section 5 and the exposure to forfeiture set forth in this Section 3(a) and Section 3(d)(iii).

            (b)      Vesting and Lapse of Restrictions.      Subject to Sections 3(a) and 3(c), the Award shall vest and Restrictions shall lapse with respect to ________ percent (__%) of the Shares subject to the Award (rounded down to the next whole number of shares) on each of the first ____ (__) anniversaries of the Award Date, provided in each case that the Participant remains continuously as an employee or in the service of the Company or a Subsidiary or otherwise as a Service Provider from the Award Date through such date.

            (c)      Acceleration of Vesting.      Notwithstanding Sections 3(a) and 3(b), the Award shall become fully vested and all Restrictions applicable to such Award shall lapse 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, and the successor corporation refuses to assume or substitute its stock for the Award. Should the successor corporation assume the Award, then no acceleration shall apply.

            (d)      Tax Withholding; Conditions to Issuance of Certificates.      Notwithstanding any other provision of this Agreement (including without limitation Section 2(b)):

                    (i)      No new certificate shall be delivered to the Participant or his legal representative unless and until the Participant or his legal representative shall have paid to the Company the full amount of all federal and state withholding or other taxes applicable to the taxable income of Participant resulting from the grant of the RSUs or the lapse or removal of the Restrictions (the "Taxes").

                    (ii)      Prior to the initial vesting anniversary date, Participant must notify E*Trade of his/her election as to which of the following three (3) methods Participant elects to be utilized to satisfy the tax obligations related to the vested Shares. In the event that Participant does not so notify E*Trade prior to the vesting anniversary date, the method set forth in Section 3(d)(ii)(C) below shall be applied. In the event Participant desires to change his/her election after the initial vesting anniversary date, Participant must notify E*Trade of such change prior to the next vesting anniversary date, provided, however, that if no such notification is given the tax treatment in place as of the initial vesting anniversary date shall apply. The three (3) methods by which Participant may pay the required amount of the Taxes are as follows:

                            (A)      Participant may pay the required amount via: (1) a cash transfer to E*Trade within five (5) days of the vesting anniversary date, or (2) a check made out to Rudolph Technologies, Inc.;

                            (B)      as of the vesting anniversary date, E*Trade may sell all of the Shares vested on the anniversary date, apply the appropriate amount to the Taxes and transfer the remainder in cash to the Participant; or

                            (C)      as of the vesting anniversary date, E*Trade may sell a sufficient number of Shares vested on the anniversary date to cover the appropriate amount for the Taxes and the balance of Shares shall be retained in the E*Trade account on behalf of Participant.

                    (iii)      The following restrictions apply:

                            (A)      If Participant is not designated as a Section 16 Insider as set forth above and Participant elects under Section 3(d)(ii)(A), all tax obligations must be satisfied within ninety (90) days of the vesting anniversary date. If such Taxes are not paid within the ninety (90) day timeframe, the amount of Shares vested on the most recent anniversary date shall be forfeited immediately and without any further action by the Company.

                            (B)      If Participant is designated as a Section 16 Insider as set forth above, the following applies:

                                        (1)      in the event that Participant elects to satisfy the Taxes via Section 3(d)(ii)(B) or 3(d)(ii)(C) above but the anniversary vesting date for Shares falls within a closed "Trading Window" of the Company (as defined in Rudolph Technologies, Inc. Insider Trading Compliance Program), the Participant shall be required to discharge the tax obligations in accordance with Section 3(d)(ii)(A) notwithstanding the election which the Participant had made.

                                        (2)      in the event that Participant elects to pay the Taxes in cash under Section 3(d)(ii)(A) or is required to pay in cash as a result of Section 3(d)(iii)(B)(1), all tax obligations must be satisfied within ninety (90) days of the vesting anniversary date. If such Taxes are not paid within the ninety (90) day timeframe, the amount of Shares vested on the most recent anniversary date shall be forfeited immediately and without any further action by the Company.

                    (iv)      The Company shall not be required to issue or deliver any certificate or certificates for any Shares prior to the fulfillment of all of the following conditions:

                            (A)      the admission of the Shares to listing on all stock exchanges on which such Common Stock is then listed,

                            (B)      the completion of any registration or other qualification of the Shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or other governmental regulatory body, which the Committee shall, in its sole and absolute discretion, deem necessary and advisable,

                            (C)      the obtaining of any approval or other clearance from any state or federal governmental agency that the Committee shall, in its absolute discretion, determine to be necessary or advisable, and

                            (D)      the lapse of any such reasonable period of time following the date the Restrictions lapse as the Committee may from time to time establish for reasons of administrative convenience.

4.     Section 83(b) Election.      Participant understands that Section 83(a) of the Code taxes as ordinary income the difference between the amount, if any, paid for the Shares of Common Stock and the Fair Market Value of such Shares at the time the Restrictions on such Shares lapse. Participant understands that, notwithstanding the preceding sentence, Participant may elect to be taxed at the time of the Award Date, rather that at the time the Restrictions lapse, by filing an election under Section 83(b) of the Code (an "83(b) Election") with the Internal Revenue Service within 30 days of the Award Date. In the event Participant files an 83(b) Election, Participant will recognize ordinary income in an amount equal to the difference between the amount, if any, paid for the Shares of Common Stock and the Fair Market Value of such Shares as of the Award Date. Participant further understands that an additional copy of such 83(b) Election form should be filed with his or her federal income tax return for the calendar year in which the date of this Agreement falls. Participant acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to the award of the RSUs hereunder, and does not purport to be complete. PARTICIPANT FURTHER ACKNOWLEDGES THAT THE COMPANY IS NOT RESPONSIBLE FOR FILING THE PARTICIPANT'S 83(b) ELECTION, AND THE COMPANY HAS DIRECTED PARTICIPANT TO SEEK INDEPENDENT ADVICE REGARDING THE APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE, THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH PARTICIPANT MAY RESIDE, AND THE TAX CONSEQUENCES OF PARTICIPANT'S DEATH.

5.     Restricted Stock Units Not Transferable.      No RSUs or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that this Section 5 shall not prevent transfers by will or by applicable laws of descent and distribution.

6.     Rights as Stockholder.     Until the Participant has satisfied all requirements for vesting and the satisfaction of all conditions set forth in Section 3(d) of this Agreement, the Participant shall not be deemed to be a shareholder or to have any of the rights of a shareholder with respect to any Shares of stock subject to the Award.

7.     Not a Contract of Employment.      Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue to serve as an employee or other Service Provider of the Company or any of its Subsidiaries.

8.     Governing Law.     The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.

9.     Conformity to Securities Laws.      The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act of 1933, as amended, and the Exchange Act, and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission, including without limitation Rule 16b-3 under the Exchange Act. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Awards are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

10.     Amendment, Suspension and Termination.      The Awards may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Committee or the Board, provided, that, except as may otherwise be provided by the Plan, neither the amendment, suspension nor termination of this Agreement shall, without the consent of the Participant, alter or impair any rights or obligations under any Award.

11.     Notices.     Notices required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the Participant to his address shown in the Company records, and to the Company at its principal executive office.

The Participant represents that he/she has read this Agreement and the Plan and is familiar with the terms and provisions of each. The Participant acknowledges that the Award is issued pursuant to, and is subject to the terms and conditions of, the Plan, and the Participant will be bound by the terms of the Plan as if it were set forth verbatim in this Agreement. The Participant agrees to comply with all rules the Company may establish with respect to the Plan. The Participant agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee with respect to any questions arising under the Plan or this Agreement. The Participant further acknowledges and agrees that this Agreement (and the Plan) constitutes the entire agreement between the parties with respect to the Award and that this Agreement (and the Plan) supersedes any and all prior agreements, whether written or oral, between the parties with respect to the Award.

                                        IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the date first set forth above.

RUDOLPH TECHNOLOGIES, INC.                                      PARTICIPANT

By: ___________________________                              ________________________________
Name:
Title:                                                                                         Residence Address:
                                                                                                "STREET1"
                                                                                                "STREET2"
                                                                                                "CITY", "STATE" "ZIP"
                                                                                                "COUNTRY"

                                                                                                Aggregate number of Restricted Stock Units subject to the Award: __________________

I, Paul F. McLaughlin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Rudolph Technologies, Inc.;
   
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
   
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

   1. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
      
      

   2. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
      
      
   3. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
      
      
   4. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

   1. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
      
      
   2. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven R. Roth, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Rudolph Technologies, Inc.;
   
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
   
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

   1. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
      
      

   2. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
      
      
   3. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
      
      
   4. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

   1. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
      
      
   2. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

I, Paul F. McLaughlin, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Rudolph Technologies, Inc. on Form 10-Q for the quarter ended June 30, 2006 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Rudolph Technologies, Inc.