APPLIED MATERIALS INC /DE
1995 EQUITY INCENTIVE PLAN
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>exh10-25.htm
<DESCRIPTION>1995 EQUITY INCENTIVE PLAN
<TEXT>
<html>
<head>
<title>FY2002 10K Exhibit 10.25</title>
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<p align="right">
                                                                             Exhibit 10.25
<p align="center"><b>
APPLIED MATERIALS, INC. <br>
1995 EQUITY INCENTIVE PLAN<br>
(April 16, 2002 Restatement)</p></b>

<p>APPLIED MATERIALS, INC., having adopted the Applied Materials,
Inc. 1995 Equity Incentive Plan (the "Plan") effective as of December
7, 1994, and having amended and restated the Plan most recently
effective as of August 1, 2001, hereby again amends and restates the
Plan in its entirety, effective as of April 16, 2002, as follows:

<p align="center">SECTION 1<br>
BACKGROUND AND PURPOSE</p>

<p>1.1     Background.  The Plan permits the grant of Nonqualified
Stock Options, Incentive Stock Options, SARs, Restricted Stock,
Performance Units, and Performance Shares.

<p>1.2     Purpose of the Plan.  The Plan is intended to attract,
motivate, and retain (a) employees of the Company and its Affiliates,
(b) consultants who provide significant services to the Company and its
Affiliates, and (c) directors of the Company who are employees of
neither the Company nor any Affiliate.  The Plan also is designed to
encourage stock ownership by Participants, thereby aligning their
interests with those of the Company's shareholders.

<p align="center">SECTION 2 <br>

DEFINITIONS</p>

<p>The following words and phrases shall have the following meanings
unless a different meaning is plainly required by the context:

<p>2.1     "1934 Act" means the Securities Exchange Act of 1934, as
amended.  Reference to a specific section of the 1934 Act or regulation
thereunder shall include such section or regulation, any valid
regulation promulgated under such section, and any comparable provision
of any future legislation or regulation amending, supplementing or
superseding such section or regulation.

<p>2.2     "Affiliate" means any corporation or any other entity
(including, but not limited to, partnerships and joint ventures)
controlling, controlled by, or under common control with the Company.

<p>2.3     "Affiliated SAR" means an SAR that is granted in
connection with a related Option, and which automatically will be
deemed to be exercised at the same time that the related Option is
exercised.

<p>2.4     "Annual Revenue" means the Company's or a business unit's
net sales for the Fiscal Year, determined in accordance with generally
accepted accounting principles; provided, however, that prior to the
Fiscal Year, the Committee shall determine whether any significant
item(s) shall be excluded or included from the calculation of Annual
Revenue with respect to one or more Participants.

<p>2.5     "Award" means, individually or collectively, a grant under
the Plan of Nonqualified Stock Options, Incentive Stock Options, SARs,
Restricted Stock, Performance Units, or Performance Shares.

<p>2.6     "Award Agreement" means the written agreement setting
forth the terms and provisions applicable to each Award granted under
the Plan.

<p>2.7     "Board" or "Board of Directors" means the Board of
Directors of the Company.

<p>2.8     "Code" means the Internal Revenue Code of 1986, as
amended.  Reference to a specific section of the Code or regulation
thereunder shall include such section or regulation, any valid
regulation promulgated under such section, and any comparable provision
of any future legislation or regulation amending, supplementing or
superseding such section or regulation.

<p>2.9     "Committee" means the committee appointed by the Board
(pursuant to Section 3.1) to administer the Plan.

<p>2.10    "Company" means Applied Materials, Inc. , a Delaware
corporation, or any successor thereto.  With respect to the definitions
of the Performance Goals, the Committee may determine that "Company"
means Applied Materials, Inc. and its consolidated subsidiaries.

<p>2.11    "Consultant" means any consultant, independent contractor,
or other person who provides significant services to the Company or its
Affiliates, but who is neither an Employee nor a Director.

<p>2.12    "Controllable Profits" means as to any Fiscal Year, a
business unit's Annual Revenue minus (a) cost of sales, (b) research,
development, and engineering expense, (c) marketing and sales expense,
(d) general and administrative expense, (e) extended receivables
expense, and (f) shipping requirement deviation expense.

<p>2.13    "Customer Satisfaction MBOs" means as to any Participant,
the objective and measurable individual goals set by a "management by
objectives" process and approved by the Committee, which goals relate
to the satisfaction of external or internal customer requirements.

<p>2.14    "Director" means any individual who is a member of the
Board of Directors of the Company.

<p>2.15    "Disability" means a permanent and total disability within
the meaning of Section 22(e)(3) of the Code, provided that in the case
of Awards other than Incentive Stock Options, the Committee in its
discretion may determine whether a permanent and total disability
exists in accordance with uniform and non-discriminatory standards
adopted by the Committee from time to time.

<p>2.16    "Earnings Per Share" means as to any Fiscal Year, the
Company's Net Income or a business unit's Pro Forma Net Income, divided
by a weighted average number of common shares outstanding and dilutive
common equivalent shares deemed outstanding.

<p>2.17    "Employee" means any employee of the Company or of an
Affiliate, whether such employee is so employed at the time the Plan is
adopted or becomes so employed subsequent to the adoption of the Plan.

<p>2.18     "Exercise Price" means the price at which a Share may be
purchased by a Participant pursuant to the exercise of an Option.

<p>2.19    "Fair Market Value" means the last quoted per share
selling price for Shares on the relevant date, or if there were no
sales on such date, the arithmetic mean of the highest and lowest
quoted selling prices on the nearest day before and the nearest day
after the relevant date, as determined by the Committee.
Notwithstanding the preceding, for federal, state, and local income tax
reporting purposes, fair market value shall be determined by the
Committee (or its delegate) in accordance with uniform and
nondiscriminatory standards adopted by it from time to time.

<p>2.20    "Fiscal Year" means the fiscal year of the Company.

<p>2.21    "Freestanding SAR" means a SAR that is granted
independently of any Option.

<p>2.22    "Grant Date" means, with respect to an Award, the date
that the Award was granted.

<p>2.23    "Incentive Stock Option" means an Option to purchase
Shares which is designated as an Incentive Stock Option and is intended
to meet the requirements of Section 422 of the Code.

<p>2.24    "Individual MBOs" means as to a Participant, the objective
and measurable goals set by a "management by objectives" process and
approved by the Committee (in its discretion).

<p>2.25    "Net Income" means as to any Fiscal Year, the income after
taxes of the Company for the Fiscal Year determined in accordance with
generally accepted accounting principles, provided that prior to the
Fiscal Year, the Committee shall determine whether any significant
item(s) shall be included or excluded from the calculation of Net
Income with respect to one or more Participants.

<p>2.26    "New Orders" means as to any Fiscal Year, the firm orders
for a system, product, part, or service that are being recorded for the
first time as defined in the Company's Order Recognition Policy.

<p>2.27    "Nonemployee Director" means a Director who is an employee
of neither the Company nor of any Affiliate.

<p>2.28    "Nonqualified Stock Option" means an option to purchase
Shares which is not intended to be an Incentive Stock Option.

<p>2.29    "Option" means an Incentive Stock Option or a Nonqualified
Stock Option.

<p>2.30    "Participant" means an Employee, Consultant, or
Nonemployee Director who has an outstanding Award.

<p>2.31    "Performance Goals" means the goal(s) (or combined
goal(s)) determined by the Committee (in its discretion) to be
applicable to a Participant with respect to an Award.  As determined by
the Committee, the Performance Goals applicable to an Award may provide
for a targeted level or levels of achievement using one or more of the
following measures: (a) Annual Revenue, (b) Controllable Profits, (c)
Customer Satisfaction MBOs, (d) Earnings Per Share, (e) Individual
MBOs, (f) Net Income, (g) New Orders, (h) Pro Forma Net Income, (i)
Return on Designated Assets, and (j) Return on Sales.  The Performance
Goals may differ from Participant to Participant and from Award to
Award.

<p>2.32    "Performance Share" means an Award granted to a
Participant pursuant to Section 8.

<p>2.33    "Performance Unit" means an Award granted to a Participant
pursuant to Section 8.

<p>2.34    "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock are subject to restrictions and
therefore, the Shares are subject to a substantial risk of forfeiture.
As provided in Section 7, such restrictions may be based on the passage
of time, the achievement of target levels of performance, or the
occurrence of other events as determined by the Committee, in its
discretion.  Notwithstanding any contrary provision of the Plan, each
Period of Restriction shall have a duration of not less than three
years from the Grant Date unless otherwise approved by the holders of a
majority of the Shares which are present in person or by proxy and
entitled to vote at any Annual or Special Meeting of Stockholders, or
unless approved by the Committee at its discretion solely by reason of
death, Disability, Retirement or major capital change.

<p>2.35    "Plan" means the Applied Materials, Inc. 1995 Equity
Incentive Plan, as set forth in this instrument and as hereafter
amended from time to time.

<p>2.36    "Pro Forma Net Income" means as to any business unit for
any Fiscal Year, the Controllable Profits of such business unit, minus
allocations of designated corporate expenses.

<p>2.37    "Restricted Stock" means an Award granted to a Participant
pursuant to Section 7.

<p>2.38    "Retirement" means, in the case of an Employee or a
Nonemployee Director: (a) a Termination of Service occurring on or
after age sixty-five (65), or (b) a Termination of Service occurring on
or after age sixty (60) with at least ten (10) Years of Service.
Notwithstanding the preceding, in the case of any Option granted to any
Employee prior to December 10, 1998, "Retirement" means a Termination
of Service by reason of the Employee's retirement at or after his or
her normal retirement date under the Applied Materials, Inc. Employee
Savings and Retirement Plan, or any successor plan.  With respect to a
Consultant, no Termination of Service shall be deemed to be on account
of "Retirement."

<p>2.39    "Return on Designated Assets" means as to any Fiscal Year,
the Pro Forma Net Income of a business unit, divided by the average of
beginning and ending business unit designated assets, or Net Income of
the Company, divided by the average of beginning and ending designated
corporate assets.

<p>2.40    "Return on Sales" means as to any Fiscal Year, the
percentage equal to the Company's Net Income or the business unit's Pro
Forma Net Income, divided by the Company's or the business unit's
Annual Revenue.

<p>2.41    "Rule 16b-3" means Rule 16b-3 promulgated under the 1934
Act, and any future regulation amending, supplementing or superseding
such regulation.

<p>2.42    "Section 16 Person" means a person who, with respect to
the Shares, is subject to Section 16 of the 1934 Act.

<p>2.43    "Shares" means the shares of common stock of the Company.

<p>2.44    "Stock Appreciation Right" or "SAR" means an Award,
granted alone or in connection with a related Option, that pursuant to
Section 7 is designated as an SAR.

<p>2.45    "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock
possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.

<p>2.46    "Tandem SAR" means an SAR that is granted in connection
with a related Option, the exercise of which shall require forfeiture
of the right to purchase an equal number of Shares under the related
Option (and when a Share is purchased under the Option, the SAR shall
be canceled to the same extent).

<p>2.47    "Termination of Service" means (a) in the case of an
Employee, a cessation of the employee-employer relationship between the
Employee and the Company or an Affiliate for any reason, including, but
not by way of limitation, a termination by resignation, discharge,
death, Disability, Retirement, or the disaffiliation of an Affiliate,
but excluding any such termination where there is a simultaneous
reemployment by the Company or an Affiliate; (b) in the case of a
Consultant, a cessation of the service relationship between the
Consultant and the Company or an Affiliate for any reason, including,
but not by way of limitation, a termination by resignation, discharge,
death, Disability, or the disaffiliation of an Affiliate, but excluding
any such termination where there is a simultaneous re-engagement of the
consultant by the Company or an Affiliate; and (c) in the case of a
Nonemployee Director, a cessation of the Director's service on the
Board for any reason, including, but not by way of limitation, a
termination by resignation, death, Disability, Retirement or non-
reelection to the Board.

<p>2.48    "Years of Service" means, in the case of an Employee, the
number of full months from the Employee's latest hire date with the
Company or an Affiliate to the date in question, divided by 12.  The
Employee's latest hire date shall be determined after giving effect to
the non-401(k) Plan principles of North American Human Resources Policy
No. 2-06, Re-Employment of Former Employees/Bridging of Service, as
such Policy may be amended or superseded from time to time.  With
respect to a Nonemployee Director, "Years of Service" means the number
of years of continuous service on the Board of Directors.

<p align="center">SECTION 3 <br>

ADMINISTRATION</p>

<p>3.1     The Committee.  The Plan shall be administered by the
Committee.  The Committee shall consist of not less than two (2)
Directors who shall be appointed from time to time by, and shall serve
at the pleasure of, the Board of Directors.  The Committee shall be
comprised solely of Directors who both are (a) "non-employee
directors" under Rule 16b-3, and (b) "outside directors" under
Section 162(m) of the Code.

<p>3.2     Authority of the Committee.  It shall be the duty of the
Committee to administer the Plan in accordance with the Plan's
provisions.  The Committee shall have all powers and discretion
necessary or appropriate to administer the Plan and to control its
operation, including, but not limited to, the power to (a) determine
which Employees and Consultants shall be granted Awards, (b) prescribe
the terms and conditions of the Awards, (c) interpret the Plan and the
Awards, (d) adopt such procedures and subplans as are necessary or
appropriate to permit participation in the Plan by Employees,
Consultants and Directors who are foreign nationals or employed outside
of the United States, (e) adopt rules for the administration,
interpretation and application of the Plan as are consistent therewith,
and (f) interpret, amend or revoke any such rules.

<p>3.3     Delegation by the Committee.  The Committee, in its sole
discretion and on such terms and conditions as it may provide, may
delegate all or any part of its authority and powers under the Plan to
one or more Directors or officers of the Company; provided, however,
that the Committee may not delegate its authority and powers (a) with
respect to Section 16 Persons, or (b) in any way which would jeopardize
the Plan's qualification under Section 162(m) of the Code or Rule 16b-
3.

<p>3.4     Decisions Binding.  All determinations and decisions made
by the Committee, the Board, and any delegate of the Committee pursuant
to the provisions of the Plan shall be final, conclusive, and binding
on all persons, and shall be given the maximum deference permitted by
law.

<p align="center">SECTION 4 <br>

SHARES SUBJECT TO THE PLAN</p>

<p>4.1     Number of Shares.  Subject to adjustment as provided in
Section 4.3, the total number of Shares available for grant under the
Plan shall not exceed 297,200,000.  Shares granted under the Plan may
be either authorized but unissued Shares or treasury Shares.

<p>4.2     Lapsed Awards.  If an Award is settled in cash, or is
cancelled, terminates, expires, or lapses for any reason (with the
exception of the termination of a Tandem SAR upon exercise of the
related Option, or the termination of a related Option upon exercise of
the corresponding Tandem SAR), any Shares subject to such Award again
shall be available to be the subject of an Award.

<p>4.3     Adjustments in Awards and Authorized Shares.  In the event
of any merger, reorganization, consolidation, recapitalization,
separation, liquidation, stock dividend, split-up, Share combination,
or other change in the corporate structure of the Company affecting the
Shares, the Committee shall adjust the number and class of Shares which
may be delivered under the Plan, the number, class, and price of Shares
subject to outstanding Awards, and the numerical limits of Sections
5.1, 6.1, 7.1, 8.1 and 9.1, in such manner as the Committee (in its
sole discretion) shall determine to be appropriate to prevent the
dilution or diminution of such Awards.  Notwithstanding the preceding,
the number of Shares subject to any Award always shall be a whole
number.

<p align="center">SECTION 5 <br>

STOCK OPTIONS</p>

<p>5.1     Grant of Options.  Subject to the terms and provisions of
the Plan, Options may be granted to Employees and Consultants at any
time and from time to time as determined by the Committee in its sole
discretion.  The Committee, in its sole discretion, shall determine the
number of Shares subject to each Option, provided that during any
Fiscal Year, no Participant shall be granted Options covering more than
1,400,000 Shares.  The Committee may grant Incentive Stock Options,
Nonqualified Stock Options, or a combination thereof.

<p>5.2     Award Agreement.  Each Option shall be evidenced by an
Award Agreement that shall specify the Exercise Price, the expiration
date of the Option, the number of Shares to which the Option pertains,
any conditions to exercise of the Option, and such other terms and
conditions as the Committee, in its discretion, shall determine.  The
Award Agreement shall also specify whether the Option is intended to be
an Incentive Stock Option or a Nonqualified Stock Option.

<p>5.3     Exercise Price.  Subject to the provisions of this Section
5.3, the Exercise Price for each Option shall be determined by the
Committee in its sole discretion.

<BLOCKQUOTE>
<p>5.3.1   Nonqualified Stock Options.  In the case of a
Nonqualified Stock Option, the Exercise Price shall be not less than
one hundred percent (100%) of the Fair Market Value of a Share on the
Grant Date.

<p>5.3.2   Incentive Stock Options.  In the case of an Incentive
Stock Option, the Exercise Price shall be not less than one hundred
percent (100%) of the Fair Market Value of a Share on the Grant Date;
provided, however, that if on the Grant Date, the Employee (together
with persons whose stock ownership is attributed to the Employee
pursuant to Section 424(d) of the Code) owns stock possessing more than
10% of the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries, the Exercise Price shall be not
less than one hundred and ten percent (110%) of the Fair Market Value
of a Share on the Grant Date.

<p>5.3.3   Substitute Options.  Notwithstanding the provisions
of Sections 5.3.1 and 5.3.2, in the event that the Company or an
Affiliate consummates a transaction described in Section 424(a) of the
Code (e.g., the acquisition of property or stock from an unrelated
corporation), persons who become Employees or Consultants on account of
such transaction may be granted Options in substitution for options
granted by their former employer.  If such substitute Options are
granted, the Committee, in its sole discretion and consistent with
Section 424(a) of the Code, may determine that such substitute Options
shall have an exercise price less than one hundred percent (100%) of
the Fair Market Value of the Shares on the Grant Date.
</BLOCKQUOTE>

<p>5.4     Expiration of Options.

<BLOCKQUOTE>
<p>5.4.1   Expiration Dates.  Each Option shall terminate no
later than the first to occur of the following events:

<BLOCKQUOTE>
<p>(a)     The date for termination of the Option set
forth in the written Award Agreement; or
<p>(b)     The expiration of ten (10) years from the Grant
Date; or
<p>(c)     The expiration of one (1) year from the date of
the Participant's Termination of Service for a reason other than the
Participant's death, Disability or Retirement; or
<p>(d)     The expiration of three (3) years from the date
of the Participant's Termination of Service by reason of Disability; or
<p>(e)     The expiration of three (3) years from the date
of the Participant's Retirement (except as provided in Section 5.8.2
regarding Incentive Stock Options).
</BLOCKQUOTE>

<p>5.4.2   Death of Participant.  Notwithstanding Section 5.4.1,
if a Participant dies prior to the expiration of his or her Options,
the Committee, in its discretion, may provide that his or her Options
shall be exercisable for up to three (3) years after the date of death.

<p>5.4.3   Committee Discretion.  Subject to the limits of
Sections 5.4.1 and 5.4.2, the Committee, in its sole discretion, (a)
shall provide in each Award Agreement when each Option expires and
becomes unexercisable, and (b) may, after an Option is granted, extend
the maximum term of the Option (subject to Section 5.8.4 regarding
Incentive Stock Options).
</BLOCKQUOTE>

<p>5.5     Exercisability of Options.  Options granted under the Plan
shall be exercisable at such times and be subject to such restrictions
and conditions as the Committee shall determine in its sole discretion.
After an Option is granted, the Committee, in its sole discretion, may
accelerate the exercisability of the Option.  However, in no event may
any Option granted to a Section 16 Person be exercisable until at least
six (6) months following the Grant Date (or such shorter period as may
be permissible while maintaining compliance with Rule 16b-3).

<p>5.6     Payment.  Options shall be exercised by the Participant's
delivery of a written notice of exercise to the Secretary of the
Company (or its designee), setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full
payment for the Shares.
<p>Upon the exercise of any Option, the Exercise Price shall
be payable to the Company in full in cash or its equivalent.  The
Committee, in its sole discretion, also may permit exercise (a) by
tendering previously acquired Shares having an aggregate Fair Market
Value at the time of exercise equal to the total Exercise Price, or (b)
by any other means which the Committee, in its sole discretion,
determines to both provide legal consideration for the Shares, and to
be consistent with the purposes of the Plan.
<p>As soon as practicable after receipt of a written
notification of exercise and full payment for the Shares purchased, the
Company shall deliver to the Participant (or the Participant's
designated broker), Share certificates (which may be in book entry
form) representing such Shares.

<p>5.7     Restrictions on Share Transferability.  The Committee may
impose such restrictions on any Shares acquired pursuant to the
exercise of an Option as it may deem advisable, including, but not
limited to, restrictions related to applicable federal securities laws,
the requirements of any national securities exchange or system upon
which Shares are then listed or traded, or any blue sky or state
securities laws.

<p>5.8     Certain Additional Provisions for Incentive Stock Options.

<BLOCKQUOTE>
<p>5.8.1   Exercisability.  The aggregate Fair Market Value
(determined on the Grant Date(s)) of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by any
Employee during any calendar year (under all plans of the Company and
its Subsidiaries) shall not exceed $100,000.

<p>5.8.2   Termination of Service.  No Incentive Stock Option
may be exercised more than three (3) months after the Participant's
Termination of Service for any reason other than Disability or death,
unless (a) the Participant dies during such three-month period, and (b)
the Award Agreement or the Committee permits later exercise.  No
Incentive Stock Option may be exercised more than one (1) year after
the Participant's Termination of Service on account of Disability,
unless (a) the Participant dies during such one-year period, and (b)
the Award Agreement or the Committee permit later exercise.

<p>5.8.3   Company and Subsidiaries Only.  Incentive Stock
Options may be granted only to persons who are employees of the Company
or a Subsidiary on the Grant Date.

<p>5.8.4   Expiration.  No Incentive Stock Option may be
exercised after the expiration of ten (10) years from the Grant Date;
provided, however, that if the Option is granted to an Employee who,
together with persons whose stock ownership is attributed to the
Employee pursuant to Section 424(d) of the Code, owns stock possessing
more than 10% of the total combined voting power of all classes of the
stock of the Company or any of its Subsidiaries, the Option may not be
exercised after the expiration of five (5) years from the Grant Date.
</BLOCKQUOTE>

<p align="center">SECTION 6 <br>

STOCK APPRECIATION RIGHTS</p>

<p>6.1     Grant of SARs.  Subject to the terms and conditions of the
Plan, an SAR may be granted to Employees and Consultants at any time
and from time to time as shall be determined by the Committee, in its
sole discretion.  The Committee may grant Affiliated SARs, Freestanding
SARs, Tandem SARs, or any combination thereof.

<BLOCKQUOTE>
<p>6.1.1   Number of Shares.  The Committee shall have complete
discretion to determine the number of SARs granted to any Participant,
provided that during any Fiscal Year, no Participant shall be granted
SARs covering more than 700,000 Shares.

<p>6.1.2   Exercise Price and Other Terms.  The Committee,
subject to the provisions of the Plan, shall have complete discretion
to determine the terms and conditions of SARs granted under the Plan.
However, the exercise price of a Freestanding SAR shall be not less
than one hundred percent (100%) of the Fair Market Value of a Share on
the Grant Date.  The exercise price of Tandem or Affiliated SARs shall
equal the Exercise Price of the related Option.  In no event shall an
SAR granted to a Section 16 Person become exercisable until at least
six (6) months after the Grant Date (or such shorter period as may be
permissible while maintaining compliance with Rule 16b-3).
</BLOCKQUOTE>

<p>6.2     Exercise of Tandem SARs.  Tandem SARs may be exercised for
all or part of the Shares subject to the related Option upon the
surrender of the right to exercise the equivalent portion of the
related Option.  A Tandem SAR may be exercised only with respect to the
Shares for which its related Option is then exercisable.  With respect
to a Tandem SAR granted in connection with an Incentive Stock Option:
(a) the Tandem SAR shall expire no later than the expiration of the
underlying Incentive Stock Option; (b) the value of the payout with
respect to the Tandem SAR shall be for no more than one hundred percent
(100%) of the difference between the Exercise Price of the underlying
Incentive Stock Option and the Fair Market Value of the Shares subject
to the underlying Incentive Stock Option at the time the Tandem SAR is
exercised; and (c) the Tandem SAR shall be exercisable only when the
Fair Market Value of the Shares subject to the Incentive Stock Option
exceeds the Exercise Price of the Incentive Stock Option.

<p>6.3     Exercise of Affiliated SARs.  An Affiliated SAR shall be
deemed to be exercised upon the exercise of the related Option.  The
deemed exercise of an Affiliated SAR shall not necessitate a reduction
in the number of Shares subject to the related Option.

<p>6.4     Exercise of Freestanding SARs.  Freestanding SARs shall be
exercisable on such terms and conditions as the Committee, in its sole
discretion, shall determine.  However, no SAR granted to a Section 16
Person shall be exercisable until at least six (6) months after the
Grant Date (or such shorter period as may be permissible while
maintaining compliance with Rule 16b-3).

<p>6.5     SAR Agreement.  Each SAR grant shall be evidenced by an
Award Agreement that shall specify the exercise price, the term of the
SAR, the conditions of exercise, and such other terms and conditions as
the Committee, in its sole discretion, shall determine.

<p>6.6     Expiration of SARs.  An SAR granted under the Plan shall
expire upon the date determined by the Committee, in its sole
discretion, and set forth in the Award Agreement.  Notwithstanding the
foregoing, the rules of Section 5.4 also shall apply to SARs.

<p>6.7     Payment of SAR Amount.  Upon exercise of an SAR, a
Participant shall be entitled to receive payment from the Company in an
amount determined by multiplying:

<BLOCKQUOTE>
<p>(a)     The difference between the Fair Market Value of a
Share on the date of exercise over the exercise price; times
<p>(b)     The number of Shares with respect to which the SAR is
exercised.
</BLOCKQUOTE>

<p>At the discretion of the Committee, the payment upon SAR
exercise may be in cash, in Shares of equivalent value, or in some
combination thereof.

<p align="center">SECTION 7 <br>

RESTRICTED STOCK</P>

<p>7.1     Grant of Restricted Stock.  Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to
time, may grant Shares of Restricted Stock to Employees and Consultants
in such amounts as the Committee, in its sole discretion, shall
determine.  The Committee, in its sole discretion, shall determine the
number of Shares to be granted to each Participant, provided that
during any Fiscal Year, no Participant shall receive more than 350,000
Shares of Restricted Stock.

<p>7.2     Restricted Stock Agreement.  Each Award of Restricted Stock
shall be evidenced by an Award Agreement that shall specify the Period
of Restriction, the number of Shares granted, and such other terms and
conditions as the Committee, in its sole discretion, shall determine.
Unless the Committee determines otherwise, Shares of Restricted Stock
shall be held by the Company as escrow agent until the restrictions on
such Shares have lapsed.

<p>7.3     Transferability.  Except as provided in this Section 7,
Shares of Restricted Stock may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction.  However, in no event may the
restrictions on Restricted Stock granted to a Section 16 Person lapse
prior to six (6) months following the Grant Date (or such shorter
period as may be permissible while maintaining compliance with Rule
16b-3).

<p>7.4     Other Restrictions.  The Committee, in its sole discretion,
may impose such other restrictions on Shares of Restricted Stock as it
may deem advisable or appropriate, in accordance with this Section 7.4.

<BLOCKQUOTE>
<p>7.4.1   General Restrictions.  The Committee may set
restrictions based upon the achievement of specific performance
objectives (Company-wide, divisional, or individual), applicable
federal or state securities laws, or any other basis determined by the
Committee in its discretion.

<p>7.4.2   Section 162(m) Performance Restrictions.  For
purposes of qualifying grants of Restricted Stock as "performance-
based compensation" under Section 162(m) of the Code, the Committee,
in its discretion, may set restrictions based upon the achievement of
Performance Goals.  The Performance Goals shall be set by the Committee
on or before the latest date permissible to enable the Restricted Stock
to qualify as "performance-based compensation" under Section 162(m) of
the Code.  In granting Restricted Stock which is intended to qualify
under Section 162(m) of the Code, the Committee shall follow any
procedures determined by it from time to time to be necessary or
appropriate to ensure qualification of the Restricted Stock under
Section 162(m) of the Code (e.g., in determining the Performance
Goals).

<p>7.4.3   Legend on Certificates.  The Committee, in its
discretion, may legend the certificates representing Restricted Stock
to give appropriate notice of such restrictions.  For example, the
Committee may determine that some or all certificates representing
Shares of Restricted Stock shall bear the following legend:
<p>"The sale or other transfer of the shares of stock
represented by this certificate, whether voluntary,
involuntary, or by operation of law, is subject to certain
restrictions on transfer as set forth in the Applied
Materials, Inc. 1995 Equity Incentive Plan, and in a
Restricted Stock Agreement.  A copy of the Plan and such
Restricted Stock Agreement may be obtained from the
Secretary of Applied Materials, Inc."
</BLOCKQUOTE>

<p>7.5     Removal of Restrictions.  Except as otherwise provided in
this Section 7, Shares of Restricted Stock covered by each Restricted
Stock grant made under the Plan shall be released from escrow as soon
as practicable after the last day of the Period of Restriction.
Subject to the minimum Period of Restriction specified in Section 2.35,
the Committee, in its discretion, may accelerate the time at which any
restrictions shall lapse or be removed.  After the restrictions have
lapsed, the Participant shall be entitled to have any legend or legends
under Section 7.4.3 removed from his or her Share certificate, and the
Shares shall be freely transferable by the Participant.

<p>7.6     Voting Rights.  During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may
exercise full voting rights with respect to those Shares, unless the
Committee determines otherwise.

<p>7.7     Dividends and Other Distributions.  During the Period of
Restriction, Participants holding Shares of Restricted Stock shall be
entitled to receive all dividends and other distributions paid with
respect to such Shares unless otherwise provided in the Award
Agreement.  If any such dividends or distributions are paid in Shares,
the Shares shall be subject to the same restrictions on transferability
and forfeitability as the Shares of Restricted Stock with respect to
which they were paid.
<p>With respect to Restricted Stock granted to a Section 16
Person, any dividend or distribution that constitutes a "derivative
security" or an "equity security" under Section 16 of the 1934 Act
shall be subject to a Period of Restriction equal to the longer of:
(a) the remaining Period of Restriction on the Shares of Restricted
Stock with respect to which the dividend or distribution is paid; or
(b) six (6) months.

<p>7.8     Return of Restricted Stock to Company.  On the date set
forth in the Award Agreement, the Restricted Stock for which
restrictions have not lapsed shall revert to the Company and again
shall become available for grant under the Plan.

<p align="center">SECTION 8 <br>

PERFORMANCE UNITS AND PERFORMANCE SHARES</p>

<p>8.1     Grant of Performance Units/Shares.  Performance Units and
Performance Shares may be granted to Employees and Consultants at any
time and from time to time, as shall be determined by the Committee, in
its sole discretion.  The Committee shall have complete discretion in
determining the number of Performance Units and Performance Shares
granted to each Participant provided that during any Fiscal Year, (a)
no Participant shall receive Performance Units having an initial value
greater than $3,000,000, and (b) no Participant shall receive more than
350,000 Performance Shares.

<p>8.2     Value of Performance Units/Shares.  Each Performance Unit
shall have an initial value that is established by the Committee on or
before the Grant Date.  Each Performance Share shall have an initial
value equal to the Fair Market Value of a Share on the Grant Date.

<p>8.3     Performance Objectives and Other Terms.  The Committee
shall set performance objectives in its discretion which, depending on
the extent to which they are met, will determine the number or value of
Performance Units/Shares that will be paid out to the Participants.
The time period during which the performance objectives must be met
shall be called the "Performance Period."  Performance Periods of
Awards granted to Section 16 Persons shall, in all cases, exceed six
(6) months in length (or such shorter period as may be permissible
while maintaining compliance with Rule 16b-3).  Each Award of
Performance Units/Shares shall be evidenced by an Award Agreement that
shall specify the Performance Period, and such other terms and
conditions as the Committee, in its sole discretion, shall determine.

<BLOCKQUOTE>
<p>8.3.1   General Performance Objectives.  The Committee may
set performance objectives based upon the achievement of Company-wide,
divisional, or individual goals, applicable federal or state securities
laws, or any other basis determined by the Committee in its discretion.

<p>8.3.2   Section 162(m) Performance Objectives.  For purposes
of qualifying grants of Performance Units/Shares as "performance-based
compensation" under Section 162(m) of the Code, the Committee, in its
discretion, may determine that the performance objectives applicable to
Performance Units/Shares shall be based on the achievement of
Performance Goals.  The Performance Goals shall be set by the Committee
on or before the latest date permissible to enable the Performance
Units/Shares to qualify as "performance-based compensation" under
Section 162(m) of the Code.  In granting Performance Units/Shares which
are intended to qualify under Section 162(m) of the Code, the Committee
shall follow any procedures determined by it from time to time to be
necessary or appropriate to ensure qualification of the Performance
Units/Shares under Section 162(m) of the Code (e.g., in determining the
Performance Goals).
</BLOCKQUOTE>

<p>8.4     Earning of Performance Units/Shares.  After the applicable
Performance Period has ended, the holder of Performance Units/Shares
shall be entitled to receive a payout of the number of Performance
Units/Shares earned by the Participant over the Performance Period, to
be determined as a function of the extent to which the corresponding
performance objectives have been achieved.  After the grant of a
Performance Unit/Share, the Committee, in its sole discretion, may
reduce or waive any performance objectives for such Performance
Unit/Share; provided, however, that Performance Periods of Awards
granted to Section 16 Persons shall not be less than six (6) months (or
such shorter period as may be permissible while maintaining compliance
with Rule 16b-3).

<p>8.5     Form and Timing of Payment of Performance Units/Shares.
Payment of earned Performance Units/Shares shall be made as soon as
practicable after the expiration of the applicable Performance Period.
The Committee, in its sole discretion, may pay earned Performance
Units/Shares in the form of cash, in Shares (which have an aggregate
Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period) or in a
combination thereof.

<p>8.6     Cancellation of Performance Units/Shares.  On the date set
forth in the Award Agreement, all unearned or unvested Performance
Units/Shares shall be forfeited to the Company, and again shall be
available for grant under the Plan.

<p align="center">SECTION 9 <br>

NONEMPLOYEE DIRECTOR OPTIONS</p>

<p>The provisions of this Section 9 are applicable only to Options
granted to Nonemployee Directors.  The provisions of Section 5 are
applicable to Options granted to Employees and Consultants (and to the
extent provided in Section 9.2.8, to Options granted to Nonemployee
Directors).

<p>9.1     Granting of Options.

<BLOCKQUOTE>
<p>9.1.1   Initial Grants.  Each Nonemployee Director who first
becomes a Nonemployee Director on or after the effective date of this
Plan, automatically shall receive, as of the date that the individual
first is appointed or elected as a Nonemployee Director, an Option to
purchase 24,000 Shares.

<p>9.1.2   Ongoing Grants.  Each Nonemployee Director who both
(a) is a Nonemployee Director on the last business day of a Fiscal
Year, and (b) has served as a Nonemployee Director for the entire
Fiscal Year which includes such last business day, automatically shall
receive, as of such last business day only, an Option to purchase
14,000 Shares.
</BLOCKQUOTE>

<p>9.2     Terms of Options.

<BLOCKQUOTE>
<p>9.2.1   Option Agreement.  Each Option granted pursuant to
this Section 9 shall be evidenced by a written Award Agreement between
the Participant and the Company.

<p>9.2.2   Exercise Price.  The Exercise Price for the Shares
subject to each Option granted pursuant to this Section 9 shall be 100%
of the Fair Market Value of such Shares on the Grant Date.

<p>9.2.3   Exercisability.

<BLOCKQUOTE>
<p>(a)     Each Option granted pursuant to Section 9.1.1
shall become exercisable as to 7,200 Shares on the first anniversary of
the Grant Date, as to an additional 6,600 Shares on the second
anniversary of the Grant Date, as to an additional 6,000 Shares on the
third anniversary of the Grant Date, and as to the remaining 4,200
Shares on the fourth anniversary of the Grant Date.

<p>(b)     Each Option granted pursuant to Section 9.1.2
shall become exercisable as to 3,500 Shares on the first anniversary of
the Grant Date, and as to an additional 3,500 Shares on each succeeding
anniversary until 100% of the Shares subject to such Option have become
exercisable.
<p>Notwithstanding the preceding, once a Participant ceases to be a
Director, his or her Options which are not then exercisable shall never
become exercisable and shall be immediately forfeited, except to the
limited extent provided in the Sections 9.2.4 and 9.2.6.
</BLOCKQUOTE>

<p>9.2.4   Retirement of Participant.  In the event that a
Participant is age sixty (60) or over and has completed at least ten
(10) Years of Service and then incurs a Termination of Service due to
Retirement, the right to exercise all or a portion of any Shares
subject to his or her Options that remain unexercisable immediately
prior to such Retirement shall accrue on the date of Retirement in
accordance with the following rules.  If the Participant has less than
fifteen (15) Years of Service as of the date of his or her Retirement,
fifty percent (50% )of the Shares that otherwise would have vested
during the twelve (12) months immediately following the Retirement (had
the Participant remained a Nonemployee Director throughout such 12
month period) shall vest on the Retirement date.  If the Participant
has at least fifteen (15) (but less than twenty (20)) Years of Service
as of the date of the Retirement, one hundred percent (100%) of the
Shares that otherwise would have vested during the twelve (12) months
immediately following the Retirement (had the Participant remained a
Nonemployee Director throughout such 12 month period) shall vest on the
Retirement date.  If the Participant has at least twenty (20) (but less
than twenty-five (25)) Years of Service as of the date of the
Retirement, (a) one hundred percent (100%) of the Shares that otherwise
would have vested during the twelve (12) months immediately following
the Retirement (had the Participant remained a Nonemployee Director
throughout such 12 month period) shall vest on the Retirement date, and
(b) fifty percent (50%) of the Shares that otherwise would have vested
during the second twelve (12) months following the Retirement (had the
Participant remained a Nonemployee Director throughout such 12 month
period) shall vest on the Retirement date.  If the Participant has at
least twenty-five (25) Years of Service as of the date of the
Retirement, one hundred percent (100%) of the Shares that otherwise
would have vested during the twenty-four (24) months immediately
following the Retirement (had the Participant remained a Nonemployee
Director throughout such 24 month period) shall vest on the Retirement
date.

<p>9.2.5   Expiration of Options.  Each Option granted pursuant
to this Section 9 shall terminate upon the first to occur of the
following events:

<BLOCKQUOTE>
<p>(a)     The expiration of five (5) years or (in the
case of any Option granted after October 10, 2000) seven (7) years from
the Grant Date; or
<p>(b)     The expiration of seven (7) months from the
date of the Participant's Termination of Service for any reason other
than the Participant's death, Disability or Retirement; or
<p>(c)     The expiration of one (1) year from the date of
the Participant's Termination of Service by reason of Disability or
Retirement.
</BLOCKQUOTE>

<p>9.2.6   Death of Participant.  Notwithstanding the provisions
of Section 9.2.5, if a Participant dies prior to the expiration of his
or her Options in accordance with Section 9.2.5, then (a) one hundred
percent (100%) of the Shares covered by his or her Options shall
immediately become one hundred percent (100%) exercisable, and (b) his
or her Options shall terminate one (1) year after the date of his or
her death.

<p>9.2.7   Not Incentive Stock Options.  Options granted
pursuant to this Section 9 shall not be designated as Incentive Stock
Options.

<p>9.2.8   Other Terms.  All provisions of the Plan not
inconsistent with this Section 9 shall apply to Options granted to
Nonemployee Directors.
</BLOCKQUOTE>

<p align="center">SECTION 10 <br>

MISCELLANEOUS</p>

<p>10.1    Deferrals.  The Committee, in its sole discretion, may
permit a Participant to defer receipt of the payment of cash or the
delivery of Shares that would otherwise be due to such Participant
under an Award.  Any such deferral elections shall be subject to such
rules and procedures as shall be determined by the Committee in its
sole discretion.

<p>10.2    No Effect on Employment or Service.  Nothing in the Plan
shall interfere with or limit in any way the right of the Company to
terminate any Participant's employment or service at any time, with or
without cause.  For purposes of the Plan, transfer of employment of a
Participant between the Company and any one of its Affiliates (or
between Affiliates) shall not be deemed a Termination of Service.
Employment with the Company and its Affiliates is on an at-will basis
only.

<p>10.3    Participation.  No Employee or Consultant shall have the
right to be selected to receive an Award under this Plan, or, having
been so selected, to be selected to receive a future Award.

<p>10.4    Indemnification.  Each person who is or shall have been a
member of the Committee, or of the Board, shall be indemnified and held
harmless by the Company against and from (a) any loss, cost, liability,
or expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the
Plan or any Award Agreement, and (b) from any and all amounts paid by
him or her in settlement thereof, with the Company's approval, or paid
by him or her in satisfaction of any judgment in any such claim,
action, suit, or proceeding against him or her, provided he or she
shall give the Company an opportunity, at its own expense, to handle
and defend the same before he or she undertakes to handle and defend it
on his or her own behalf.  The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such
persons may be entitled under the Company's Certificate of
Incorporation or Bylaws, by contract, as a matter of law, or otherwise,
or under any power that the Company may have to indemnify them or hold
them harmless.

<p>10.5    Successors.  All obligations of the Company under the Plan,
with respect to Awards granted hereunder, shall be binding on any
successor to the Company, whether the existence of such successor is
the result of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business or assets of the
Company.

<p>10.6    Beneficiary Designations.  If permitted by the Committee, a
Participant under the Plan may name a beneficiary or beneficiaries to
whom any vested but unpaid Award shall be paid in the event of the
Participant's death.  Each such designation shall revoke all prior
designations by the Participant and shall be effective only if given in
a form and manner acceptable to the Committee.  In the absence of any
such designation, any vested benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate and,
subject to the terms of the Plan and of the applicable Award Agreement,
any unexercised vested Award may be exercised by the administrator or
executor of the Participant's estate.

<p>10.7    Limited Transferability of Awards.  No Award granted under
the Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will, by the laws of descent
and distribution, or to the limited extent provided in Section 10.6.
All rights with respect to an Award granted to a Participant shall be
available during his or her lifetime only to the Participant.
Notwithstanding the foregoing, the Participant may, in a manner
specified by the Committee, (a) transfer a Nonqualified Stock Option to
a Participant's spouse, former spouse or dependent pursuant to a court-
approved domestic relations order which relates to the provision of
child support, alimony payments or marital property rights, and
(b) transfer a Nonqualified Stock Option by bona fide gift and not for
any consideration, to (i) a member or members of the Participant's
immediate family, (ii) a trust established for the exclusive benefit of
the Participant and/or member(s) of the Participant's immediate family,
(iii) a partnership, limited liability company of other entity whose
only partners or members are the Participant and/or member(s) of the
Participant's immediate family, or (iv) a foundation in which the
Participant an/or member(s) of the Participant's immediate family
control the management of the foundation's assets.

<p>10.8    No Rights as Stockholder.  Except to the limited extent
provided in Sections 7.6 and 7.7, no Participant (nor any beneficiary)
shall have any of the rights or privileges of a stockholder of the
Company with respect to any Shares issuable pursuant to an Award (or
exercise thereof), unless and until certificates representing such
Shares shall have been issued, recorded on the records of the Company
or its transfer agents or registrars, and delivered to the Participant
(or beneficiary).

<p align="center">SECTION 11 <br>

AMENDMENT, TERMINATION, AND DURATION</p>

<p>11.1    Amendment, Suspension, or Termination.  The Board, in its
sole discretion, may amend, suspend or terminate the Plan, or any part
thereof, at any time and for any reason.  The amendment, suspension, or
termination of the Plan shall not, without the consent of the
Participant, alter or impair any rights or obligations under any Award
theretofore granted to such Participant.  No Award may be granted
during any period of suspension or after termination of the Plan.

<p>11.2    Duration of the Plan.  The amended and restated Plan shall
be effective as of April 16, 2002, and subject to Section 11.1
(regarding the Board's right to amend or terminate the Plan), shall
remain in effect thereafter.  However, without further stockholder
approval, no Incentive Stock Option may be granted under the Plan after
December 6, 2004.

<p align="center">SECTION 12 <br>

TAX WITHHOLDING</p>

<p>12.1    Withholding Requirements.  Prior to the delivery of any
Shares or cash pursuant to an Award (or exercise thereof), the Company
shall have the power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy
federal, state, and local taxes (including the Participant's FICA
obligation) required to be withheld with respect to such Award (or
exercise thereof).

<p>12.2    Withholding Arrangements.  The Committee, in its sole
discretion and pursuant to such procedures as it may specify from time
to time, may permit a Participant to satisfy such tax withholding
obligation, in whole or in part by (a) electing to have the Company
withhold otherwise deliverable Shares, or (b) delivering to the Company
already-owned Shares having a Fair Market Value equal to the amount
required to be withheld.  The amount of the withholding requirement
shall be deemed to include any amount which the Committee agrees may be
withheld at the time the election is made, not to exceed the amount
determined by using the maximum federal, state or local marginal income
tax rates applicable to the Participant with respect to the Award on
the date that the amount of tax to be withheld is to be determined.
The Fair Market Value of the Shares to be withheld or delivered shall
be determined as of the date that the taxes are required to be
withheld.

<p align="center">SECTION 13 <br>

LEGAL CONSTRUCTION</p>

<p>13.1    Gender and Number.  Except where otherwise indicated by the
context, any masculine term used herein also shall include the
feminine; the plural shall include the singular and the singular shall
include the plural.

<p>13.2    Severability.  In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision had not
been included.

<p>13.3    Requirements of Law.  The granting of Awards and the
issuance of Shares under the Plan shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.

<p>13.4    Securities Law Compliance.  With respect to Section 16
Persons, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3.  To the extent any provision of
the Plan, Award Agreement or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee.

<p>13.5    Governing Law.  The Plan and all Award Agreements shall be
construed in accordance with and governed by the laws of the State of
California.

<p>13.6    Captions.  Captions are provided herein for convenience
only, and shall not serve as a basis for interpretation or construction
of the Plan.

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