Exhibit 10.1


Veeco
Instruments Inc.
2006 Long-Term Cash Incentive Plan


1. Plan Objective


The Veeco Instruments Inc. 2006 Long-Term Cash
Incentive Plan (the “Plan”) is designed to encourage results-oriented actions
on the part of key executives of Veeco Instruments Inc. and its
subsidiaries (collectively, the “Company”) that will drive the achievement of
specific business objectives.


2. Definitions


“Administrator” means the Committee or such individual or committee
to which authority has been delegated in writing; provided that determinations
made under Section 5(d) and Section 6 shall be made by the Committee.
The Chief Executive Officer of the Company may exercise the powers of the
Administrator to designate Participants for the Plan (other than Section 16
Executives) and to determine target awards and performance goals for such
Participants.


“Board”  means the Board of Directors of Veeco Instruments Inc.


“Code”  means the Internal Revenue Code of 1986, as amended
from time to time.


“Committee”
means the Compensation Committee of the Board,
which is comprised wholly of independent, outside directors.


“Designated Beneficiary”
means the beneficiary designated by a
Participant, in a manner determined by the Company, to receive amounts due the
Participant in the event of the Participant’s death.  In the absence of an
effective designation by the Participant, Designated Beneficiary shall mean the
Participant’s estate.


“Disability” means permanent and total disability within the
meaning of Section 105(d)(4) of the Code.


“Eligible Employee”
means a full-time, regular
employee of the Company.


“Employer” means the Company and any affiliate whose employees
participate in the Plan.  The term shall also mean any successor to the
Company.


“Fiscal Year”
means the fiscal year of the Company.


“Participant” means an Eligible Employee designated by the
Administrator to receive an award under the Plan.


“Performance Goals”
means the objective(s) established by the
Committee for a Performance Period. 
Performance Goals shall be objective and measurable criteria, deemed by
the Committee to be closely linked to long-term shareholder value, such as
Earnings Before Interest, Taxes and Amortization (“EBITA”), Revenue or other
performance measures.


“Performance Period” means the period of years selected by the Committee
during which Performance Goals are measured for purposes of determining the
extent to which a Participant has earned his or her Target Bonus or any portion
or multiple of it.  A Performance Period must be at least two years in
length.


“Period to Date
Performance” means the
Company’s performance for each of the Performance Goals as measured from the
beginning of the Performance Period to the end of the most recently completed
fiscal quarter.


“Section 16
Executive” means an employee
who is subject to the reporting requirements of Section 16 of the
Securities Exchange Act of 1934, as amended.









 



“Target Bonus” means
the dollar amount specified for each Participant for each Performance Period.


“Termination of Employment”
means the date on which a Participant shall
cease to serve as an Eligible Employee for any reason.


3. Administration


(a) The Administrator shall have full power and
authority to establish the rules and regulations relating to the Plan, to
interpret the Plan and those rules and regulations, to designate Performance
Periods and Participants for the Plan, to determine each Participant’s target
award, performance goals and final award, to make all factual and other
determinations in connection with the Plan, and to take all other actions
necessary or appropriate for the proper administration of the Plan, including
the delegation of such authority or power, where appropriate.


(b) All powers of the Administrator shall be
executed in its sole discretion, in the best interest of the Company, not as a
fiduciary, and in keeping with the objectives of the Plan and need not be
uniform as to similarly situated individuals. The Administrator’s
administration of the Plan, including all such rules and regulations,
interpretations, selections, determinations, approvals, decisions, delegations,
amendments, terminations and other actions, shall be final and binding on the
Company and all employees of the Company, including the Participants and their
respective beneficiaries.


4. Target Awards and Performance Goals


(a) The Administrator shall establish the Performance
Period and the performance goals for each Performance Period and shall
establish for each Participant a target award that will be payable if and to
the extent that the Company attains such performance goals for the specified
Performance Period.


(b) The Administrator may establish appropriate
terms and conditions to accommodate newly eligible employees (e.g., newly hired
or promoted employees). Unless otherwise determined by the Administrator, the
target award for a newly eligible employee shall be prorated based on a
fraction, the numerator of which is the number of months such Participant will
participate in the Plan during the Performance Period (rounded to the nearest
whole month) and the denominator of which is equal to the total number of
months in such Performance Period.


(c) Target awards under the Plan shall be expressed as
a percent of the Participant’s base salary in effect on January 1st of the first fiscal year of the Performance
Period, except for Participants who become eligible during the Performance
Period (as a result of their hire or promotion date), in which case the base
salary in effect at the time of commencement of participation shall be used.


5. Calculation of Incentive
Awards


(a) At the end of the Performance Period, the
Administrator shall determine whether and to what extent the performance goals
have been met based on the Company’s cumulative performance for the Performance
Period. The Administrator shall then determine the percentage of the target
award that is earned for the Performance Period based on such cumulative
performance.


(b) Participants must be employed on the last day
of the applicable Performance Period in order to be eligible to receive an incentive
award under the Plan with respect to that Performance Period, except as
otherwise provided in this Plan, by written agreement between the Company and a
Participant or as the Administrator may 
determine.


(c) If a Participant terminates employment as a result
of death, Disability, or retirement, he or she (or his or her Designated
Beneficiary, in the event of death) shall receive a pro-rated award at the end
of the Performance Period based on the Company’s cumulative performance for the
Performance Period and pro-rated based on the length of service during the
Performance Period as compared to the entire Performance Period, rounded to the




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nearest whole month. For the purpose of this Plan,
retirement shall mean any voluntary termination of employment on or after
age 60, provided the Participant has completed at least one full year of
service during the Performance Period.


(d) If a “Change
in Control” of the Company (as that term is defined in the Veeco Instruments Inc.
2000 Stock Incentive Plan, as it may be amended from time to time) occurs
during the Performance Period, the following provisions shall apply:


1.                  If the Committee
determines that it would be impracticable to continue the Plan following the
Change in Control, then each Participant will receive a pro-rated award,
calculated by the Committee based on the Company’s Period-to-Date Performance
as of the date of the Change in Control, pro-rated based on the length of
service of such Participant during the Performance Period as compared to the
entire Performance Period, rounded to the nearest whole month.  This award will be paid as soon as
practicable thereafter.


2.                  A Participant
whose employment is terminated by the Company without cause within twelve (12)
months following the Change in Control will receive a pro-rated award,
calculated by the Committee based on the Company’s Period-to-Date Performance
as of the later of the Participant’s termination or the date of the Change in
Control, pro-rated based on the length of service during the Performance Period
as compared to the entire Performance Period, rounded to the nearest whole
month.  This award will be paid as soon
as practicable thereafter.


3.                  In all other
cases, the Plan shall continue following the Change of Control, except to the
extent adjusted or amended under Section 6 or 7 below.


(e) Amounts earned under the terms of the Plan
shall be paid to Participants in cash in a single lump sum amount, on or before
March 15th of the year following the end of the
Performance Period.


6. Changes to Performance
Goals and Target Awards


At any time prior to the final determination of
awards, the Committee may adjust the performance goals and target awards to
reflect a change in corporate capitalization (such as a stock split or stock
dividend), or a corporate transaction (such as a change in control, merger,
consolidation, separation, reorganization or partial or complete liquidation),
or to reflect equitably the occurrence of any extraordinary event, any change
in applicable accounting rules or principles, any change in the Company’s
method of accounting, any change in applicable law, any change due to any
merger, consolidation, acquisition, reorganization, stock split, stock
dividend, combination of shares or other changes in the Company’s corporate
structure or shares, or any other change of a similar nature.


7. Amendments and
Termination


The Company may at any time amend or terminate the
Plan by action of the Committee; provided that no such action shall adversely
affect any outstanding awards to Participants. The Committee shall have the
right to modify the terms of the Plan as may be necessary or desirable to
comply with the laws or local customs of countries in which the Company
operates or has employees.


8. Miscellaneous
Provisions


(a) This Plan is not a contract between the
Company and the Participants. Neither the establishment of this Plan, nor any
action taken hereunder, shall be construed as giving any Participant any right
to be retained in the employ of the Company or any of its subsidiaries. Nothing
in the Plan, and no action taken pursuant to the Plan, shall affect the right
of the Company or a subsidiary to terminate a Participant’s employment at any
time and for any or no reason. Except as provided in Section 7, the
Company is under no obligation to continue the Plan.


(b) A Participant’s right and interest under the
Plan may not be assigned or transferred, except upon death as provided in Section 5(c)
above, and any attempted assignment or transfer shall be null and void and
shall 



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extinguish, in the Company’s sole discretion, the
Company’s obligation under the Plan to pay awards with respect to the
Participant. The Company’s obligations under the Plan may be assigned to any
corporation which acquires all or substantially all of the assets of the
Company or, with respect to a particular Participant, of the business unit that
employed the Participant, or any corporation into which the Company may be
merged or consolidated.


(c) The Plan shall be unfunded. The Company shall
not be required to establish any special or separate fund, or to make any other
segregation of assets, to assure payment of awards. The Company’s obligations
hereunder shall constitute a general, unsecured obligation, awards shall be
paid solely out of the Company’s general assets, and no Participant shall have
any right to any specific assets of the Company.


(d) The Company shall have the right to deduct from
awards or any other payments of wages any and all federal, state and local
taxes or other amounts required by law to be withheld.


(e) The Company’s obligation to pay compensation
as herein provided is subject to any applicable orders, rules or regulations of
any government agency or office having authority to regulate the payment of
wages, salaries, and other forms of compensation.


(f) Upon a violation by the Participant of any of the
restrictive covenants contained in any agreement between the Participant and
the Company, the Participant shall forfeit his or her entitlement to any award
granted pursuant to this Plan.  The Administrator
may, in its sole discretion, waive in whole or in part the Company’s right to
enforce forfeiture under this section, but no such waiver shall be effective
unless expressly made in writing for that purpose.


(g) The Company may, to the extent permitted by law,
deduct from and set off against its obligations to a Participant hereunder
(including, without limitation, amounts payable in connection with an award
hereunder as wages or benefits or other form of compensation), any amounts the
Participant owes to the Company for any reason whatsoever and such Participant
shall remain liable for any portion of the Participant’s obligation not
satisfied by such setoff.  By accepting
an award under this Plan, each Participant agrees to the deduction or setoff
provided for in this section.


(h) If the Committee, in its sole discretion,
determines that any provision of the Plan could cause any payment to be made or
benefit to be provided to a Participant to be deferred compensation that does
not comply with Section 409A(a)(1) of the Code, such provision shall be
null and void, and, if permitted by Section 409A, the Committee shall
amend the Plan to maintain to the maximum extent practicable the original
intent of the provision without violating the requirements of Section 409A
of the Code.


(i) The validity, construction, interpretation
and effect of the Plan shall exclusively be governed by and determined in
accordance with the laws of the State of Delaware.


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