EXHIBIT 10.16



Ultratech
Stepper, Inc.
3050 Zanker Road
San Jose, CA 95134

Gentlemen:

This
letter is to confirm that WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank"), subject to all terms and conditions contained herein, has agreed to make the credit described below
available to Ultratech Stepper, Inc. ("Borrower"):

1.    A
revolving line of credit under which Bank will make advances to Borrower from time to time up to and including June 30, 2003, not to exceed at any time the
maximum principal amount of Eight Million Dollars ($8,000,000.00) ("Line of Credit"), the proceeds of which shall be used for working capital requirements.

I.    CREDIT TERMS:



(a)Line of Credit Note.Borrower's obligation to repay advances under the Line of Credit shall be evidenced by
a promissory note substantially in the form of Exhibit A attached hereto ("Line of Credit Note"), all terms of which are incorporated herein by this reference.

(b)Letter of Credit Subfeature.As a subfeature under the Line of Credit, Bank agrees from time to time during
the term thereof to issue or cause an affiliate to issue standby letters of credit for the account of Borrower (each, a "Letter of Credit" and collectively, "Letters of Credit"); provided however,
that the aggregate undrawn amount of all outstanding Letters of Credit shall not at any time exceed Eight Million Dollars ($8,000,000.00). The form and substance of each Letter of Credit shall be
subject to approval by Bank, in its sole discretion. No Letter of Credit shall have an expiration date subsequent to the maturity date of the Line of Credit. The undrawn amount of all Letters of
Credit shall be reserved under the Line of Credit and shall not be available for borrowings thereunder. Each Letter of Credit shall be subject to the additional terms and conditions of the Letter of
Credit agreements, applications and any related documents required by Bank in connection with the issuance thereof. Each draft paid under a Letter of Credit shall be deemed an advance under the Line
of Credit and shall be repaid by Borrower in accordance with the terms and conditions of this letter applicable to such advances; provided however, that if advances under the Line of Credit are not
available, for any reason, at the time any draft is paid, then Borrower shall immediately pay to Bank the full amount of such draft, together with interest thereon from the date such draft is paid to
the date such amount is fully repaid by Borrower, at the rate of interest applicable to advances under the Line of Credit. In such event Borrower agrees that Bank, in its sole discretion, may debit
any deposit account maintained by Borrower with Bank for the amount of any such draft.

(c)Borrowing and Repayment.Borrower may from time to time during the term of the Line of Credit borrow,
partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that the
total outstanding borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth above.



As security for all indebtedness of Borrower to Bank subject hereto, Borrower hereby grants to Bank security interests of first priority in all Borrower's
accounts receivable and other rights to payment, general intangibles, inventory and equipment.

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All
of the foregoing shall be evidenced by and subject to the terms of such security agreements, financing statements, deeds of trust and other documents as Bank shall reasonably
require, all in form and substance satisfactory to Bank. Borrower shall reimburse Bank immediately upon demand for all costs and expenses incurred by Bank in connection with any of the foregoing
security, including without limitation, filing and recording fees and costs of appraisals, audits and title insurance.



Borrower shall cause each domestic entity to which Borrower has made a capital contribution or transferred assets to execute and deliver to Bank a guaranty in
form and content acceptable to Bank of Borrower's obligations to Bank within 60 days after the book value of such entity's assets first exceeds 5.00% of the book value of Borrower's
consolidated assets (inclusive, without limitation, of all such entities' assets).

II.    INTEREST/FEES:

1.Interest.The outstanding principal balance of each credit subject hereto shall bear interest, at the rate of
interest set forth in each promissory note or other instrument executed in connection therewith.

2.Computation and Payment.Interest shall be computed on the basis of a 360-day year, actual days
elapsed. Interest shall be payable at the times and place set forth in each promissory note or other instrument required hereby.

3.Unused Commitment Fee.Borrower shall pay to Bank a fee equal to one-quarter of one percent
(0.25%) per annum (computed on the basis of a 360-day year, actual days elapsed) on the average daily unused amount of the Line of Credit, which fee shall be calculated on a quarterly
basis by Bank and shall be due and payable by Borrower in arrears within seven (7) days after each billing is sent by Bank.

4.Letter of Credit Fees.Borrower shall pay to Bank (a) fees upon the issuance of each Letter of Credit
equal to one and three-quarters of one percent (1.75%) per annum (computed on the basis of a 360-day year, actual days elapsed) of the face amount thereof, and (b) fees upon the
payment or negotiation of each draft under any Letter of Credit and fees upon the occurrence of any other activity with respect to any Letter of Credit (including without limitation, the transfer,
amendment or cancellation of any Letter of Credit) determined in accordance with Bank's standard fees and charges then in effect for such activity.

5.Collection of Payments.Borrower authorizes Bank to collect all interest and fees due under each credit
subject hereto by charging Borrower's deposit account number 4159-404250 with Bank, or any other deposit account maintained by Borrower with Bank, for the full amount thereof. Should there
be insufficient funds in any such deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower.

III.    REPRESENTATIONS AND WARRANTIES:

Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this letter and shall
continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this letter.

1.Legal Status.Borrower is a corporation, duly organized and existing and in good standing under the laws of
the State of Delaware, and is qualified or licensed to do business in all jurisdictions

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in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could have a material adverse effect on Borrower.

2.Authorization and Validity.This letter and each promissory note, contract, instrument and other document
deemed necessary by Bank to evidence any extension of credit to Borrower pursuant to the terms and conditions hereof, or now or at any time hereafter required by or delivered to Bank in connection
with this letter (collectively, the "Loan Documents") have been duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding
agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms.

3.No Violation.The execution, delivery and performance by Borrower of each of the Loan Documents do not
violate any provision of any law or regulation, or contravene any provision of the Articles of Incorporation or By-Laws of Borrower, or result in a breach of or constitute a default under
any contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound.

4.Litigation.There are no pending, or to the best of Borrower's knowledge threatened, actions, claims,
investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could have a material adverse effect on the financial condition or
operation of Borrower other than those disclosed by Borrower to Bank in writing or in Borrower 10-K forms filed with the SEC for fiscal year ending 12/31/01 prior to the date hereof.

5.Correctness of Financial Statement.To the best of Borrower's knowledge, the financial statement of Borrower
dated March 31, 2002, a true copy of which has been delivered by Borrower to Bank prior to the date hereof, (a) is complete and correct and presents fairly the financial condition of
Borrower, (b) discloses all liabilities of Borrower that are required to be reflected or reserved against under generally accepted accounting principles, whether liquidated or unliquidated,
fixed or contingent, and (c) has been prepared in accordance with generally accepted accounting principles consistently applied. Since the date of such financial statement there has been no
material adverse change in the condition or operation of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in
favor of Bank or as otherwise permitted by Bank in writing.

6.Income Tax Returns.Borrower has no knowledge of any pending assessments or adjustments of its income tax
payable with respect to any year.

7.No Subordination.There is no agreement, indenture, contract or instrument to which Borrower is a party or by
which Borrower may be bound that requires the subordination in right of payment of any of Borrower's obligations subject to this letter to any other obligation of Borrower.

8.Permits, Franchises.Borrower possesses, and will hereafter possess, all permits, consents, approvals,
franchises and licenses required and all rights to trademarks, trade names, patents and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in
compliance with applicable law.

9.ERISA.Borrower is in compliance in all material respects with all applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended or recodified from time to time ("ERISA"); Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event, as defined in ERISA, has occurred and is continuing with respect to any Plan initiated by Borrower;
Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles.

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10.Other Obligations.Borrower is not in default on any obligation for borrowed money or any purchase money
obligation in excess of $1,000,000.00, or any other material lease, commitment, contract, instrument or obligation.

11.Environmental Matters.Except as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower
is in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations adopted pursuant thereto, which
govern or affect any of Borrower's operations and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any of the same may be amended, modified or
supplemented from time to time. To the best of Borrower's knowledge, none of the operations of Borrower is the subject of any federal or state investigation evaluating whether any remedial action
involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment. Borrower has no material contingent liability in connection with
any release of any toxic or hazardous waste or substance into the environment.

12.SUBSIDIARIES.As of the date hereof, Borrower's subsidiaries consist of the entities named in
Schedule I hereto. Each such entity, and any other entity now or hereafter required by generally accepted accounting principles to be consolidated with Borrower shall be referred to as a
"Subsidiary".

IV.    CONDITIONS:

1.Conditions of Initial Extension of Credit.The obligation of Bank to extend any credit contemplated by this
letter is subject to fulfillment to Bank's satisfaction of all of the following conditions:

(a)Documentation.Bank shall have received each of the Loan Documents, duly executed and in form and substance
satisfactory to Bank.

(b)Financial Condition.There shall have been no material adverse change, as determined by Bank, in the
financial condition or business of Borrower or any guarantor hereunder, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or
material portion of the assets of Borrower or any such guarantor.

(c)Insurance.Borrower shall have delivered to Bank evidence of insurance coverage on all Borrower's property,
in form, substance, amounts, covering risks and issued by companies satisfactory to Bank, and where required by Bank, with loss payable endorsements in favor of Bank.

2.Conditions of Each Extension of Credit.The obligation of Bank to make each extension of credit requested by
Borrower hereunder shall be subject to the fulfillment to Bank's satisfaction of each of the following conditions:

(a)Compliance.The representations and warranties contained herein and in each of the other Loan Documents
shall be true on and as of the date of the signing of this letter and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no default hereunder, and no condition, event or act which with the giving of notice or the passage of time or both would
constitute such a default, shall have occurred and be continuing or shall exist.

(b)Documentation.Bank shall have received all additional documents which may be required in connection with
such extension of credit.

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V.    COVENANTS:

Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank
otherwise consents in writing:

1.Punctual Payment.Punctually pay all principal, interest, fees or other liabilities due under any of the Loan
Documents at the times and place and in the manner specified therein.

2.Accounting Records.Maintain adequate books and records in accordance with generally accepted accounting
principles consistently applied, and permit any representative of Bank, at any reasonable time, to inspect, audit and examine such books and records, to make copies of the same and inspect the
properties of Borrower.

3.Financial Statements.Provide to Bank all of the following, in form and detail satisfactory to Bank:

(a)  not
later than 120 days after and as of the end of each fiscal year, an audited consolidated financial statement of Borrower, prepared by a certified public
accountant acceptable to Bank, to include balance sheet, income statement and statement of cash flow;

(b)  not
later than 60 days after and as of the end of each fiscal quarter, a consolidated financial statement of Borrower, prepared by Borrower, to include balance
sheet, income statement and statement of cash flow;

(c)  contemporaneously
with each annual and fiscal quarter end financial statement of Borrower required hereby, a certificate of the president or chief financial officer of
Borrower that said financial statements are accurate and that there exists no default hereunder nor any condition, act or event which with the giving of notice or the passage of time or both would
constitute such a default, and to reflect consolidated cash and cash equivalents, and cash and cash equivalents separately by Borrower, its U.S. subsidiaries (whether wholly or partially owned) and
its foreign subsidiaries (whether wholly or partially owned);

(d)  from
time to time such other information as Bank may reasonably request.

4.Compliance.Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and
franchises necessary for the conduct of its business; and comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower's continued existence and
with the requirements of all laws, rules, regulations and orders of a governmental agency applicable to Borrower and/or its business.

5.Insurance.Maintain and keep in force insurance of the types and in amounts customarily carried in lines of
business similar to that of Borrower, including but not limited to fire, extended coverage, public liability, flood, property damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to Bank, and deliver to Bank from time to time at Bank's request schedules setting forth all insurance then in effect.

6.Facilities.Keep all properties useful or necessary to Borrower's business in good repair and condition, and
from time to time make necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and maintained.

7.Taxes and Other Liabilities.Pay and discharge when due any and all indebtedness, obligations, assessments
and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except (a) such as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision,

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to Bank's satisfaction, for eventual payment thereof in the event Borrower is obligated to make such payment.

8.Litigation.Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower.

9.Financial Condition.Maintain Borrower's financial condition as follows using generally accepted accounting
principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein):

(a)  Consolidated
net income after taxes not less than $1.00 on a quarterly basis, determined as of each quarter end, commencing December 31, 2002.

(b)  Unencumbered
and unrestricted cash and cash equivalents held domestically by Borrower not less than $130,000,000.00, determined as each fiscal quarter end.

(c)  Consolidated
net loss after tax not greater than $6,000,000.00 during each of the fiscal quarters ending June 30, 2002 and September 30, 2002, and
consolidated net loss after tax not greater than $7,500,000.00 in fiscal year ending December 31, 2002

10.Other Indebtedness.Not (nor cause or permit any Subsidiary to) create, incur, assume or permit to exist any
indebtedness or liabilities resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (a) the
liabilities of Borrower or any Subsidiary to Bank, (b) any other liabilities of Borrower and Subsidiaries existing as of, and disclosed to Bank prior to, the date hereof, (c) new
purchase money debt in amounts not to exceed an aggregate of $10,000,000.00 during the initial term of the Line of Credit, and (d) borrowings by Borrower's Japanese Subsidiary not to exceed an
aggregate of US$3,000,000.00 outstanding ant any time.

11.Merger, Consolidation, Transfer of Assets.Not (nor cause or permit any Subsidiary to) merge into or
consolidate with any other entity; not (nor cause or permit any Subsidiary to) make any substantial change in the nature of Borrower's or Subsidiary's business as conducted as of the date hereof; not
(nor cause or permit any Subsidiary to) acquire all or substantially all of the assets of any other entity; not (nor cause or permit any Subsidiary to) sell, lease, transfer or otherwise dispose of
all or a substantial or material portion of Borrower's or any Subsidiary's assets except in the ordinary course of its business and except for sales and leasebacks of equipment (inclusive of existing
sale/leasebacks) the aggregate book value of which equipment at the time of such sale/leaseback(s) shall not exceed an aggregate of $5,000,000.00 at any time.

12.Guaranties.Not (nor cause or permit any Subsidiary to) guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets
of Borrower or any Subsidiary as security for, any liabilities or obligations of any other person or entity, except any of the foregoing in favor of Bank, and except Borrower's $3,000,000.00 guaranty
of the obligations of its Japanese subsidiary.

13.Loans, Advances, Investments.Not (nor cause or permit any Subsidiary to) make any loans or advances to or
investments in any person or entity, except any of the foregoing existing as of, and disclosed to Bank prior to, the date hereof and except for loans to officers and employees not to exceed $300,00.00
per loan or $1,500,000.00 outstanding at any time in the aggregate.

14.Dividends, Distributions.Not declare or pay any dividend or distribution either in cash, stock or any other
property on Borrower's stock now or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of any class of Borrower's stock now or hereafter outstanding; provided
however, that so long as Borrower maintains its valid election as an S corporation, Borrower may pay cash dividends or distributions to its shareholders in any fiscal year to cover its shareholders'
federal

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income tax liability for the immediately preceding fiscal year arising as a direct result of Borrower's reported income for said fiscal year, but not to exceed the minimum amount so required, and
Borrower shall provide to Bank, upon request, any documentation required by Bank to substantiate the appropriateness of amounts paid or to be paid.

15.Pledge of Assets.Not (nor cause or permit any Subsidiary to) mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, all or any portion of Borrower's or a Subsidiary's assets now owned or hereafter acquired, except any of the foregoing in favor of Bank or which are existing as of,
and disclosed to Bank in writing prior to, the date hereof, and purchase money liens to the extent they secure purchase money debt permitted under Paragraph V.10(c) and other liens of specific
equipment in connection with leases thereof in the ordinary course of business.

VI.    DEFAULT, REMEDIES:

1.Default, Remedies.Upon the violation of any term or condition of any of the Loan Documents, or upon the
occurrence of any default or defined event of default under any of the Loan Documents: (a) all indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary
notwithstanding, shall at Bank's option and without notice become immediately due and payable without presentment, demand, protest or notice of dishonor, all of which are expressly waived by Borrower;
(b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and
remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or
all of the rights of a beneficiary or secured party pursuant to applicable law. All rights, powers and remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence
of any such breach or default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity.

2.No Waiver.No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of
the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan
Documents must be in writing and shall be effective only to the extent set forth in such writing.

VII.    MISCELLANEOUS:

1.Notices.All notices, requests and demands which any party is required or may desire to give to any other
party under any provision of this letter must be in writing delivered to each party at its address first set forth above, or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the
date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.

2.Costs, Expenses and Attorneys' Fees.Borrower shall pay to Bank immediately upon demand the full amount of
all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in connection with (a) the negotiation and preparation of this letter and the other Loan Documents, Bank's continued administration hereof and thereof, and the preparation of
amendments
and waivers hereto and thereto, (b) the enforcement of Bank's rights and/or the collection of any amounts which become due to Bank under any of the Loan Documents, and (c) the
prosecution

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or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter
or motion brought by Bank or any other person) relating to any Borrower or any other person or entity.

3.Successors, Assignment.This letter shall be binding upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interest hereunder without Bank's prior written consent.
Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank's rights and benefits under each of the Loan Documents. In
connection therewith Bank may disclose all documents and information which Bank now has or hereafter may acquire relating to any credit subject hereto, Borrower or its business, any guarantor
hereunder or the business of such guarantor,] or any collateral required hereunder.

4.Entire Agreement; Amendment.This letter and the other Loan Documents constitute the entire agreement between
Borrower and Bank with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter hereof. This letter may
be amended or modified only in writing signed by each party hereto.

5.No Third Party Beneficiaries.This letter is made and entered into for the sole protection and benefit of the
parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this letter or any other of the Loan Documents to which it is not a party.

6.Severability of Provisions.If any provision of this letter shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this
letter.

7.Governing Law.This letter shall be governed by and construed in accordance with the laws of the State of
California.

8.Arbitration.

(a)Arbitration.The parties hereto agree, upon demand by any party, to submit to
binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or
otherwise arising out of or relating to in any way (i) the loan and related Loan Documents which are the subject of this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.

(b)Governing Rules.Any arbitration proceeding will (i) proceed in a location in California selected by
the American Arbitration Association ("AAA"); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any
of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA's commercial dispute
resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in
accordance with the AAA's optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to
be referred to, as applicable, as the "Rules"). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or
refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein
shall be deemed to be a

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waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.

(c)No Waiver of Provisional Remedies, Self-Help and Foreclosure.The arbitration requirement does
not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of
collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or
after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder,
including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.

(d)Arbitrator Qualifications and Powers.Any arbitration proceeding in which the amount in controversy is
$5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and
deliberations. The arbitrator will be a neutral attorney licensed in the State of California or a neutral retired judge of the state or federal judiciary of California, in either case with a minimum
of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give
effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with
the substantive law of California and may grant any remedy or relief that a
court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of
all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
California Rules of Civil Procedure or other applicable law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.

(e)Discovery.In any arbitration proceeding discovery will be permitted in accordance with the Rules. All
discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date and within 180 days
of the filing of the dispute with the AAA. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing
that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.

(f)Class Proceedings and Consolidations.The resolution of any dispute arising pursuant to the terms of this
Agreement shall be determined by a separate arbitration proceeding and such dispute shall not be consolidated with other disputes or included in any class proceeding.

(g)Payment Of Arbitration Costs And Fees.The arbitrator shall award all costs and expenses of the arbitration
proceeding.

(h)Real Property Collateral; Judicial Reference.Notwithstanding anything herein to the contrary, no dispute
shall be submitted to arbitration if the dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the arbitration, or (ii) all parties to the

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arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute of California, thereby agreeing that all indebtedness and obligations of the parties,
and all mortgages, liens and security interests securing such indebtedness and obligations, shall remain fully valid and enforceable. If any such dispute is not submitted to arbitration, the dispute
shall be referred to a referee in accordance with California Code of Civil Procedure Section 638 et seq., and this general reference agreement is intended to be specifically enforceable in
accordance with said Section 638. A referee with the qualifications required herein for arbitrators shall be selected pursuant to the AAA's selection procedures. Judgment upon the decision
rendered by a referee shall be entered in the court in which such proceeding was commenced in accordance with California Code of Civil Procedure Sections 644 and 645.

(i)Miscellaneous.To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all
action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement
for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control.
This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.

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Your
acknowledgment of this letter shall constitute acceptance of the foregoing terms and conditions. Bank's commitment to extend any credit to Borrower pursuant to the terms of this
letter shall terminate on June 30, 2002, unless this letter is acknowledged by Borrower and returned to Bank on or before that date.

| |  | Sincerely,                            
| |  | --------------------------------------
| |  | WELLS FARGO BANK,
NATIONAL ASSOCIATION
| |  | By:                                   

Acknowledged
and accepted as of                    :

|ULTRATECH STEPPER, INC. |  | 
|----------------------- |  | 
|By:                     |  | 
|Title:                  |  | 

11

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EXHIBIT A

REVOLVING LINE OF CREDIT NOTE

|$8,000,000.00 |  | San Jose, California
May 20, 2002
|------------- |  | ---------------------------------

FOR
VALUE RECEIVED, the undersigned Ultratech Stepper, Inc. ("Borrower") promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its office at Santa
Clara Technology RCBO, 121 Park Center Plaza, 3rd Floor, San Jose, California, or at such other place as the holder hereof may designate, in lawful money of the United States of America
and in immediately available funds, the principal sum of Eight Million Dollars ($8,000,000.00), or so much thereof as may be advanced and be outstanding, with interest thereon, to be computed on each
advance from the date of its disbursement as set forth herein.

DEFINITIONS:

As used herein, the following terms shall have the meanings set forth after each, and any other term defined in this Note shall have the meaning set forth at the
place defined:

(a)  "Business
Day" means any day except a Saturday, Sunday or any other day on which commercial banks in California are authorized or required by law to close.

(b)  "Fixed
Rate Term" means a period commencing on a Business Day and continuing for 1,2,3,6 or 12 months, as designated by Borrower, during which all or a portion of
the outstanding principal balance of this Note bears interest determined in relation to LIBOR; provided however, that no Fixed Rate Term may be selected for a principal amount less than One Hundred
Thousand Dollars ($100,000.00); and provided further, that no Fixed Rate Term shall extend beyond the scheduled maturity date hereof. If any Fixed Rate Term would end on a day which is not a Business
Day, then such Fixed Rate Term shall be extended to the next succeeding Business Day.

(c)  "LIBOR"
means the rate per annum (rounded upward, if necessary, to the nearest whole 1/8 of 1%) and determined pursuant to the following formula:

LIBOR =

Base LIBOR100% - LIBOR Reserve Percentage




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(d)  "Prime
Rate" means at any time the rate of interest most recently announced within Bank at its principal office as its Prime Rate, with the understanding that the Prime
Rate is one of Bank's base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after
its announcement in such internal publication or publications as Bank may designate.

INTEREST:

(a)Interest.The outstanding principal balance of this Note shall bear interest (computed on the basis of a
360-day year, actual days elapsed) either (i) at a fluctuating rate per annum equal the Prime Rate in effect from time to time, or (ii) at a fixed rate per annum determined
by Bank to be two and one quarter percent (2.25%) above LIBOR in effect on the first day of the applicable Fixed Rate Term. When interest is determined in relation to the Prime Rate, each change in
the rate of interest hereunder shall become effective on the date each Prime Rate change is announced within Bank. With respect to each LIBOR selection hereunder, Bank is hereby authorized to note the
date, principal amount, interest rate and Fixed Rate Term applicable thereto and any payments made thereon on Bank's books and records (either manually or by electronic entry) and/or on any schedule
attached to this Note, which notations shall be prima facie evidence of the accuracy of the information noted.

(b)Selection of Interest Rate Options.At any time any portion of this Note bears interest determined in
relation to LIBOR, it may be continued by Borrower at the end of the Fixed Rate Term applicable thereto so that all or a portion thereof bears interest determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower. At any time any portion of this Note bears interest determined in relation to the Prime Rate, Borrower may convert all or a portion thereof so
that it bears interest determined in relation to LIBOR for a Fixed Rate Term designated by Borrower. At such time as Borrower requests an advance hereunder or wishes to select a LIBOR option for all
or a portion of the outstanding principal balance hereof, and at the end of each Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the interest rate option selected by Borrower;
(ii) the principal amount subject thereto; and (iii) for each LIBOR selection, the length of the applicable Fixed Rate Term. Any such notice may be given by telephone (or such other
electronic method as Bank may permit) so long as, with respect to each LIBOR selection, (A) if requested by Bank, Borrower provides to Bank written confirmation thereof not later than three
(3) Business Days after such notice is given, and (B) such notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate Term, or at a later time during any
Business Day if Bank, at it's sole option but without obligation to do so, accepts
Borrower's notice and quotes a fixed rate to Borrower. If Borrower does not immediately accept a fixed rate when quoted by Bank, the quoted rate shall expire and any subsequent LIBOR request from
Borrower shall be subject to a redetermination by Bank of the applicable fixed rate. If no specific designation of interest is made at the time any advance is requested hereunder or at the end of any
Fixed Rate Term, Borrower shall be deemed to have made a Prime Rate interest selection for such advance or the principal amount to which such Fixed Rate Term applied.

(c)Taxes and Regulatory Costs.Borrower shall pay to Bank immediately upon demand, in addition to any other
amounts due or to become due hereunder, any and all (i) withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed by any domestic or
foreign governmental authority and related in any manner to LIBOR, and (ii) future, supplemental, emergency or other changes in the LIBOR Reserve Percentage, assessment rates imposed by the
Federal Deposit Insurance Corporation, or similar requirements or costs imposed by any domestic or foreign governmental authority or resulting from compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other governmental authority and related in any manner to LIBOR to the extent they are not included in the calculation of LIBOR. In
determining which of the foregoing are attributable to any LIBOR option available to

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Borrower hereunder, any reasonable allocation made by Bank among its operations shall be conclusive and binding upon Borrower.

(d)Payment of Interest.Interest accrued on this Note shall be payable on the last day of each month,
commencing June 30, 2002.

(e)Default Interest.From and after the maturity date of this Note, or such earlier date as all principal owing
hereunder becomes due and payable by acceleration or otherwise, the outstanding principal balance of this Note shall bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to four percent (4%) above the rate of interest from time to time applicable to this Note.

BORROWING AND REPAYMENT:

(a)Borrowing and Repayment.Borrower may from time to time during the term of this Note borrow, partially or
wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions of this Note and of any document executed in connection with or governing this Note;
provided however, that the total outstanding borrowings under this Note shall not at any time exceed the principal amount stated above. The unpaid principal balance of this obligation at any time
shall be the total amounts advanced hereunder by the holder hereof less the amount of principal payments made hereon by or for any Borrower, which balance may be endorsed hereon from time to
time by the holder. The outstanding principal balance of this Note shall be due and payable in full on June 30, 2003.

(b)Advances.Advances hereunder, to the total amount of the principal sum stated above, may be made by the
holder at the oral or written request of (i)
                         or                
        , any one acting alone, who are authorized to request advances and direct the disposition of any advances until
written notice of the revocation of such authority is received by the holder at the office designated above, or (ii) any person, with respect to advances deposited to the credit of any deposit
account of any Borrower, which advances, when so deposited, shall be conclusively presumed to have been made to or for the benefit of each Borrower regardless of the fact that persons other than those
authorized to request advances may have authority to draw against such account. The holder shall have no obligation to determine whether any person requesting an advance is or has been authorized by
any Borrower.

(c)Application of Payments.Each payment made on this Note shall be credited first, to any interest then due
and second, to the outstanding principal balance hereof. All payments credited to principal shall be applied first, to the outstanding principal balance of this Note which bears interest determined in
relation to the Prime Rate, if any, and second, to the outstanding principal balance of this Note which bears interest determined in relation to LIBOR, with such payments applied to the oldest Fixed
Rate Term first.

PREPAYMENT:

(a)Prime Rate.Borrower may prepay principal on any portion of this Note which bears interest determined in
relation to the Prime Rate at any time, in any amount and without penalty.

(b)LIBOR.Borrower may prepay principal on any portion of this Note which bears interest determined in relation
to LIBOR at any time and in the minimum amount of One Hundred Thousand Dollars ($100,000.00); provided however, that if the outstanding principal balance of such portion of this Note is less than said
amount, the minimum prepayment amount shall be the entire outstanding principal balance thereof. In consideration of Bank providing this prepayment option to Borrower, or if any such portion of this
Note shall become due and payable at any time prior to the last day of the Fixed Rate Term applicable thereto by acceleration or otherwise, Borrower shall pay to Bank immediately upon demand a fee
which is the sum of the discounted monthly differences for each

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month from the month of prepayment through the month in which such Fixed Rate Term matures, calculated as follows for each such month:



Each
Borrower acknowledges that prepayment of such amount may result in Bank incurring additional costs, expenses and/or liabilities, and that it is difficult to ascertain the full extent of such
costs, expenses and/or liabilities. Each Borrower, therefore, agrees to pay the above-described prepayment fee and agrees that said amount represents a reasonable estimate of the prepayment costs,
expenses and/or liabilities of Bank. If Borrower fails to pay any prepayment fee when due, the amount of such prepayment fee shall thereafter bear interest until paid at a rate per annum two percent
(2.00%) above the Prime Rate in effect from time to time (computed on the basis of a 360-day year, actual days elapsed). Each change in the rate of interest on any such past due prepayment
fee shall become effective on the date each Prime Rate change is announced within Bank.

EVENTS OF DEFAULT:

The occurrence of any of the following shall constitute an "Event of Default" under this Note:

(a)  The
failure to pay any principal, interest, fees or other charges when due hereunder or under any contract, instrument or document executed in connection with this Note.

(b)  The
filing of a petition by or against any Borrower, any guarantor of this Note or any general partner or joint venturer in any Borrower which is a partnership or a
joint venture (with each such guarantor, general partner and/or joint venturer referred to herein as a "Third Party Obligor") under any provisions of the Bankruptcy Reform Act, Title 11 of the United
States Code, as amended or recodified from time to time, or under any similar or other law relating to bankruptcy, insolvency, reorganization or other relief for debtors, provided, however, that if
the petition or other proceeding is filed against Borrower or such Third party Obligor without the concurrence or acquiescence of Borrower or such Third Party Obligor, no Event of Default shall be
deemed to have occurred unless the petition or other proceeding is not dismissed or discharged within 30 days after its filing, provided, further, that Bank shall not be required to make new
advances during such 30 day period; the appointment of a receiver, trustee, custodian or liquidator of or for any part of the assets or property
of any Borrower or Third Party Obligor; any Borrower or Third Party Obligor becomes insolvent, makes a general assignment for the benefit of creditors or is generally not paying its debts as they
become due; or any attachment or like levy on any property of any Borrower or Third Party Obligor.

(c)  The
death or incapacity of any individual Borrower or Third Party Obligor, or the dissolution or liquidation of any Borrower or Third Party Obligor which is a
corporation, partnership, joint venture or other type of entity.

(d)  Subject
to applicable cure period(s), if any, any default in the payment or performance of any obligation, or any defined event of default, under any provisions of any
contract, instrument or document pursuant to which any Borrower or Third Party Obligor has incurred any obligation for borrowed money, any purchase obligation, or any other liability of any kind to
any person or entity,

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including the holder, and, if obligation or liability is owed to a party other than Bank, the amount thereof exceeds $500,000.00.

(e)  Any
financial statement provided by any Borrower or Third Party Obligor to Bank proves to be (i) incorrect, false or misleading in any material respect, or
(ii) not to have been prepared in accordance with generally accepted accounting principles consistently applied.

(f)    Any
sale or transfer of all or a substantial or material part of the assets of any Borrower or Third Party Obligor other than in the ordinary course of its business.

(g)  Any
violation or breach of any provision of, or any defined event of default under, any addendum to this Note or any loan agreement, guaranty, security agreement, deed
of trust, mortgage or other document executed in connection with or securing this Note.

MISCELLANEOUS:

(a)Remedies.Upon the occurrence of any Event of Default, the holder of this Note, at the holder's option, may
declare all sums of principal and interest outstanding hereunder to be immediately due and payable without presentment, demand, notice of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly waived by each Borrower, and the obligation, if any, of the holder to extend any further credit hereunder shall immediately cease and terminate. Each
Borrower shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of the holder's in-house counsel), expended or incurred by the holder in connection with the enforcement of the holder's rights and/or the collection of any amounts
which become due to the holder under this Note, and the prosecution or defense of any action in any way related to this Note, including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to any Borrower or any other person or entity.

(b)Obligations Joint and Several.Should more than one person or entity sign this Note as a Borrower, the
obligations of each such Borrower shall be joint and several.

(c)Governing Law.This Note shall be governed by and construed in accordance with the laws of the State of
California.

IN
WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

|ULTRATECH STEPPER, INC. |  | 
|----------------------- |  | 
|By:                     |  | 
|Title:                  |  | 

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