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                                 EXHIBIT 10.12.1
                             ULTRATECH STEPPER, INC.
                  SUPPLEMENTAL STOCK OPTION/STOCK ISSUANCE PLAN

               AS AMENDED AND RESTATED EFFECTIVE OCTOBER 19, 1999

                                   ARTICLE ONE

                                     GENERAL

                  A. This Supplemental Stock Option/Stock Issuance Plan is
intended to promote the interests of Ultratech Stepper, Inc., a Delaware
corporation, by authorizing an additional reserve of shares of the
Corporation's common stock for issuance through long-term option grants or
direct stock issuances to individuals in the employ of the Corporation (or
any Parent or Subsidiary) who are NOT: (i) officers of the Corporation, (ii)
employees with the title of Vice President, General Manager or (iii) members
of the Board.

                  B. The Plan became effective immediately upon adoption by
the Board on October 20, 1998.

                  C. The Plan shall supplement the authorized share reserve
under the Corporation's 1993 Stock Option/Stock Issuance Plan, and share
issuances under this Plan shall not reduce or otherwise affect the number of
shares of the Corporation's common stock available for issuance under the
1993 Stock Option/Stock Issuance Plan. In addition, share issuances under the
1993 Stock Option/Stock Issuance Plan shall not reduce or otherwise affect
the number of shares of the Corporation's common stock available for issuance
under this Plan.

                  Capitalized terms shall have the meanings assigned to such
terms in the attached Appendix.

       I.         STRUCTURE OF THE PLAN

                  A. The Plan shall be divided into two (2) separate equity
programs:

                                (i)  the Option Grant Program under which
         eligible persons may, at the discretion of the Plan Administrator, be
         granted options to purchase shares of Common Stock, and

                                (ii) the Stock Issuance Program under which
         eligible persons may, at the discretion of the Plan Administrator, be
         issued shares of Common Stock directly, either through the immediate
         purchase of such shares or as

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         a bonus for services rendered the Corporation (or any Parent or
         Subsidiary) or the attainment of designated performance goals.

      II.         ADMINISTRATION OF THE PLAN

                  A. The Plan Administrator shall have full power and
discretion (subject to the express provisions of the Plan) to establish such
rules and regulations as it may deem appropriate for the proper
administration of the Plan and to make such determinations under, and issue
such interpretations of, the provisions of the Plan and any outstanding
option grants or unvested stock issuances thereunder as it may deem necessary
or advisable. Decisions of the Plan Administrator shall be final and binding
on all parties who have an interest in the Plan or any outstanding stock
option or stock issuance thereunder.

                  B. The individuals serving as Plan Administrator shall
serve for such period as the Board may determine and shall be subject to
removal by the Board at any time.

                  C. Service as Plan Administrator shall constitute service
as a Board member, and each Board member serving as Plan Administrator shall
accordingly be entitled to full indemnification and reimbursement as a Board
member for such service. No individual serving as Plan Administrator shall be
liable for any act or omission made in good faith with respect to the Plan or
any option grant or stock issuance made under the Plan.

     III.         ELIGIBILITY

                  A. The persons eligible to participate in the Plan shall be
limited to those Employees who are NOT: (i) officers of the Corporation, (ii)
Employees with the title of Vice President, General Manager or (iii) members
of the Board.

                  B. The Plan Administrator shall have full authority to
determine (i) with respect to the Option Grant Program, which eligible
Employees are to receive option grants under the Plan, the time or times when
the grants are to be made, the number of shares subject to each such grant,
the time or times when each granted option is to become exercisable and the
maximum term for which the option may remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible
persons are to receive stock issuances, the time or times when such issuances
are to be made, the number of shares to be issued to each Participant, the
vesting schedule (if any) applicable to the issued shares and the
consideration for such shares. All options granted under the Plan shall be
Non-Statutory Options.

                                        2.

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      IV.         STOCK SUBJECT TO THE PLAN

                  A. Shares of Common Stock shall be available for issuance
under the Plan and shall be drawn from either the Corporation's authorized
but unissued shares of Common Stock or from reacquired shares of Common
Stock, including shares repurchased by the Corporation on the open market.
The maximum number of shares of Common Stock reserved for issuance over the
term of the Plan shall be limited to 800,000 shares, subject to adjustment
from time to time in accordance with the provisions of Section IV.C. Such
share reserve consists of (i) the 400,000 shares of Common Stock initially
reserved for issuance under the Plan plus (ii) the 400,000-share increase
authorized by the Board effective October 19, 1999.

                  B. Should one or more outstanding options under this Plan
expire or terminate for any reason prior to exercise in full, then the shares
subject to the portion of each option not so exercised shall be available for
subsequent issuance under the Plan. Unvested shares issued under the Plan and
subsequently cancelled or repurchased by the Corporation, at the original
issue price paid per share, pursuant to the Corporation's repurchase rights
under the Plan shall be added back to the number of shares of Common Stock
reserved for issuance under the Plan and shall accordingly be available for
reissuance through one or more subsequent option grants or direct stock
issuances under the Plan. Should the exercise price of an outstanding option
under the Plan be paid with shares of Common Stock, then the number of shares
of Common Stock available for issuance under the Plan shall be reduced by the
gross number of shares for which the option is exercised, and not by the net
number of shares of Common Stock actually issued to the holder of such option.

                  C. Should any change be made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, then appropriate adjustments shall be made to (i)
the maximum number and/or class of securities issuable under the Plan, and
(ii) the number and/or class of securities and price per share in effect
under each option outstanding under the Plan. Such adjustments to the
outstanding securities are to be effected in a manner which shall preclude
the enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.

                                        3.

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                                   ARTICLE TWO

                              OPTION GRANT PROGRAM

       I.         OPTION TERMS

                  Options granted under the Plan shall be authorized by
action of the Plan Administrator and shall be evidenced by one or more
instruments in the form approved by the Plan Administrator; PROVIDED,
however, that each such instrument shall comply with the terms and conditions
specified below. All such granted options shall be Non-Statutory Options.

                  A. EXERCISE PRICE.

                           1. The exercise price per share shall be fixed by
the Plan Administrator but shall not be less than one hundred percent (100%)
of the Fair Market Value per share of Common Stock on the grant date.

                           2. Full payment of the exercise price shall become
immediately due upon exercise of the option and shall be payable in one or
more of the forms specified below:

                                (i) cash or check made payable to the
         Corporation,

                               (ii) shares of Common Stock held for the
         requisite period necessary to avoid a charge to the Corporation's
         earnings for financial reporting purposes and valued at Fair Market
         Value on the Exercise Date, or

                              (iii) through a special sale and remittance
         procedure pursuant to which the Optionee shall concurrently provide
         irrevocable instructions (a) to a Corporation-designated brokerage firm
         to effect the immediate sale of the purchased shares and remit to the
         Corporation, out of the sale proceeds available on the settlement date,
         sufficient funds to cover the aggregate exercise price payable for the
         purchased shares plus all applicable Federal, state and local income
         and employment taxes required to be withheld by the Corporation in
         connection with such purchase and (b) to the Corporation to deliver the
         certificates for the purchased shares directly to such brokerage firm
         in order to complete the sale transaction.

                  Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made
on the Exercise Date.

                                        4.

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                  B. EXERCISE AND TERM OF OPTIONS. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing such option. No option shall have a maximum term in
excess of ten (10) years measured from the option grant date.

                  C. LIMITED TRANSFERABILITY. Each option granted under the
Plan may, in connection with the Optionee's estate plan, be assigned in whole
or in part during the Optionee's lifetime to one or more members of the
Optionee's immediate family or to a trust established exclusively for one or
more such family members. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant
to the assignment. The terms applicable to the assigned portion shall be the
same as those in effect for the option immediately prior to such assignment
and shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.

                  D. EFFECT OF TERMINATION OF SERVICE.

                           1. The following provisions shall govern the
exercise of any options held by the Optionee at the time of cessation of
Service or death:

                                (i) Any option outstanding at the time of the
         Optionee's cessation of Service for any reason shall remain exercisable
         for such period of time thereafter as shall be determined by the Plan
         Administrator and set forth in the documents evidencing the option, but
         no such option shall be exercisable after the expiration of the option
         term.

                               (ii) Any option exercisable in whole or in part
         by the Optionee at the time of death may be subsequently exercised by
         the personal representative of the Optionee's estate or by the person
         or persons to whom the option is transferred pursuant to the Optionee's
         will or in accordance with the laws of descent and distribution.

                              (iii) Should the Optionee's Service be
         terminated for Misconduct, then all outstanding options held by the
         Optionee shall terminate immediately and cease to be outstanding.

                               (iv) During the applicable post-Service exercise
         period, the option may not be exercised in the aggregate for more than
         the number of shares for which the option is exercisable on the date of
         Optionee's cessation of Service. Upon the expiration of such
         post-Service exercise period or (if earlier) upon the expiration of the
         option term, the option shall terminate and cease to be outstanding for
         any otherwise exercisable shares for which the option has not been
         exercised.

                                        5.

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         However, the option shall, immediately upon Optionee's cessation of
         Service for any reason, terminate and cease to be outstanding with
         respect to any and all option shares for which the option is not
         otherwise at the time exercisable.

                           2. The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:

                                (i) extend the period of time for which the
         option is to remain exercisable following Optionee's cessation of
         Service or death from the limited period otherwise in effect for that
         option to such greater period of time as the Plan Administrator shall
         deem appropriate, but in no event beyond the expiration of the option
         term, and/or

                               (ii) permit the option to be exercised, during
         the applicable post-Service exercise period, not only with respect to
         the number of shares of Common Stock for which such option is
         exercisable at the time of the Optionee's cessation of Service but also
         with respect to one or more additional installments for which the
         option would have become exercisable had the Optionee continued in
         Service.

                  C. STOCKHOLDER RIGHTS. No Optionee shall have any stockholder
rights with respect to any option shares until such person shall have exercised
the option and paid the exercise price for the purchased shares.

                  D. REPURCHASE RIGHTS.

                           1. The Plan Administrator shall have discretion to
authorize the issuance of unvested shares of Common Stock under this Article
Two. Should the Optionee cease Service while holding such unvested shares,
the Corporation shall have the right to repurchase any or all of those
unvested shares at the option exercise price paid per share. The terms and
conditions upon which such repurchase right shall be exercisable (including
the period and procedure for exercise and the appropriate vesting schedule
for the purchased shares) shall be established by the Plan Administrator and
set forth in the instrument evidencing such repurchase rights.

                           2. The Plan Administrator shall have the
discretionary authority, exercisable at any time while the Corporation's
repurchase right remains outstanding, to cancel that repurchase right with
respect to one or more shares purchased or purchasable by the Optionee under
this Article Two and thereby accelerate the vesting of those shares in whole
or in part at any time.

                                        6.

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      II.         CORPORATE TRANSACTION/CHANGE IN CONTROL

                  A. Each option outstanding under the Plan at the time of a
Corporate Transaction shall automatically accelerate so that each such option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable with respect to the total number of
shares of Common Stock at the time subject to that option and may be
exercised for all or any portion of those shares as fully-vested shares.
However, an outstanding option under the Plan shall NOT become exercisable on
such an accelerated basis if and to the extent: (i) such option is, in
connection with the Corporate Transaction, either to be assumed by the
successor corporation or parent thereof or to be replaced with a comparable
option to purchase shares of the capital stock of the successor corporation
or parent thereof, (ii) such option is to be replaced with a cash incentive
program of the successor corporation which preserves the option spread
existing at the time of the Corporate Transaction on the shares for which the
option is not otherwise at that time exercisable and provides for subsequent
payout in accordance with the same vesting schedule applicable to such option
or (iii) the acceleration of such option is subject to other limitations
imposed by the Plan Administrator at the time of the option grant. The
determination of option comparability under clause (i) above shall be made by
the Plan Administrator, and its determination shall be final, binding and
conclusive.

                  B. All of the Corporation's outstanding repurchase rights
under this Article Two shall automatically terminate, and the shares subject
to those terminated rights shall immediately vest in full, upon the
occurrence of a Corporate Transaction, except to the extent (i) any such
repurchase right is to be assigned to the successor corporation (or parent
thereof) in connection with the Corporate Transaction or (ii) such
accelerated vesting is precluded by other limitations imposed by the Plan
Administrator at the time the repurchase right is granted.

                  C. The Plan Administrator shall have the discretionary
authority, exercisable either at the time the option is granted or at any
time while the option remains outstanding, to provide (upon such terms as it
may deem appropriate) for the automatic acceleration of one or more
outstanding options which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time (and the termination
of any outstanding repurchase rights), in the event the Optionee's Service
should subsequently terminate within a designated period following the
effective date of such Corporate Transaction.

                  D. Immediately following the consummation of the Corporate
Transaction, all outstanding options under the Plan shall terminate and cease
to remain outstanding, except to the extent assumed by the successor
corporation or its parent company.

                  E. Each outstanding option which is assumed in connection
with the Corporate Transaction shall be appropriately adjusted, immediately
after such Corporate Transaction, to apply and pertain to the number and
class of securities which would have been issued to the Optionee, in
consummation of the Corporate Transaction, had such person exercised the
option immediately

                                        7.

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prior to the Corporate Transaction. Appropriate adjustments shall also be
made to the exercise price payable per share, PROVIDED the aggregate exercise
price payable for such securities shall remain the same. In addition, the
class and number of securities available for issuance under the Plan
following the consummation of the Corporate Transaction shall be
appropriately adjusted.

                  F. The Plan Administrator shall have the discretionary
authority, exercisable either at the time the option is granted or at any
time while the option remains outstanding, to provide for the automatic
acceleration of one or more outstanding options under the Plan (and the
termination of one or more of the Corporation's outstanding repurchase
rights) upon the occurrence of any Change in Control. The Plan Administrator
shall also have full power and authority to condition any such option
acceleration (and the termination of any outstanding repurchase rights) upon
the subsequent termination of the Optionee's Service within a specified
period following the Change in Control. Any options accelerated in connection
with the Change in Control shall remain fully exercisable until the
expiration or sooner termination of the option term.

                  G. The grant of options under the Plan shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

     III.         CANCELLATION AND REGRANT OF OPTIONS

                  The Plan Administrator shall have the authority to effect,
at any time and from time to time, with the consent of the affected
optionees, the cancellation of any or all outstanding options under this
Article Two and to grant in substitution new options under the Plan covering
the same or different numbers of shares of Common Stock but with an option
exercise price per share not less than the Fair Market Value of the Common
Stock on the new grant date.

                                        8.

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                                  ARTICLE THREE

                             STOCK ISSUANCE PROGRAM

       I.         STOCK ISSUANCE TERMS

                  Shares of Common Stock may be issued under the Stock
Issuance Program through direct and immediate issuances without any
intervening option grants. Each such stock issuance shall be evidenced by a
Stock Issuance Agreement which complies with the terms specified below.
Shares of Common Stock may also be issued under the Stock Issuance Program
pursuant to share right awards which entitle the recipients to receive those
shares upon the attainment of designated performance goals.

                  A. PURCHASE PRICE.

                           1. The purchase price per share of Common Stock
subject to direct issuance shall be fixed by the Plan Administrator, but
shall not be less than one hundred percent (100%) of the Fair Market Value
per share of Common Stock on the issuance date.

                           2. Shares of Common Stock may be issued under the
Stock Issuance Program for any of the following items of consideration which
the Plan Administrator may deem appropriate in each individual instance:

                                (i) cash or check made payable to the
         Corporation, or

                                (ii) past services rendered to the Corporation
         (or any Parent or Subsidiary).

                  B. VESTING/ISSUANCE PROVISIONS.

                           1. Shares of Common Stock issued under the Stock
Issuance Program may, in the discretion of the Plan Administrator, be fully
and immediately vested upon issuance or may vest in one or more installments
over the Participant's period of Service or upon attainment of specified
performance objectives. Alternatively, the Plan Administrator may issue share
right awards under the Stock Issuance Program which shall entitle the
recipient to receive a specified number of shares of Common Stock upon the
attainment of one or more performance goals established by the Plan
Administrator. Upon the attainment of such performance goals, fully-vested
shares of Common Stock shall be issued in satisfaction of those share right
awards.

                                        9.

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                           2. Any new, substituted or additional securities
or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
his or her unvested shares of Common Stock by reason of any stock dividend,
stock split, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued subject to (i) the
same vesting requirements applicable to the Participant's unvested shares of
Common Stock and (ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.

                           3. The Participant shall have full stockholder
rights with respect to any shares of Common Stock issued to the Participant
under the Stock Issuance Program, whether or not the Participant's interest
in those shares is vested. Accordingly, the Participant shall have the right
to vote such shares and to receive any regular cash dividends paid on such
shares.

                           4. Should the Participant cease to remain in
Service while holding one or more unvested shares of Common Stock issued
under the Stock Issuance Program or should the performance objectives not be
attained with respect to one or more such unvested shares of Common Stock,
then those shares shall be immediately surrendered to the Corporation for
cancellation, and the Participant shall have no further stockholder rights
with respect to those shares. To the extent the surrendered shares were
previously issued to the Participant for cash consideration, the Corporation
shall repay that consideration to the Participant at the time the shares are
surrendered.

                           5. The Plan Administrator may in its discretion
waive the surrender and cancellation of one or more unvested shares of Common
Stock (or other assets attributable thereto) which would otherwise occur upon
the cessation of the Participant's Service or the non-attainment of the
performance objectives applicable to those shares. Such waiver shall result
in the immediate vesting of the Participant's interest in the shares of
Common Stock as to which the waiver applies. Such waiver may be effected at
any time, whether before or after the Participant's cessation of Service or
the attainment or non-attainment of the applicable performance objectives.

                           6. Outstanding share right awards under the Stock
Issuance Program shall automatically terminate, and no shares of Common Stock
shall actually be issued in satisfaction of those awards, if the performance
goals established for such awards are not attained. The Plan Administrator,
however, shall have the discretionary authority to issue shares of Common
Stock under one or more outstanding share right awards as to which the
designated performance goals have not been attained.

                                        10.

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      II.         CORPORATE TRANSACTION/CHANGE IN CONTROL

                  A. In the event of any Corporate Transaction, all of the
Corporation's outstanding repurchase rights under the Stock Issuance Program
shall terminate automatically and all the shares of Common Stock subject to
those terminated rights shall immediately vest in full, except to the extent
(i) those repurchase rights are to be assigned to the successor corporation
(or parent thereof) in connection with such Corporate Transaction or (ii) the
Plan Administrator imposes other limitations in the Issuance Agreement which
preclude such accelerated vesting in whole or in part.

                  B. The Plan Administrator shall have the discretionary
authority, exercisable either at the time the unvested shares are issued or
any time while the Corporation's repurchase rights remain outstanding under
the Stock Issuance Program, to provide that those rights shall automatically
terminate in whole or in part, and the shares of Common Stock subject to
those terminated rights shall immediately vest, upon the Participant's
termination of Service within a designated period following the effective
date of any Corporate Transaction in which those repurchase rights are
assigned to the successor corporation (or parent thereof).

                  C. The Plan Administrator shall have the discretionary
authority, exercisable either at the time the unvested shares are issued or
any time while the Corporation's repurchase rights remain outstanding under
the Stock Issuance Program, to provide that those rights shall automatically
terminate in whole or in part, and the shares of Common Stock subject to
those terminated rights shall immediately vest, upon the occurrence of a
Change in Control. Alternatively, the Plan Administrator may condition such
accelerated vesting upon the Participant's termination of Service within a
designated period following the effective date of any Change in Control.

     III.         SHARE ESCROW/LEGENDS

                  Unvested shares may, in the Plan Administrator's
discretion, be held in escrow by the Corporation until the Participant's
interest in such shares vests or may be issued directly to the Participant
with restrictive legends on the certificates evidencing those unvested shares.

                                        11.

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                                  ARTICLE FOUR

                                  MISCELLANEOUS

         I.       EFFECTIVE DATE AND TERM OF PLAN

                  A. This Plan became effective upon approval by the Board on
October 20, 1998 and shall not be subject to stockholder approval. The Plan
was amended by the Board on October 19, 1999 to increase the number of shares
of Common Stock reserved for issuance under the Plan from 400,000 shares to
800,000 shares. Such amendment is effective immediately and is not subject to
stockholder approval.

                  B. The Plan shall terminate upon the EARLIER of (i) October
19, 2008 or (ii) the date on which all shares available for issuance under
the Plan shall have been issued as fully-vested shares pursuant to option
exercises or direct stock issuances under the Plan or (iii) the termination
of all outstanding options in connection with a Corporate Transaction. If the
date of termination is determined under clause (i) above, then all option
grants or unvested stock issuances outstanding on such date shall thereafter
continue to have force and effect in accordance with the provisions of the
instruments evidencing those grants or issuances.

         II.      AMENDMENT OF THE PLAN

                  The Board has complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever. However, no such
amendment or modification shall adversely affect rights and obligations with
respect to stock options or unvested stock issuances at the time outstanding
under the Plan, unless the affected Optionees or Participants consent to such
amendment.

         III.     USE OF PROCEEDS

                  Any cash proceeds received by the Corporation from the sale
of shares pursuant to option grants or direct stock issuances under the Plan
shall be used for general corporate purposes.

         IV.      REGULATORY APPROVALS

                  A. The implementation of the Plan, the granting of any
option under the Plan, and the issuance of Common Stock either upon the
exercise of the stock options granted hereunder or pursuant to the Stock
Issuance Program shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the stock options granted under it and the Common Stock issued
pursuant to it.

                                        12.

<PAGE>

                  B. No shares of Common Stock or other assets shall be
issued or delivered under this Plan unless and until there shall have been
compliance with all applicable requirements of Federal and state securities
laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all
applicable listing requirements of any stock exchange (or the Nasdaq National
Market, if applicable) on which the Common Stock is then listed for trading.

       V.         TAX WITHHOLDING

                  The Corporation's obligation to deliver shares of Common
Stock upon the exercise of stock options for such shares or the direct
issuance or vesting of such shares under the Plan shall be subject to the
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements.

      VI.         NO EMPLOYMENT/SERVICE RIGHTS

                  Neither the action of the Corporation in establishing the
Plan, nor any action taken by the Plan Administrator hereunder, nor any
provision of the Plan shall be construed so as to grant any individual the
right to remain in Service for any period of specific duration, and the
Corporation (or any Parent or Subsidiary employing such individual) may
terminate such individual's Service at any time and for any reason, with or
without cause.

      VII.        MISCELLANEOUS PROVISIONS

                  A. The right to acquire Common Stock or other assets under
the Plan may not be assigned, encumbered or otherwise transferred by any
Optionee or Participant, except as expressly provided herein

                  B. The provisions of the Plan relating to the exercise of
options and the vesting of shares shall be governed by the laws of the State
of California, as such laws are applied to contracts entered into and
performed in such state.

                  C. The provisions of the Plan shall insure to the benefit
of, and shall be binding upon, the Corporation and its successors and
assigns, whether by Corporate Transaction or otherwise, and the Participants
and Optionees and the legal representatives, heirs or legatees of their
respective estates.

                                        13.

<PAGE>

                                    APPENDIX

            The following definitions shall be in effect under the Plan:

         A. BOARD shall mean the Corporation's Board of Directors.

         B. CHANGE IN CONTROL shall mean a change in ownership or control of
the Corporation effected through either of the following transactions:

                                (i) the acquisition, directly or indirectly by
         any person or related group of persons (other than the Corporation or a
         person that directly or indirectly controls, is controlled by, or is
         under common control with, the Corporation), of beneficial ownership
         (within the meaning of Rule 13d-3 of the 1934 Act) of securities
         possessing more than fifty percent (50%) of the total combined voting
         power of the Corporation's outstanding securities pursuant to a tender
         or exchange offer made directly to the Corporation's stockholders, or

                                (ii) a change in the composition of the Board
         over a period of thirty-six (36) consecutive months or less such that a
         majority of the Board members ceases, by reason of one or more
         contested elections for Board membership, to be comprised of
         individuals who either (A) have been Board members continuously since
         the beginning of such period or (B) have been elected or nominated for
         election as Board members during such period by at least a majority of
         the Board members described in clause (A) who were still in office at
         the time the Board approved such election or nomination.

         C. CODE shall mean the Internal Revenue Code of 1986, as amended.

         D. COMMON STOCK shall mean the Corporation's common stock.

         E. CORPORATE TRANSACTION shall mean any of the following
stockholder-approved transactions to which the Corporation is a party:

                                (i) a merger or consolidation in which the
         Corporation is not the surviving entity, except for a transaction the
         principal purpose of which is to change the State in which the
         Corporation is incorporated,

                               (ii) the sale, transfer or other disposition of
         all or substantially all of the assets of the Corporation in complete
         liquidation or dissolution of the Corporation, or

                                        A-1

<PAGE>


                              (iii) any reverse merger in which the
         Corporation is the surviving entity but in which securities possessing
         more than fifty percent (50%) of the total combined voting power of the
         Corporation's outstanding securities are transferred to person or
         persons different from the persons holding those securities immediately
         prior to such merger.

         F. CORPORATION shall mean Ultratech Stepper, Inc., a Delaware
corporation, and its successors.

         G. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and
direction of the employer entity as to both the work to be performed and the
manner and method of performance.

         H. EXERCISE DATE shall mean the date on which the Corporation shall
have received written notice of the option exercise.

         I. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

                  - If the Common Stock is at the time traded on the Nasdaq
         National Market, then the Fair Market Value shall be the closing
         selling price per share of Common Stock on the date in question, as
         such price is reported on the Nasdaq National Market. If there is no
         closing selling price for the Common Stock on the date in question,
         then the Fair Market Value shall be the closing selling price on the
         last preceding date for which such quotation exists.

                  - If the Common Stock is at the time listed on any Stock
         Exchange, then the Fair Market Value shall be the closing selling price
         per share of Common Stock on the date in question on that Stock
         Exchange determined by the Plan Administrator to be the primary market
         for the Common Stock, as such price is officially quoted in the
         composite tape of transactions on such exchange. If there is no closing
         selling price for the Common Stock on the date in question, then the
         Fair Market Value shall be the closing selling price on the last
         preceding date for which such quotation exists.

         J. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized
use or disclosure by such person of confidential information or trade secrets
of the Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by such person adversely affecting the business or affairs of the
Corporation (or any Parent or Subsidiary) in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Corporation (or any Parent or Subsidiary) may consider as grounds
for the dismissal or discharge of any Optionee, Participant or other person
in the Service of the Corporation (or any Parent or Subsidiary).

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<PAGE>


         K. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.

         L. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.

         M. OPTION GRANT PROGRAM shall mean the option grant program in
effect under the Plan.

         N. OPTIONEE shall mean any person to whom an option is granted under
the Plan.

         O. PARENT shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the
time of the determination, 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. PARTICIPANT shall mean any person who is issued shares of Common
Stock under the Stock Issuance Program.

         Q. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of an individual to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected
to result in death or to be of continuous duration of twelve (12) months or
more.

         R. PLAN shall mean the Corporation's Supplemental Stock Option/Stock
Issuance Plan, as set forth in this document.

         S. PLAN ADMINISTRATOR shall mean the committee comprised of one or
more Board members appointed by the Board to administer the Plan.

         T. SERVICE shall mean the provision of services on a periodic basis
to the Corporation (or any Parent or Subsidiary) in the capacity of an
Employee or an independent consultant or advisor, except to the extent
otherwise specifically provided in the applicable stock option agreement.

         U. STOCK EXCHANGE shall mean either the American Stock Exchange or
the New York Stock Exchange.

         V. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by
the Corporation and the Participant at the time of issuance of shares of
Common Stock under the Stock Issuance Program.

         W. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in
effect under the Plan.

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<PAGE>

         X. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in
the unbroken chain owns, at the time of the determination, 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.


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