**Exhibit
        10.1**
 **THE
        EIGHTH AMENDED AND RESTATED**
 **1998
        EQUITY PARTICIPATION PLAN**
 **OF**
 **TEGAL
        CORPORATION***
  ****
        This Plan addresses the effect of the Company’s 1-to-12 reverse stock split
        effected on July 25, 2006.***
  Tegal
        Corporation, a Delaware corporation (the “Company”), hereby amends and restates
        the Seventh Amended and Restated 1998 Equity Participation Plan of Tegal
        Corporation (as so amended, the “Plan”), incorporating certain amendments
        adopted by the Board of Directors on May 24, 2006. The Plan shall become
        effective on the date it is approved by the Company’s stockholders. The Plan was
        initially adopted by the Board of Directors on July 16, 1998 and the
        stockholders of the Company on September 15, 1998, with an initial effective
        date of July 16, 1998. The Plan was amended and restated by the Board of
        Directors on July 21, 1999 and such amendment was approved by the stockholders
        on September 21, 1999. The Plan was again amended and restated on July 8,
        2000
        by the Board of Directors and such amendment was approved by the stockholders
        on
        September 19, 2000. The Plan was amended and restated a third time on September
        25, 2001 by the Board of Directors and such amendment did not require
        shareholder approval. The Plan was amended and restated a fourth time on
        September 9, 2002 and was approved by our stockholders on October 22, 2002.
        The
        Plan was amended and restated a fifth time on June 30, 2003 and was approved
        by
        our stockholders on September 8, 2003. The Plan was amended and restated
        a sixth
        time on July 23, 2004 and was approved by our stockholders on September 21,
        2004. The Plan was amended and restated a seventh time on July 5, 2005 and
        was
        approved by our stockholders on August 8, 2005. The plan was amended and
        restated an eighth time on May 24, 2006 and was approved by our stockholders
        on
        July 21, 2006. The purposes of the Plan are as follows:
  (1) To
        provide an additional incentive for key Employees and Consultants (as such
        terms
        are defined below) to further the growth, development and financial success
        of
        the Company by personally benefiting through the ownership of Company stock
        and/or rights which recognize such growth, development and financial
        success.
  (2) To
        enable
        the Company to obtain and retain the services of key Employees and Consultants
        considered essential to the long range success of the Company by offering
        them
        an opportunity to own stock in the Company and/or rights which will reflect
        the
        growth, development and financial success of the Company.
  1. DEFINITIONS
  *1.1General.
        Wherever the following terms are used in the Plan, they shall have the meanings
        specified below, unless the context clearly indicates
        otherwise.*
  *1.2Administrator.
        “Administrator” shall mean the entity that conducts the general administration
        of the Plan as provided herein. With reference to the administration of the
        Plan
        with respect to any Award granted under the Plan, the term “Administrator” shall
        refer to the Committee unless the Board has assumed the authority for
        administration of the Plan generally as provided in Section
        11.1.*
  *1.3Award.
“Award”
        shall mean an Option, a Restricted Stock award, a Restricted Stock Unit award,
        a
        Dividend Equivalent award or a Stock Appreciation Right which may be awarded
        or
        granted under the Plan (collectively, “Awards”).*
  *1.4Award
        Agreement.
“Award
        Agreement” shall mean a written agreement executed by an authorized officer of
        the Company and the Holder which shall contain such terms and conditions
        with
        respect to an Award as the Administrator shall determine, consistent with
        the
        Plan.*
  *1.5Award
        Limit.
“Award
        Limit” shall mean 333,334 shares of Common Stock, as adjusted pursuant to
        Section 12.3 of the Plan.*
  *1.6Board**.
        “Board” shall mean the Board of Directors of the Company.*
  25
  **1.7**Change
        in
        Control**.
        “Change in Control” shall mean a change in ownership or control of the Company
        effected through any of the following transactions:**
  **(a)** **any
        person or related group of persons (other than the Company or a person that,
        prior to such transaction, directly or indirectly controls, is controlled
        by, or
        is under common control with, the Company) directly or indirectly acquires
        beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
        Act)
        of securities of the Company (or a successor of the Company) possessing more
        than twenty-five percent (25%) of the total combined voting power of the
        then
        outstanding securities of the Company or such successor;
        or**
 **(b)** **at
        any time that the Company has registered shares under the Exchange Act, at
        least
        40% of the directors of the Company constitute persons who were not at the
        time
        of their first election to the Board, candidates proposed by a majority of
        the
        Board in office prior to the time of such first election;
        or**
 **(c)** **the
        dissolution of the Company or liquidation of more than 75% in value of the
        Company or a sale of assets involving 75% or more in value of the assets
        of the
        Company, (x) any merger or reorganization of the Company whether or not another
        entity is the survivor, (y) a transaction pursuant to which the holders,
        as a
        group, of all of the shares of the Company outstanding prior to the transaction
        hold, as a group, less than 50% of the combined voting power of the Company
        or
        any successor company outstanding after the transaction, or (z) any other
        event
        which the Board determines, in its discretion, would materially alter the
        structure of the Company or its ownership.**
 **1.8**Code**.
        “Code” shall mean the Internal Revenue Code of 1986, as amended.**
  **1.9**Committee**.
        “Committee” shall mean the Compensation Committee of the Board, or another
        committee or subcommittee of the Board, appointed as provided in Section
        11.1.**
  **1.10**Common
        Stock**.
        “Common Stock” shall mean the common stock of the Company, par value $.01 per
        share, and any equity security of the Company issued or authorized to be
        issued
        in the future, but excluding any preferred stock and any warrants, options
        or
        other rights to purchase Common Stock.**
  **1.11**Company**.
        “Company” shall mean Tegal Corporation, a Delaware
        corporation.**
  **1.12**Consultant**.
        “Consultant” shall mean any consultant or adviser if:**
  ****the
        consultant or adviser renders bona fide services to the
        Company;
 ****t he
          services rendered by the consultant or adviser are not in connection with
          the
          offer or sale of securities in a capital-raising transaction and do not
          directly
          or indirectly promote or maintain a market for the Company’s securities;
          and
  the consultant or adviser is a natural person who has contracted directly
        with
        the Company to render such services.
  **1.13**Director**.
        “Director” shall mean a member of the Board.**
  **1.14**Dividend
        Equivalent**.
        “Dividend Equivalent” shall mean a right granted to a Holder pursuant to Section
        11.1 to receive the equivalent value (in cash or shares of Common Stock)
        of
        dividends paid on Common Stock.**
  **1.15**DRO**.
        “DRO” shall mean a domestic relations order as defined by the Code or Title I of
        the Employee Retirement Income Security Act of 1974, as amended, or the rules
        thereunder.**
  **1.16**Employee**.
        “Employee” shall mean any officer or other employee (as defined in accordance
        with Section 3401(c) of the Code) of the Company, or of any corporation which
        is
        a Subsidiary.**
  **1.17**Exchange****Act**.
        “Exchange Act” shall mean the Securities Exchange Act of 1934, as
        amended.**
  **1.18**Fair
        Market Value**.
        “Fair Market Value” of a share of Common Stock as of a given date shall be (a)
        the closing price of a share of Common Stock on the principal exchange on
        which
        shares of Common Stock are then trading, if any (or as reported on any composite
        index which includes such principal exchange), on the trading day previous
        to
        such date, or if shares were not traded on the trading day previous to such
        date, then on the next preceding date on which a trade occurred, or (b) if
        Common Stock is not traded on an exchange but is quoted on NASDAQ or a successor
        quotation system, the mean between the closing representative bid and asked
        prices for the Common Stock on the trading day previous to such date as reported
        by NASDAQ or such successor quotation system; or (c) if Common Stock is not
        publicly traded on an exchange and not quoted on NASDAQ or a successor quotation
        system, the Fair Market Value of a share of Common Stock as established by
        the
        Administrator acting in good faith.**
  26
  **1.19**Holder**.
        “Holder” shall mean a person who has been granted or awarded an
        Award.**
  **1.20**Incentive
        Stock Option**.
        “Incentive Stock Option” shall mean an option which conforms to the applicable
        provisions of Section 422 of the Code and which is designated as an Incentive
        Stock Option by the Administrator.**
  **1.21**Independent
        Director**.
        “Independent Director” shall mean a member of the Board who is not an Employee
        of the Company.**
  **1.22**Non-Qualified
        Stock Option**.
        “Non-Qualified Stock Option” shall mean an Option which is not designated as an
        Incentive Stock Option by the Administrator.**
  **1.23**Option**.
        “Option” shall mean a stock option granted under Article IV of the Plan. An
        Option granted under the Plan shall, as determined by the Administrator,
        be
        either a Non-Qualified Stock Option or an Incentive Stock Option; provided,
        however, that Options granted to Consultants shall be Non-Qualified Stock
        Options.**
  **1.24**Performance
        Criteria**.
        “Performance Criteria” shall mean the following business criteria with respect
        to the Company, any Subsidiary or any division or operating unit: (a) net
        income, (b) pre-tax income, (c) operating income, (d) cash flow, (e) earnings
        per share, (f) return on equity, (g) return on invested capital or assets,
        (h)
        cost reductions or savings, (i) funds from operations, (j) appreciation in
        the
        fair market value of Common Stock and (k) earnings before any one or more
        of the
        following items: interest, taxes, depreciation or
        amortization.**
  **1.25**Plan**.
        “Plan” shall mean The Eighth Amended and Restated 1998 Equity Participation Plan
        of Tegal Corporation.**
  **1.26**Restricted
        Stock**.
        “Restricted Stock” shall mean Common Stock awarded under Article VII of the
        Plan.**
  **1.27**Restricted
        Stock Unit**.
        “Restricted Stock Unit” shall mean a right to receive a share of Common Stock
        during specified time periods granted pursuant to Section
        11.2**
  **1.28**Rule
        16b-3**.
        “Rule 16b-3” shall mean that certain Rule 16b-3 under the Exchange Act, as such
        Rule may be amended from time to time.**
  **1.29**Section
        162(m) Participant**.
        “Section 162(m) Participant” shall mean any key Employee designated by the
        Administrator as a key Employee whose compensation for the fiscal year in
        which
        the key Employee is so designated or a future fiscal year may be subject
        to the
        limit on deductible compensation imposed by Section 162(m) of the
        Code.**
  **1.30**Securities
        Act**.
        “Securities Act” shall mean the Securities Act of 1933, as
        amended.**
  **1.31**Stock
        Appreciation Right**.
        “Stock Appreciation Right” shall mean a stock appreciation right granted under
        Article VIII of the Plan.**
  **1.32**Subsidiary**.
        “Subsidiary” shall mean any corporation in an unbroken chain of corporations
        beginning with the Company if each of the corporations other than the last
        corporation in the unbroken chain then owns stock possessing fifty percent
        (50%)
        or more of the total combined voting power of all classes of stock in one
        of the
        other corporations in such chain.**
  **1.33**Substitute
        Award**.
        “Substitute Award” shall mean an Option granted under this Plan upon the
        assumption of, or in substitution for, outstanding equity awards previously
        granted by a company or other entity in connection with a corporate transaction,
        such as a merger, combination, consolidation or acquisition of property or
        stock.**
  **1.34**Termination
        of Consultancy**.
        “Termination of Consultancy” shall mean the time when the engagement of a Holder
        as a Consultant to the Company or a Subsidiary is terminated for any reason,
        with or without cause, including, but not by way of limitation, by resignation,
        discharge, death, disability or retirement; but excluding terminations where
        there is a simultaneous commencement of employment with the Company or any
        Subsidiary. The Administrator, in its absolute discretion, shall determine
        the
        effect of all matters and questions relating to Termination of Consultancy,
        including, but not by way of limitation, the question of whether a Termination
        of Consultancy resulted from a discharge for good cause, and all questions
        of
        whether a particular leave of absence constitutes a Termination of Consultancy.
        Notwithstanding any other provision of the Plan, the Company or any Subsidiary
        has an absolute and unrestricted right to terminate a Consultant’s service at
        any time for any reason whatsoever, with or without cause, except to the
        extent
        expressly provided otherwise in writing.**
  27
  **1.35**Termination
        of Employment ***.
        “Termination of Employment” shall mean the time when the employee-employer
        relationship between a Holder and the Company or any Subsidiary is terminated
        for any reason, with or without cause, including, but not by way of limitation,
        a termination by resignation, discharge, death, disability or retirement;
        but
        excluding (a) terminations where there is a simultaneous reemployment or
        continuing employment of a Holder by the Company or any Subsidiary, (b) at
        the
        discretion of the Administrator, terminations which result in a temporary
        severance of the employee-employer relationship, and (c) at the discretion
        of
        the Administrator, terminations which are followed by the simultaneous
        establishment of a consulting relationship by the Company or a Subsidiary
        with
        the former employee. The Administrator, in its absolute discretion, shall
        determine the effect of all matters and questions relating to Termination
        of
        Employment, including, but not by way of limitation, the question of whether
        a
        Termination of Employment resulted from a discharge for good cause, and all
        questions of whether a particular leave of absence constitutes a Termination
        of
        Employment; provided, however, that, with respect to Incentive Stock Options,
        unless otherwise determined by the Administrator in its discretion, a leave
        of
        absence, change in status from an employee to an independent contractor or
        other
        change in the employee-employer relationship shall constitute a Termination
        of
        Employment if, and to the extent that, such leave of absence, change in status
        or other change interrupts employment for the purposes of Section 422(a)(2)
        of
        the Code and the then applicable regulations and revenue rulings under said
        Section. Notwithstanding any other provision of the Plan, the Company or
        any
        Subsidiary has an absolute and unrestricted right to terminate an Employee’s
        service at any time for any reason whatsoever, with or without cause, except
        to
        the extent expressly provided otherwise in writing.***
  2. SHARES
        SUBJECT TO PLAN
  ***2.1***  *Shares
        Subject to Plan* **.**
  The shares of stock subject to Awards shall be Common Stock, initially shares
        of
        the Company’s Common Stock, par value $.01 per share. The aggregate number of
        such shares which may be issued upon exercise of such Options or rights or
        upon
        any such awards under the Plan shall not exceed 1,666,667. The shares of
        Common
        Stock issuable upon exercise of such Options or rights or upon any such awards
        may be either previously authorized but unissued shares or treasury
        shares.
  The maximum number of shares which may be subject to Awards, granted under
        the
        Plan to any individual in any fiscal year shall not exceed the Award Limit.
        To
        the extent required by Section 162(m) of the Code, shares subject to Options
        which are canceled continue to be counted against the Award Limit.
  **2.2**Add-back
        of Options and Other Rights**.
        If any Option, or other right to acquire shares of Common Stock under any
        other
        Award under the Plan, expires or is canceled without having been fully
        exercised, or is exercised in whole or in part for cash as permitted by the
        Plan, the number of shares subject to such Option or other right but as to
        which
        such Option or other right was not exercised prior to its expiration,
        cancellation or exercise may again be optioned, granted or awarded hereunder,
        subject to the limitations of Section 2.1. Furthermore, any shares subject
        to
        Awards which are adjusted pursuant to Section 12.3 and become exercisable
        with
        respect to shares of stock of another corporation shall be considered cancelled
        and may again be optioned, granted or awarded hereunder, subject to the
        limitations of Section 2.1. Shares of Common Stock which are delivered by
        the
        Holder or withheld by the Company upon the exercise of any Award under the
        Plan,
        in payment of the exercise price thereof or tax withholding thereon, may
        again
        be optioned, granted or awarded hereunder, subject to the limitations of
        Section
        2.1. If any shares of Restricted Stock are surrendered by the Holder or
        repurchased by the Company pursuant to Section 7.4 or 7.5 hereof, such shares
        may again be optioned, granted or awarded hereunder, subject to the limitations
        of Section 2.1. Notwithstanding the provisions of this Section 2.2, no shares
        of
        Common Stock may again be optioned, granted or awarded if such action would
        cause an Incentive Stock Option to fail to qualify as an incentive stock
        option
        under Section 422 of the Code.**
  3. GRANTING
        OF AWARDS
  **3.1**Award
        Agreement**.
        Each Award shall be evidenced by an Award Agreement. Award Agreements evidencing
        Awards intended to qualify as performance-based compensation as described
        in
        Section 162(m)(4)(C) of the Code shall contain such terms and conditions
        as may
        be necessary to meet the applicable provisions of Section 162(m) of the Code.
        Award Agreements evidencing Incentive Stock Options shall contain such terms
        and
        conditions as may be necessary to meet the applicable provisions of Section
        422
        of the Code.**
  28
  **3.2**Provisions
        Applicable to Section 162(m) Participants ***.***
  The
        Committee, in its discretion, may determine whether an Award is to qualify
        as
        performance-based compensation as described in Section 162(m)(4)(C) of the
        Code.
  Notwithstanding
        anything in the Plan to the contrary, the Committee may grant any Award to
        a
        Section 162(m) Participant, including Restricted Stock the restrictions with
        respect to which lapse upon the attainment of performance goals which are
        related to one or more of the Performance Criteria.
  To
        the
        extent necessary to comply with the performance-based compensation requirements
        of Section 162(m)(4)(C) of the Code, with respect to any Award granted under
        Article VII which may be granted to one or more Section 162(m) Participants,
        no
        later than ninety (90) days following the commencement of any fiscal year
        in
        question or any other designated fiscal period or period of service (or such
        other time as may be required or permitted by Section 162(m) of the Code),
        the
        Committee shall, in writing, (i) designate one or more Section 162(m)
        Participants, (ii) select the Performance Criteria applicable to the fiscal
        year
        or other designated fiscal period or period of service, (iii) establish the
        various performance targets, in terms of an objective formula or standard,
        and
        amounts of such Awards, as applicable, which may be earned for such fiscal
        year
        or other designated fiscal period or period of service and (iv) specify the
        relationship between Performance Criteria and the performance targets and
        the
        amounts of such Awards, as applicable, to be earned by each Section 162(m)
        Participant for such fiscal year or other designated fiscal period or period
        of
        service. Following the completion of each fiscal year or other designated
        fiscal
        period or period of service, the Committee shall certify in writing whether
        the
        applicable performance targets have been achieved for such fiscal year or
        other
        designated fiscal period or period of service. In determining the amount
        earned
        by a Section 162(m) Participant, the Committee shall have the right to reduce
        (but not to increase) the amount payable at a given level of performance
        to take
        into account additional factors that the Committee may deem relevant to the
        assessment of individual or corporate performance for the fiscal year or
        other
        designated fiscal period or period of service.
  Furthermore,
        notwithstanding any other provision of the Plan, any Award which is granted
        to a
        Section 162(m) Participant and is intended to qualify as performance-based
        compensation as described in Section 162(m)(4)(C) of the Code shall be subject
        to any additional limitations set forth in Section 162(m) of the Code (including
        any amendment to Section 162(m) of the Code) or any regulations or rulings
        issued thereunder that are requirements for qualification as performance-based
        compensation as described in Section 162(m)(4)(C) of the Code, and the Plan
        shall be deemed amended to the extent necessary to conform to such
        requirements.
  **3.3**Limitations
        Applicable to Section 16 Persons**.
        Notwithstanding any other provision of the Plan, the Plan, and any Award
        granted
        or awarded to any individual who is then subject to Section 16 of the Exchange
        Act, shall be subject to any additional limitations set forth in any applicable
        exemptive rule under Section 16 of the Exchange Act (including any amendment
        to
        Rule 16b-3 of the Exchange Act) that are requirements for the application
        of
        such exemptive rule. To the extent permitted by applicable law, the Plan
        and
        Awards granted or awarded hereunder shall be deemed amended to the extent
        necessary to conform to such applicable exemptive
        rule.**
  **3.4**At-Will
        Employment**.
        Nothing in the Plan or in any Award Agreement hereunder shall confer upon
        any
        Holder any right to continue in the employ of, or as a Consultant for, the
        Company or any Subsidiary, or shall interfere with or restrict in any way
        the
        rights of the Company and any Subsidiary, which are hereby expressly reserved,
        to discharge any Holder at any time for any reason whatsoever, with or without
        cause, except to the extent expressly provided otherwise in a written employment
        agreement between the Holder and the Company and any
        Subsidiary.**
  4. GRANTING
        OF OPTIONS TO EMPLOYEES AND CONSULTANTS
  **4.1**Eligibility**.
        Any Employee or Consultant selected by the Committee pursuant to Section
        4.4(a)(i) shall be eligible to be granted an Option.**
  **4.2**Disqualification
        for Stock Ownership**.
        No person may be granted an Incentive Stock Option under the Plan if such
        person, at the time the Incentive Stock Option is granted, owns stock possessing
        more than ten percent (10%) of the total combined voting power of all classes
        of
        stock of the Company or any then existing Subsidiary or parent corporation
        (within the meaning of Section 422 of the Code) unless such Incentive Stock
        Option conforms to the applicable provisions of Section 422 of the
        Code.**
  29
  **4.3**Qualification
        of Incentive Stock Options**.
        No Incentive Stock Option shall be granted to any person who is not an
        Employee.**
  4.4Granting
        of Options to Employees and Consultants.
  The
        Committee shall from time to time, in its absolute discretion, and subject
        to
        applicable limitations of the Plan:
  **Determine
        which Employees are key Employees and select from among the key Employees
        or
        Consultants (including Employees or Consultants who have previously received
        Awards under the Plan) such of them as in its opinion should be granted
        Options;**
  **Subject
        to the Award Limit, determine the number of shares to be subject to such
        Options
        granted to the selected key Employees or consultants;**
  **Subject
        to Section 4.3, determine whether such Options are to be Incentive Stock
        Options
        or Non-Qualified Stock Options and whether such Options are to qualify as
        performance-based compensation as described in Section 162(m)(4)(C) of the
        Code;
        and**
  **Determine
        the terms and conditions of such Options, consistent with the Plan; provided,
        however, that the terms and conditions of Options intended to qualify as
        performance-based compensation as described in Section 162(m)(4)(C) of the
        Code
        shall include, but not be limited to, such terms and conditions as may be
        necessary to meet the applicable provisions of Section 162(m) of the
        Code.**
  Upon
        the
        selection of a key Employee or Consultant to be granted an Option, the Committee
        shall instruct the Secretary of the Company to issue the Option and may impose
        such conditions on the grant of the Option as it deems appropriate.
  Any
        Incentive Stock Option granted under the Plan may be modified by the Committee,
        with the consent of the Holder, to disqualify such Option from treatment
        as an
“incentive stock option” under Section 422 of the Code.
  5. TERMS
        OF OPTIONS
  **5.1**Option
        Price ***.
        The price per share of the shares subject to each Option granted to Employees
        and Consultants shall be set by the Committee; provided, however, that such
        price shall be no less than 85% of the Fair Market Value of a share of Common
        Stock on the date the Option is granted and:***
  in
        the
        case of Options intended to qualify as performance-based compensation as
        described in Section 162(m)(4)(C) of the Code, such price shall not be less
        than
        100% of the Fair Market Value of a share of Common Stock on the date the
        Option
        is granted;
  in
        the
        case of Incentive Stock Options such price shall not be less than 100% of
        the
        Fair Market Value of a share of Common Stock on the date the Option is granted
        (or the date the Option is modified, extended or renewed for purposes of
        Section
        424(h) of the Code);
  in
        the
        case of Incentive Stock Options granted to an individual then owning (within
        the
        meaning of Section 424(d) of the Code) more than 10% of the total combined
        voting power of all classes of stock of the Company or any Subsidiary or
        parent
        corporation thereof (within the meaning of Section 422 of the Code), such
        price
        shall not be less than 110% of the Fair Market Value of a share of Common
        Stock
        on the date the Option is granted (or the date the Option is modified, extended
        or renewed for purposes of Section 424(h) of the Code); and
  with
        the
        consent of a Holder whose rights are impaired or altered under an outstanding
        Option, the exercise price per share of shares subject to a previously granted,
        outstanding Option may be reduced (i) to the then-current Fair Market Value
        if
        the Fair Market Value of the Common Stock has declined since the date the
        Option
        was granted, (ii) pursuant to an option exchange program, including a program
        pursuant to which an outstanding Option is cancelled and any of the following
        is
        granted in substitution therefor (A) a new option under the Plan or another
        equity plan of the Company covering the same or a different number of shares
        of
        Common Stock, (B) another Award, (C) cash, or (D) other valuable consideration
        (as determined by the Committee, in its sole discretion); (iii) pursuant
        to any
        other action that is treated as a repricing under generally accepted accounting
        principles.
  30
  **5.2**Option
        Term**.
        The term of an Option granted to an Employee or consultant shall be set by
        the
        Committee in its discretion; provided, however, that, in the case of Incentive
        Stock Options, the term shall not be more than ten (10) years from the date
        the
        Incentive Stock Option is granted, or five (5) years from the date the Incentive
        Stock Option is granted if the Incentive Stock Option is granted to an
        individual then owning (within the meaning of Section 424(d) of the Code)
        more
        than 10% of the total combined voting power of all classes of stock of the
        Company or any Subsidiary or parent corporation thereof (within the meaning
        of
        Section 422 of the Code). Except as limited by requirements of Section 422
        of
        the Code and regulations and rulings thereunder applicable to Incentive Stock
        Options, the Committee may extend the term of any outstanding Option in
        connection with any Termination of Employment or Termination of Consultancy
        of
        the Holder, or amend any other term or condition of such Option relating
        to such
        a termination.**
  ***5.3***  **** Option
        Vesting
  The
        period during which the right to exercise, in whole or in part, an Option
        granted to an Employee or a Consultant vests in the Holder shall be set by
        the
        Committee and the Committee may determine that an Option may not be exercised
        in
        whole or in part for a specified period after it is granted; provided, however,
        that, unless the Committee otherwise provides in the terms of the Award
        Agreement or otherwise, no Option shall be exercisable by any Holder who
        is then
        subject to Section 16 of the Exchange Act within the period ending six months
        and one day after the date the Option is granted. At any time after grant
        of an
        Option, the Committee may, in its sole and absolute discretion and subject
        to
        whatever terms and conditions it selects, accelerate the period during which
        an
        Option granted to an Employee or Consultant vests.
  No
        portion of an Option granted to an Employee or Consultant which is unexercisable
        at Termination of Employment or Termination of Consultancy, as applicable,
        shall
        thereafter become exercisable, except as may be otherwise provided by the
        Committee either in the Award Agreement or by action of the Committee following
        the grant of the Option.
  To
        the
        extent that the aggregate Fair Market Value of stock with respect to which
        “incentive stock options” (within the meaning of Section 422 of the Code, but
        without regard to Section 422(d) of the Code) are exercisable for the first
        time
        by a Holder during any calendar year (under the Plan and all other incentive
        stock option plans of the Company and any parent or subsidiary corporation,
        within the meaning of Section 422 of the Code) of the Company, exceeds $100,000,
        such Options shall be treated as Non-Qualified Options to the extent required
        by
        Section 422 of the Code. The rule set forth in the preceding sentence shall
        be
        applied by taking Options into account in the order in which they were granted.
        For purposes of this Section 5.3(c), the Fair Market Value of stock shall
        be
        determined as of the time the Option with respect to such stock is
        granted.
  **5.4**Substitute
        Awards ***.
        Notwithstanding the foregoing provisions of this Article V to the contrary,
        in
        the case of an Option that is a Substitute Award, the price per share of
        the
        shares subject to such Option may be less than the Fair Market Value per
        share
        on the date of grant, provided, that the excess of:***
  the
        aggregate Fair Market Value (as of the date such Substitute Award is granted)
        of
        the shares subject to the Substitute Award; over
  the
        aggregate exercise price thereof; does not exceed the excess of;
  the
        aggregate fair market value (as of the time immediately preceding the
        transaction giving rise to the Substitute Award, such fair market value to
        be
        determined by the Committee) of the shares of the predecessor entity that
        were
        subject to the grant assumed or substituted for by the Company;
        over
  the
        aggregate exercise price of such shares.
  **5.5**Termination ***.
        In the event of a Holder’s Termination of Employment or Termination of
        Consultancy, such Holder may exercise his or her Option within such period
        of
        time as is specified in the Option Agreement to the extent that the Option
        is
        vested on the date of termination. If, on the date of termination, the Holder
        is
        not vested as to his or her entire Option, the shares covered by the unvested
        portion of the Option shall immediately cease to be issuable under the Option
        and shall again become available for issuance under the Plan. If, after
        termination, the Holder does not exercise his or her Option within the time
        period specified herein, the Option shall terminate, and the shares covered
        by
        such Option shall again become available for issuance under the Plan.***
  31
  6. EXERCISE
        OF OPTIONS
  **6.1**Partial
        Exercise**.
        An exercisable Option may be exercised in whole or in part. However, an Option
        shall not be exercisable with respect to fractional shares and the Administrator
        may require that, by the terms of the Option, a partial exercise be with
        respect
        to a minimum number of shares.**
  **6.2**Manner
        of
        Exercise**.
        All or a portion of an exercisable Option shall be deemed exercised upon
        delivery of all of the following to the Secretary of the Company or his
        office:**
  A
        written
        notice complying with the applicable rules established by the Administrator
        stating that the Option, or a portion thereof, is exercised. The notice shall
        be
        signed by the Holder or other person then entitled to exercise the Option
        or
        such portion of the Option;
  Such
        representations and documents as the Administrator, in its absolute discretion,
        deems necessary or advisable to effect compliance with all applicable provisions
        of the Securities Act and any other federal or state securities laws or
        regulations. The Administrator may, in its absolute discretion, also take
        whatever additional actions it deems appropriate to effect such compliance
        including, without limitation, placing legends on share certificates and
        issuing
        stop-transfer notices to agents and registrars;
  In
        the
        event that the Option shall be exercised pursuant to Section 10.1 by any
        person
        or persons other than the Holder, appropriate proof of the right of such
        person
        or persons to exercise the Option; and
  Full
        cash
        payment to the Secretary of the Company for the shares with respect to which
        the
        Option, or portion thereof, is exercised. However, the Administrator, may
        in its
        discretion
  **allow
        a delay in payment up to thirty (30) days from the date the Option, or portion
        thereof, is exercised;**
  **allow
        payment, in whole or in part, through the delivery of shares of Common Stock
        which have been owned by the Holder for at least six months, duly endorsed
        for
        transfer to the Company with a Fair Market Value on the date of delivery
        equal
        to the aggregate exercise price of the Option or exercised portion thereof;**
  **allow
        payment, in whole or in part, through the surrender of shares of Common Stock
        then issuable upon exercise of the Option having a Fair Market Value on the
        date
        of Option exercise equal to the aggregate exercise price of the Option or
        exercised portion thereof;**
  **allow
        payment, in whole or in part, through the delivery of property of any kind
        which
        constitutes good and valuable consideration; (v) allow payment, in whole
        or in
        part, through the delivery of a full recourse promissory note bearing interest
        (at no less than such rate as shall then preclude the imputation of interest
        under the Code) and payable upon such terms as may be prescribed by the
        Administrator; (vi) allow payment, in whole or in part, through the delivery
        of
        a notice that the Holder has placed a market sell order with a broker with
        respect to shares of Common Stock then issuable upon exercise of the Option,
        and
        that the broker has been directed to pay a sufficient portion of the net
        proceeds of the sale to the Company in satisfaction of the Option exercise
        price, provided that payment of such proceeds is then made to the Company
        upon
        settlement of such sale; or (vii) allow payment through any combination of
        the
        consideration provided in the foregoing subparagraphs (ii), (iii), (iv),
        (v) and
        (vi). In the case of a promissory note, the Administrator may also prescribe
        the
        form of such note and the security to be given for such note. The Option
        may not
        be exercised, however, by delivery of a promissory note or by a loan from
        the
        Company when or where such loan or other extension of credit is prohibited
        by
        law.**
  32
  ***6.3***  *Conditions to Issuance of Stock Certificates* **.
        The Company shall not be required to issue or deliver any certificate or
        certificates for shares of stock purchased upon the exercise of any Option
        or
        portion thereof prior to fulfillment of all of the following
        conditions:**
  The
        admission of such shares to listing on all stock exchanges on which such
        class
        of stock is then listed;
  The
        completion of any registration or other qualification of such shares under
        any
        state or federal law, or under the rulings or regulations of the Securities
        and
        Exchange Commission or any other governmental regulatory body which the
        Administrator shall, in its absolute discretion, deem necessary or
        advisable;
  The
        obtaining of any approval or other clearance from any state or federal
        governmental agency which the Administrator shall, in its absolute discretion,
        determine to be necessary or advisable;
  The
        lapse
        of such reasonable period of time following the exercise of the Option as
        the
        Administrator may establish from time to time for reasons of administrative
        convenience; and
  The
        receipt by the Company of full payment for such shares, including payment
        of any
        applicable withholding tax, which in the discretion of the Administrator
        may be
        in the form of consideration used by the Holder to pay for such shares under
        Section 6.2(d).
  **6.4******Rights
        as
        Stockholders**.
        Holders shall not be, nor have any of the rights or privileges of, stockholders
        of the Company in respect of any shares purchasable upon the exercise of
        any
        part of an Option unless and until certificates representing such shares
        have
        been issued by the Company to such Holders.**
  **6.5****Ownership and Transfer Restrictions. The Administrator, in its absolute
        discretion, may impose such restrictions on the ownership and transferability
        of
        the shares purchasable upon the exercise of an Option as it deems appropriate.
        Any such restriction shall be set forth in the respective Award Agreement
        and
        may be referred to on the certificates evidencing such shares. The Holder
        shall
        give the Company prompt notice of any disposition of shares of Common Stock
        acquired by exercise of an Incentive Stock Option within (a) two years from
        the
        date of granting (including the date the Option is modified, extended or
        renewed
        for purposes of Section 424(h) of the Code) such Option to such Holder or
        (b)
        one year after the transfer of such shares to such
        Holder.**
  **6.6****Additional Limitations on Exercise of Options. Holders may be required to
        comply
        with any timing or other restrictions with respect to the settlement or exercise
        of an Option, including a window-period limitation, as may be imposed in
        the
        discretion of the Administrator.**
  7. AWARD
        OF RESTRICTED STOCK
  **7.1******Eligibility.
        Subject to the Award Limit**.
        Restricted Stock may be awarded to any Employee who the Committee determines
        is
        a key Employee or any Consultant who the Committee determines should receive
        such an Award.**
  **7.2******Award
        of
        Restricted Stock**.**
  The
        Committee may from time to time, in its absolute discretion:
  **Determine
        which Employees are key Employees and select from among the key Employees
        or
        Consultants (including Employees or Consultants who have previously received
        other awards under the Plan) such of them as in its opinion should be awarded
        Restricted Stock; and**
  **Determine
        the purchase price, if any, and other terms and conditions applicable to
        such
        Restricted Stock, consistent with the Plan.**
  The
        Committee shall establish the purchase price, if any, and form of payment
        for
        Restricted Stock; provided, however, that such purchase price shall be no
        less
        than the par value of the Common Stock to be purchased, unless otherwise
        permitted by applicable state law. In all cases, legal consideration shall
        be
        required for each issuance of Restricted Stock.
  33
  Upon
        the
        selection of a key Employee or Consultant to be awarded Restricted Stock,
        the
        Committee shall instruct the Secretary of the Company to issue such Restricted
        Stock and may impose such conditions on the issuance of such Restricted Stock
        as
        it deems appropriate.
  **7.3**Rights
        as
        Stockholders**.
        Subject to Section 7.4, upon delivery of the shares of Restricted Stock to
        the
        escrow holder pursuant to Section 7.6, the Holder shall have, unless otherwise
        provided by the Committee, all the rights of a stockholder with respect to
        said
        shares, subject to the restrictions in his Award Agreement, including the
        right
        to receive all dividends and other distributions paid or made with respect
        to
        the shares; provided, however, that in the discretion of the Committee, any
        extraordinary distributions with respect to the Common Stock shall be subject
        to
        the restrictions set forth in Section 7.4.**
  **7.4******Restriction**.
        All shares of Restricted Stock issued under the Plan (including any shares
        received by holders thereof with respect to shares of Restricted Stock as
        a
        result of stock dividends, stock splits or any other form of recapitalization)
        shall, in the terms of each individual Award Agreement, be subject to such
        restrictions as the Committee shall provide, which restrictions may include,
        without limitation, restrictions concerning voting rights and transferability
        and restrictions based on duration of employment with the Company, Company
        performance and individual performance; provided, however, that, unless the
        Committee otherwise provides in the terms of the Award Agreement or otherwise,
        no share of Restricted Stock granted to a person subject to Section 16 of
        the
        Exchange Act shall be sold, assigned or otherwise transferred until at least
        six
        months and one day have elapsed from the date on which the Restricted Stock
        was
        issued, and provided, further, that, except with respect to shares of Restricted
        Stock granted to Section 162(m) Participants, by action taken after the
        Restricted Stock is issued, the Committee may, on such terms and conditions
        as
        it may determine to be appropriate, remove any or all of the restrictions
        imposed by the terms of the Award Agreement. Restricted Stock may not be
        sold or
        encumbered until all restrictions are terminated or expire. If no consideration
        was paid by the Holder upon issuance, a Holder’s rights in unvested Restricted
        Stock shall lapse, and such Restricted Stock shall be surrendered to the
        Company
        without consideration, upon Termination of Employment or, if applicable,
        upon
        Termination of Consultancy with the Company; provided, however, that the
        Committee in its sole and absolute discretion may provide that such rights
        shall
        not lapse in the event of a Termination of Employment following a “change of
        ownership or control” (within the meaning of Treasury Regulation Section
        1.162-27(e)(2)(v) or any successor regulation thereto) of the Company or
        because
        of the Holder’s death or disability; provided, further, except with respect to
        shares of Restricted Stock granted to Section 162(m) Participants, the Committee
        in its sole and absolute discretion may provide that no such lapse or surrender
        shall occur in the event of a Termination of Employment, or a Termination
        of
        Consultancy, without cause or following any Change in Control of the Company
        or
        because of the Holder’s retirement, or otherwise.**
  **7.5**Repurchase
        of Restricted Stock**.
        The Committee shall provide in the terms of each individual Award Agreement
        that
        the Company shall have the right to repurchase from the Holder the Restricted
        Stock then subject to restrictions under the Award Agreement immediately
        upon a
        Termination of Employment or, if applicable, upon a Termination of Consultancy
        between the Holder and the Company, at a cash price per share equal to the
        price
        paid by the Holder for such Restricted Stock; provided, however, that the
        Committee in its sole and absolute discretion may provide that no such right
        of
        repurchase shall exist in the event of a Termination of Employment following
        a
“change of ownership or control” (within the meaning of Treasury Regulation
        Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the Company
        or
        because of the Holder’s death or disability; provided, further, that, except
        with respect to shares of Restricted Stock granted to Section 162(m)
        Participants, the Committee in its sole and absolute discretion may provide
        that
        no such right of repurchase shall exist in the event of a Termination of
        Employment or a Termination of Consultancy without cause or following any
        Change
        in Control of the Company or because of the Holder’s retirement, or
        otherwise.**
  **7.6******Escrow**.
        The Secretary of the Company or such other escrow holder as the Committee
        may
        appoint shall retain physical custody of each certificate representing
        Restricted Stock until all of the restrictions imposed under the Award Agreement
        with respect to the shares evidenced by such certificate expire or shall
        have
        been removed.**
  **7.7******Legend**.
        In order to enforce the restrictions imposed upon shares of Restricted Stock
        hereunder, the Committee shall cause a legend or legends to be placed on
        certificates representing all shares of Restricted Stock that are still subject
        to restrictions under Award Agreements, which legend or legends shall make
        appropriate reference to the conditions imposed thereby.**
  **7.8**Section
        83(b) Election**.
        If a Holder makes an election under Section 83(b) of the Code, or any successor
        section thereto, to be taxed with respect to the Restricted Stock as of the
        date
        of transfer of the Restricted Stock rather than as of the date or dates upon
        which the Holder would otherwise be taxable under Section 83(a) of the Code,
        the
        Holder shall deliver a copy of such election to the Company immediately after
        filing such election with the Internal Revenue
        Service.**
  34
  8. STOCK
        APPRECIATION RIGHTS
  **8.1**Grant
        of
        Stock Appreciation Rights**.
        A Stock Appreciation Right may be granted to any key Employee or Consultant
        selected by the Committee. A Stock Appreciation Right may be granted (a)
        in
        connection and simultaneously with the grant of an Option, (b) with respect
        to a
        previously granted Option, or (c) independent of an Option. A Stock Appreciation
        Right shall be subject to such terms and conditions not inconsistent with
        the
        Plan as the Committee shall impose and shall be evidenced by an Award
        Agreement.**
  **8.2**Coupled
        Stock Appreciation Rights**.**
  A
        Coupled
        Stock Appreciation Right (“CSAR”) shall be related to a particular Option and
        shall be exercisable only when and to the extent the related Option is
        exercisable.
  A
        CSAR
        may be granted to the Holder for no more than the number of shares subject
        to
        the simultaneously or previously granted Option to which it is
        coupled.
  A
        CSAR
        shall entitle the Holder (or other person entitled to exercise the Option
        pursuant to the Plan) to surrender to the Company unexercised a portion of
        the
        Option to which the CSAR relates (to the extent then exercisable pursuant
        to its
        terms) and to receive from the Company in exchange therefore an amount
        determined by multiplying the difference obtained by subtracting the Option
        exercise price from the Fair Market Value of a share of Common Stock on the
        date
        of exercise of the CSAR by the number of shares of Common Stock with respect
        to
        which the CSAR shall have been exercised, subject to any limitations the
        Committee may impose.
  ***8.3***  *Independent
        Stock Appreciation Rights* **.**
  An
        Independent Stock Appreciation Right (“ISAR”) shall be unrelated to any Option
        and shall have a term set by the Committee. An ISAR shall be exercisable
        in such
        installments as the Committee may determine. An ISAR shall cover such number
        of
        shares of Common Stock as the Committee may determine; provided, however,
        that
        unless the Committee otherwise provides in the terms of the ISAR or otherwise,
        no ISAR granted to a person subject to Section 16 of the Exchange Act shall
        be
        exercisable until at least six months have elapsed from (but excluding) the
        date
        on which the Option was granted. The exercise price per share of Common Stock
        subject to each ISAR shall be set by the Committee. With the consent of a
        Holder
        whose rights are impaired or altered under an outstanding ISAR, the exercise
        price per share of shares subject to a previously granted, outstanding ISAR
        may
        be reduced (i) to the then-current Fair Market Value if the Fair Market Value
        of
        the Common Stock has declined since the date the ISAR was granted, (ii) pursuant
        to a Stock Appreciation Right exchange program, including a program pursuant
        to
        which an outstanding ISAR is cancelled and any of the following is granted
        in
        substitution therefor (A) a new ISAR under the Plan or another equity plan
        of
        the Company covering the same or a different number of shares of Common Stock,
        (B) another Award, (C) cash, or (D) other valuable consideration (as determined
        by the Committee, in its sole discretion); (iii) pursuant to any other action
        that is treated as a repricing under generally accepted accounting principles.
        An ISAR is exercisable only while the Holder is an Employee or Consultant;
        provided that the Committee may determine that the ISAR may be exercised
        subsequent to Termination of Employment or Termination of Consultancy without
        cause, or following a Change in Control, or because of the Holder’s retirement,
        death or disability, or otherwise.
  An
        ISAR
        shall entitle the Holder (or other person entitled to exercise the ISAR pursuant
        to the Plan) to exercise all or a specified portion of the ISAR (to the extent
        then exercisable pursuant to its terms) and to receive from the Company an
        amount determined by multiplying the difference obtained by subtracting the
        exercise price per share of the ISAR from the Fair Market Value of a share
        of
        Common Stock on the date of exercise of the ISAR by the number of shares
        of
        Common Stock with respect to which the ISAR shall have been exercised, subject
        to any limitations the Committee may impose.
  ***8.4***  *Payment
        and Limitations on Exercise* **.**
  Payment
        of the amounts determined under Section 8.2(c) and 8.3(b) above shall be
        in
        cash, in Common Stock (based on its Fair Market Value as of the date the
        Stock
        Appreciation Right is exercised) or a combination of both, as determined
        by the
        Committee. To the extent such payment is effected in Common Stock, it shall
        be
        made subject to satisfaction of all provisions of Section 6.3 above pertaining
        to Options.
  35
  Holders
        of Stock Appreciation Rights may be required to comply with any timing or
        other
        restrictions with respect to the settlement or exercise of a Stock Appreciation
        Right, including a window-period limitation, as may be imposed in the discretion
        of the Committee.
  9. **OTHER
        TYPES OF AWARDS**
 
 ***9.1***  *Dividend
        Equivalents* **.**
   **(a)** **Any
        Employee or Consultant selected by the Administrator may be granted Dividend
        Equivalents based on the dividends on the shares of Common Stock that are
        subject to any Award, to be credited as of dividend payment dates, during
        the
        period between the date the Award is granted and the date the Award is
        exercised, vests or expires, as determined by the Administrator. Such Dividend
        Equivalents shall be converted to cash or additional shares of Common Stock
        by
        such formula and at such time and subject to such limitations as may be
        determined by the Administrator.**
  **(b)** **Dividend
        Equivalents granted with respect to Options or Stock Appreciation Rights
        that
        are intended to qualify as performance-based compensation as described in
        Section 162(m)(C)(4) of the Code shall be payable, with respect to pre-exercise
        periods, regardless of whether such Option or Stock Appreciation Right is
        subsequently exercised.**
 **9.2**Restricted
        Stock Units**.
        The Administrator is authorized to make Awards of Restricted Stock Units
        to any
        Employee or Consultant selected by the Administrator in such amounts and
        subject
        to such terms and conditions as determined by the Administrator. At the time
        of
        grant, the Administrator shall specify the date or dates on which the Restricted
        Stock Units shall become fully vested and nonforfeitable, and may specify
        such
        conditions to vesting as it deems appropriate. Alternatively, Restricted
        Stock
        Units may become fully vested and nonforfeitable pursuant to the satisfaction
        of
        one or more Performance Criteria or other specific performance criteria as
        the
        Administrator determines to be appropriate at the time of the grant of the
        Restricted Stock Units or thereafter, in each case on a specified date or
        dates
        or over any period or periods determined by the Administrator. At the time
        of
        grant, the Administrator shall specify the maturity date applicable to each
        grant of Restricted Stock Units which shall be no earlier than the vesting
        date
        or dates of the Award and may be determined at the election of the Employee
        or
        Consultant to whom the Award is granted. On the maturity date, the Company
        shall
        transfer to the Holder one unrestricted, fully transferable share of Stock
        for
        each Restricted Stock Unit that is vested and scheduled to be distributed
        on
        such date and not previously forfeited. The Administrator shall specify the
        purchase price, if any, to be paid by the Holder to the Company for such
        shares
        of Common Stock; provided, however, that such price shall not be less than
        the
        par value of a share of Stock on the date of grant, unless otherwise permitted
        by applicable state law.**
  **9.3**Term**.
        Except as otherwise provided herein, the term of any Award of Dividend
        Equivalents or Restricted Stock Units shall be set by the Administrator in
        its
        discretion.**
  **9.4**Form
        of
        Payment**.
        Payments with respect to any Awards granted under Sections 9.1 and 9.2 shall
        be
        made in cash, in Common Stock or a combination of both, as determined by
        the
        Administrator.**
  **9.5**Award
        Agreement**.
        All Awards under this Article 9 shall be subject to such additional terms
        and
        conditions as determined by the Administrator and shall be evidenced by a
        written Award Agreement.**
  10. COMPLIANCE
        WITH SECTION 409A OF THE CODE
  **10.1**Awards
        subject to Code Section 409A**.
        Any Award that constitutes, or provides for, a deferral****of compensation subject to Section 409A of the Code (a “**Section
        409A Award**”)
        shall satisfy the requirements of Section 409A of the Code and this Article
        10,
        to the extent applicable. The Award Agreement with respect to a Section 409A
        Award shall incorporate the terms and conditions required by Section 409A
        of the
        Code and this Article 10.**
  **10.2**Distributions
        under a Section 409A Award ***.***
  (a)  Subject
        to subsection (b), any shares of Common Stock or other property or amounts
        to be
        paid or distributed upon the grant, issuance, vesting, exercise or payment
        of a
        Section 409A Award shall be distributed in accordance with the requirements
        of
        Section 409A(a)(2) of the Code, and shall not be distributed earlier
        than:
  36
  (i)  the
        Holder’s separation from service, as determined by the Secretary of the
        Treasury;
  (ii)  the
        date
        the Holder becomes disabled;
  (iii)  the
        Participant’s death;
  (iv)  a
        specified time (or pursuant to a fixed schedule) specified under the Award
        Agreement at the date of the deferral compensation;
  (v)  to
        the
        extent provided by the Secretary of the Treasury, a change in the ownership
        or
        effective control of the Company or a Subsidiary, or in the ownership of
        a
        substantial portion of the assets of the Company or a Subsidiary;
        or
  (vi)  the
        occurrence of an unforeseeable emergency with respect to the
        Holder.
  (b)  In
        the
        case of a Holder who is a “specified employee,” the requirement of paragraph
        (a)(i) shall be met only if the distributions with respect to the Section
        409A
        Award may not be made before the date which is six months after the Holder’s
        separation from service (or, if earlier, the date of the Holder’s death). For
        purposes of this subsection (b), a Holder shall be a “specified employee” if
        such Holder is a key employee (as defined in Section 416(i) of the Code without
        regard to paragraph (5) thereof) of a corporation any stock of which is publicly
        traded on an established securities market or otherwise, as determined under
        Section 409A(a)(2)(B)(i) of the Code and the Treasury Regulations thereunder.
  (c)  The
        requirement of paragraph (a)(vi) shall be met only if, as determined under
        Treasury Regulations under Section 409A(a)(2)(B)(ii) of the Code, the amounts
        distributed with respect to the unforeseeable emergency do not exceed the
        amounts necessary to satisfy such unforeseeable emergency plus amounts necessary
        to pay taxes reasonably anticipated as a result of the distribution, after
        taking into account the extent to which such unforeseeable emergency is or
        may
        be relieved through reimbursement or compensation by insurance or otherwise
        or
        by liquidation of the Holder’s assets (to the extent the liquidation of such
        assets would not itself cause severe financial hardship).
  (d)  For
        purposes of this Section, the terms specified therein shall have the respective
        meanings ascribed thereto under Section 409A of the Code and the Treasury
        Regulations thereunder.
  **10.3**Prohibition
        on Acceleration of Benefits**.
        The time or schedule of any distribution or payment of any shares of Stock
        or
        other property or amounts under a Section 409A Award shall not be accelerated,
        except as otherwise permitted under Section 409A(a)(3) of the Code and the
        Treasury Regulations thereunder.**
  ***10.4*** Elections
        under Section 409A Awards **.**
  (a) Any
        deferral election provided under or with respect to an Award to any Employee
        or
        Consultant, or to the Holder holding a Section 409A Award, shall satisfy
        the
        requirements of Section 409A(a)(4)(B) of the Code, to the extent applicable,
        and, except as otherwise permitted under paragraph (i) or (ii) below, any
        such
        deferral election with respect to compensation for services performed during
        a
        taxable year shall be made not later than the close of the preceding taxable
        year, or at such other time as provided in Treasury Regulations.
  **(i)**  **In
        the case of the first year in which an Eligible Individual or a Participant
        holding a Section 409A Award, becomes eligible to participate in the Plan,
        any
        such deferral election may be made with respect to services to be performed
        subsequent to the election with thirty days after the date the Eligible
        Individual, or the Participant holding a Section 409A Award, becomes eligible
        to
        participate in the Plan, as provided under Section 409A(a)(4)(B)(ii) of the
        Code.**
 **(ii)**  **In
        the case of any performance-based compensation based on services performed
        by an
        Eligible Individual, or the Participant holding a Section 409A Award, over
        a
        period of at least twelve months, any such deferral election may be made
        no
        later than six months before the end of the period, as provided under Section
        409A(a)(4)(B)(iii) of the Code.**
 (b) In
        the
        event that a Section 409A Award permits, under a subsequent election by the
        Holder holding such Section 409A Award, a delay in a distribution or payment
        of
        any shares of Common Stock or other property or amounts under such Section
        409A
        Award, or a change in the form of distribution or payment, such subsequent
        election shall satisfy the requirements of Section 409A(a)(4)(C) of the Code,
        and:
  37
  (i)  such
        subsequent election may not take effect until at least twelve months after
        the
        date on which the election is made,
  (ii)  in
        the
        case such subsequent election relates to a distribution or payment not described
        in Section 10.2(a)(ii), (iii) or (vi), the first payment with respect to
        such
        election may be deferred for a period of not less than five years from the
        date
        such distribution or payment otherwise would have been made, and
  (iii)  in
        the
        case such subsequent election relates to a distribution or payment described
        in
        Section 10.2(a)(iv), such election may not be made less than twelve months
        prior
        to the date of the first scheduled distribution or payment under Section
        12.2(a)(iv).
  **10.5**Compliance
        in Form and Operation**.
        A Section 409A Award, and any election under or with respect to such Section
        409A Award, shall comply in form and operation with the requirements of Section
        409A of the Code and the Treasury Regulations
        thereunder.**
  11. ADMINISTRATION
  **11.1**Compensation
        Committee**.
        The Compensation Committee (or another committee or a subcommittee of the
        Board
        assuming the functions of the Committee under the Plan) shall consist solely
        of
        two or more Independent Directors appointed by and holding office at the
        pleasure of the Board, each of whom is both a “non-employee director” as defined
        by Rule 16b-3 and an “outside director” for purposes of Section 162(m) of the
        Code. Appointment of Committee members shall be effective upon acceptance
        of
        appointment. Committee members may resign at any time by delivering written
        notice to the Board. Vacancies in the Committee may be filled by the
        Board.**
  **11.2**Duties
        and Powers of Committee**.
        It shall be the duty of the Committee to conduct the general administration
        of
        the Plan in accordance with its provisions. The Committee shall have the
        power
        to interpret the Plan and the Award Agreements, and to adopt such rules for
        the
        administration, interpretation, and application of the Plan as are consistent
        therewith, to interpret, amend or revoke any such rules and to amend any
        Award
        Agreement provided that the rights or obligations of the Holder of the Award
        that is the subject of any such Award Agreement are not affected adversely.
        Any
        such grant or award under the Plan need not be the same with respect to each
        Holder. Any such interpretations and rules with respect to Incentive Stock
        Options shall be consistent with the provisions of Section 422 of the Code.
        In
        its absolute discretion, the Board may at any time and from time to time
        exercise any and all rights and duties of the Committee under the Plan except
        with respect to matters which under Rule 16b-3 or Section 162(m) of the Code,
        or
        any regulations or rules issued thereunder, are required to be determined
        in the
        sole discretion of the Committee.**
  **11.3**Majority
        Rule; Unanimous Written Consent**.
        The Committee shall act by a majority of its members in attendance at a meeting
        at which a quorum is present or by a memorandum or other written instrument
        signed by all members of the Committee.**
  **11.4******Compensation;
        Professional Assistance; Good Faith Actions**.
        Members of the Committee shall receive such compensation, if any, for their
        services as members as may be determined by the Board. All expenses and
        liabilities which members of the Committee incur in connection with the
        administration of the Plan shall be borne by the Company. The Committee may,
        with the approval of the Board, employ attorneys, consultants, accountants,
        appraisers, brokers, or other persons. The Committee, the Company and the
        Company’s officers and Directors shall be entitled to rely upon the advice,
        opinions or valuations of any such persons. All actions taken and all
        interpretations and determinations made by the Committee or the Board in
        good
        faith shall be final and binding upon all Holders, the Company and all other
        interested persons. No members of the Committee or Board shall be personally
        liable for any action, determination or interpretation made in good faith
        with
        respect to the Plan or Awards, and all members of the Committee and the Board
        shall be fully protected by the Company with respect to any such action,
        determination or interpretation.**
  **11.5**Delegation
        of Authority to Grant Awards**.
        The Committee may, but need not, delegate from time to time some or all of
        its
        authority to grant Awards under the Plan to a committee consisting of one
        or
        more members of the Committee or of one or more officers of the Company;
        provided, however, that the Committee may not delegate its authority to grant
        Awards to individuals (i) who are subject on the date of the grant to the
        reporting rules under Section 16(a) of the Exchange Act, (ii) who are Section
        162(m) Participants or (iii) who are officers of the Company who are delegated
        authority by the Committee hereunder. Any delegation hereunder shall be subject
        to the restrictions and limits that the Committee specifies at the time of
        such
        delegation of authority and may be rescinded at any time by the Committee.
        At
        all times, any committee appointed under this Section 11.5 shall serve in
        such
        capacity at the pleasure of the Committee.**
  38
  12. MISCELLANEOUS
        PROVISIONS
 **12.1**Not
        Transferable**.
        No Award under the Plan may be sold, pledged, assigned or transferred in
        any
        manner other than by will or the laws of descent and distribution or, subject
        to
        the consent of the Administrator, pursuant to a DRO, unless and until such
        Award
        has been exercised, or the shares underlying such Award have been issued,
        and
        all restrictions applicable to such shares have lapsed; provided, however,
        that
        the restrictions set forth in the foregoing clause shall not apply to transfers
        of Non-Qualified Stock Options, Restricted Stock or Stock Appreciation Rights,
        subject to the consent of the Administrator, by gift of an Option by an Employee
        to a Permitted Transferee (as defined below) subject to the following terms
        and
        conditions: (i) an Option transferred to a Permitted Transferee shall not
        be
        assignable or transferable by the Permitted Transferee other than by DRO
        or by
        will or the laws of descent and distribution; (ii) any Option which is
        transferred to a Permitted Transferee shall continue to be subject to all
        the
        terms and considerations of the Option as applicable to the original holder
        (other than the ability to further transfer the Option); (iii) the Employee
        and
        the Permitted Transferee shall execute any and all documents reasonably
        requested by the Administrator, including, without limitation, documents
        to (a)
        confirm the status of the transferee as a Permitted Transferee, (b) satisfy
        any
        requirements for an exemption for the transfer under applicable federal and
        state securities laws and (c) provide evidence of the transfer; (iv) the
        shares
        of Common Stock acquired by a Permitted Transferee through exercise of an
        Option
        have not been registered under the Securities Act, or any state securities
        act
        and may not be transferred, nor will any assignee or transferee thereof be
        recognized as an owner of such shares of Common Stock for any purpose, unless
        a
        registration statement under the Securities Act and any applicable state
        securities act with respect to such shares shall then be in effect or unless
        the
        availability of an exemption from registration with respect to any proposed
        transfer or disposition of such shares shall be established to the satisfaction
        of counsel for the Company. As used in this Section 12.1, “Permitted Transferee”
shall mean (i) one or more of the following family members of an Employee:
        spouse, former spouse, child (whether natural or adopted), stepchild, any
        other
        lineal descendant of the Employee, (ii) a trust, partnership or other entity
        established and existing for the sole benefit of, or under the sole control
        of,
        one or more of the above family members of the Employee, or (iii) any other
        transferee specifically approved by the Administrator after taking into account
        any state or federal tax or securities laws applicable to transferable
        Options.**
  No
        Award
        or interest or right therein shall be liable for the debts, contracts or
        engagements of the Holder or his successors in interest or shall be subject
        to
        disposition by transfer, alienation, anticipation, pledge, encumbrance,
        assignment or any other means whether such disposition be voluntary or
        involuntary or by operation of law, by judgment, levy, attachment, garnishment
        or any other legal or equitable proceedings (including bankruptcy), and any
        attempted disposition thereof shall be null and void and of no effect, except
        to
        the extent that such disposition is permitted by the preceding
        sentence.
  Unless
        an
        Option has been transferred in accordance with this Section 12.1, (i) during
        the
        lifetime of the Holder, only he may exercise an Option or other Award (or
        any
        portion thereof) granted to him under the Plan unless it has been disposed
        of
        pursuant to a DRO, and (ii) after the death of the Holder, any exercisable
        portion of an Option or other Award may, prior to the time when such portion
        becomes unexercisable under the Plan or the applicable Award Agreement, be
        exercised by his personal representative or by any person empowered to do
        so
        under the deceased Holder’s will or under the then applicable laws of descent
        and distribution.
  **12.2******Amendment,
        Suspension or Termination of the Plan**.
        Except as otherwise provided in this Section 12.2, the Plan may be wholly
        or
        partially amended or otherwise modified, suspended or terminated at any time
        or
        from time to time by the Administrator. However, without approval of the
        Company’s stockholders given within twelve months before or after the action by
        the Administrator, no action of the Administrator may, except as provided
        in
        Section 12.3, increase the limits imposed in Section 2.1 on the maximum number
        of shares which may be issued under the Plan. No amendment, suspension or
        termination of the Plan shall, without the consent of the Holder, alter or
        impair any rights or obligations under any Award theretofore granted or awarded,
        unless the Award itself otherwise expressly so provides. No Awards may be
        granted or awarded during any period of suspension or after termination of
        the
        Plan, and in no event may any Award be granted under the Plan after the first
        to
        occur of the following events:**
  The
        expiration of ten years from the date the Plan is adopted by the Board;
        or
  The
        expiration of ten years from the date the Plan is approved by the Company’s
        stockholders under Section 12.4.
  The
        Plan
        will terminate on July 14, 2015, unless it is terminated sooner by the
        Administrator pursuant to this Section 12.2.
  39
  **12.3******Changes
        in Common Stock or Assets of the Company, Acquisition or Liquidation of the
        Company and Other Corporate Events.
  Subject
        to Section 12.3 (d), in the event that the Administrator determines that
        any
        dividend or other distribution (whether in the form of cash, Common Stock,
        other
        securities, or other property), recapitalization, reclassification, stock
        split,
        reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
        combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
        or other disposition of all or substantially all of the assets of the Company,
        or exchange of Common Stock or other securities of the Company, issuance
        of
        warrants or other rights to purchase Common Stock or other securities of
        the
        Company, or other similar corporate transaction or event, in the Administrator’s
        sole discretion, affects the Common Stock such that an adjustment is determined
        by the Administrator to be appropriate in order to prevent dilution or
        enlargement of the benefits or potential benefits intended to be made available
        under the Plan or with respect to an Award, then the Administrator shall,
        in
        such manner as it may deem equitable, adjust any or all of
  **the
        number and kind of shares of Common Stock (or other securities or property)
        with
        respect to which Awards may be granted or awarded (including, but not limited
        to, adjustments of the limitations in Section 2.1 on the maximum number and
        kind
        of shares which may be issued and adjustments of the Award
        Limit),**
  **the
        number and kind of shares of Common Stock (or other securities or property)
        subject to outstanding Awards, and**
  **the
        grant or exercise price with respect to any Award.**
  Subject
        to Sections 12.3(b)(vii) and 12.3(d), in the event of any transaction or
        event
        described in Section 12.3(a) or of changes in applicable laws, regulations,
        or
        accounting principles, the Administrator, in its sole and absolute discretion,
        and on such terms and conditions as it deems appropriate, either by the terms
        of
        the Award or by action taken prior to the occurrence of such transaction
        or
        event and either automatically or upon the Holder’s request, is hereby
        authorized to take any one or more of the following actions whenever the
        Administrator determines that such action is appropriate in order to prevent
        dilution or enlargement of the benefits or potential benefits intended to
        be
        made available under the Plan or with respect to any Award under the Plan,
        to
        facilitate such transactions or events or to give effect to such changes
        in
        laws, regulations or principles:
  **To
        provide for either the purchase of any such Award for an amount of cash equal
        to
        the amount that could have been attained upon the exercise of such Award
        or
        realization of the Holder’s rights had such Award been currently exercisable or
        payable or fully vested or the replacement of such Award with other rights
        or
        property selected by the Administrator in its sole
        discretion;**
  **To
        provide that the Award cannot vest, be exercised or become payable after
        such
        event;**
  **To
        provide that such Award shall be exercisable as to all shares covered thereby,
        notwithstanding anything to the contrary in Section 5.3 or the provisions
        of
        such Award;**
  **To
        provide that such Award be assumed by the successor or survivor corporation,
        or
        a parent or subsidiary thereof, or shall be substituted for by similar options,
        rights or awards covering the stock of the successor or survivor corporation,
        or
        a parent or subsidiary thereof, with appropriate adjustments as to the number
        and kind of shares and prices;**
  **To
        make adjustments in the number and type of shares of Common Stock (or other
        securities or property) subject to outstanding Awards, and in the number
        and
        kind of outstanding Restricted Stock and/or in the terms and conditions of,
        and
        the criteria included in, outstanding options, rights and awards and options,
        rights and awards which may be granted in the future;**
  **To
        provide that, for a specified period of time prior to such event, the
        restrictions imposed under an Award Agreement upon some or all shares of
        Restricted Stock may be terminated, and some or all shares of such Restricted
        Stock may cease to be subject to repurchase under Section 7.5 or forfeiture
        under Section 7.4 after such event; and**
  40
  **Notwithstanding
        any other provision of the Plan, in the event of a Change in Control, each
        outstanding Award shall, immediately prior to the effective date of the Change
        in Control, automatically become fully exercisable for all of the shares
        of
        Common Stock at the time subject to such rights and may be exercised for
        any or
        all of those shares as fully-vested shares of Common
        Stock.**
  Subject
        to Sections 12.3(d), 3.2 and 3.3, the Administrator may, in its discretion,
        include such further provisions and limitations in any Award, agreement or
        certificate, as it may deem equitable and in the best interests of the
        Company.
  With
        respect to Awards which are granted to Section 162(m) Participants and are
        intended to qualify as performance-based compensation under Section
        162(m)(4)(C), no adjustment or action described in this Section 12.3 or in
        any
        other provision of the Plan shall be authorized to the extent that such
        adjustment or action would cause such Award to fail to so qualify under Section
        162(m)(4)(C), or any successor provisions thereto. No adjustment or action
        described in this Section 12.3 or in any other provision of the Plan shall
        be
        authorized to the extent that such adjustment or action would cause the Plan
        to
        violate Section 422(b)(1) of the Code. Furthermore, no such adjustment or
        action
        shall be authorized to the extent such adjustment or action would result
        in
        short-swing profits liability under Section 16 or violate the exemptive
        conditions of Rule 16b-3 unless the Administrator determines that the Award
        is
        not to comply with such exemptive conditions. The number of shares of Common
        Stock subject to any Award shall always be rounded to the next whole number.
  Notwithstanding
        the foregoing, in the event that the Company becomes a party to a transaction
        that is intended to qualify for “pooling of interests” accounting treatment and,
        but for one or more of the provisions of this Plan or any Award Agreement
        would
        so qualify, then this Plan and any Award Agreement shall be interpreted so
        as to
        preserve such accounting treatment, and to the extent that any provision
        of the
        Plan or any Award Agreement would disqualify the transaction from pooling
        of
        interests accounting treatment (including, if applicable, an entire Award
        Agreement), then such provision shall be null and void. All determinations
        to be
        made in connection with the preceding sentence shall be made by the independent
        accounting firm whose opinion with respect to “pooling of interests” treatment
        is required as a condition to the Company’s consummation of such
        transaction.
  The
        existence of the Plan, the Award Agreement and the Awards granted hereunder
        shall not affect or restrict in any way the right or power of the Company
        or the
        shareholders of the Company to make or authorize any adjustment,
        recapitalization, reorganization or other change in the Company’s capital
        structure or its business, any merger or consolidation of the Company, any
        issue
        of stock or of options, warrants or rights to purchase stock or of bonds,
        debentures, preferred or prior preference stocks whose rights are superior
        to or
        affect the Common Stock or the rights thereof or which are convertible into
        or
        exchangeable for Common Stock, or the dissolution or liquidation of the Company,
        or any sale or transfer of all or any part of its assets or business, or
        any
        other corporate act or proceeding, whether of a similar character or otherwise.
  **12.4******Approval
        of Plan by Stockholders**.
        The Plan will be submitted for the approval of the Company’s stockholders within
        twelve months after the date of the Board’s initial adoption of the Plan. Awards
        may be granted or awarded prior to such stockholder approval, provided that
        such
        Awards shall not be exercisable nor shall such Awards vest prior to the time
        when the Plan is approved by the stockholders, and provided further that
        if such
        approval has not been obtained at the end of said twelve-month period, all
        Awards previously granted or awarded under the Plan shall thereupon be canceled
        and become null and void. In addition, if the Board determines that Awards
        other
        than Options or Stock Appreciation Rights which may be granted to Section
        162(m)
        Participants should continue to be eligible to qualify as performance-based
        compensation under Section 162(m)(4)(C) of the Code, the Performance Criteria
        must be disclosed to and approved by the Company’s stockholders no later than
        the first stockholder meeting that occurs in the fifth year following the
        year
        in which the Company’s stockholders previously approved the Performance
        Criteria.**
  **12.5******Tax
        Withholding**.
        The Company shall be entitled to require payment in cash or deduction from
        other
        compensation payable to each Holder of any sums required by federal, state
        or
        local tax law to be withheld with respect to the issuance, vesting, exercise
        or
        payment of any Award. The Administrator may in its discretion and in
        satisfaction of the foregoing requirement allow such Holder to elect to have
        the
        Company withhold shares of Common Stock otherwise issuable under such Award
        (or
        allow the return of shares of Common Stock) having a Fair Market Value equal
        to
        the sums required to be withheld.**
  **12.6**Loans**.
        The Committee may, in its discretion, extend one or more loans to key Employees
        in connection with the exercise or receipt of an Award granted or awarded
        under
        the Plan, or the issuance of Restricted Stock awarded under the Plan. The
        terms
        and conditions of any such loan shall be set by the Committee.**
  **12.7**Forfeiture
        Provisions**.
        Pursuant to its general authority to determine the terms and conditions
        applicable to Awards under the Plan, the Administrator shall have the right
        to
        provide, in the terms of Awards made under the Plan, or to require a Holder
        to
        agree by separate written instrument, that (a)(i) any proceeds, gains or
        other
        economic benefit actually or constructively received by the Holder upon any
        receipt or exercise of the Award, or upon the receipt or resale of any Common
        Stock underlying the Award, must be paid to the Company, and (ii) the Award
        shall terminate and any unexercised portion of the Award (whether or not
        vested)
        shall be forfeited, if (b)(i) a Termination of Employment or Termination
        of
        Consultancy occurs prior to a specified date, or within a specified time
        period
        following receipt or exercise of the Award, or (ii) the Holder at any time,
        or
        during a specified time period, engages in any activity in competition with
        the
        Company, or which is inimical, contrary or harmful to the interests of the
        Company, as further defined by the Administrator or (iii) the Holder incurs
        a
        Termination of Employment or Termination of Consultancy for
        cause.**
  41
  **12.8**Effect
        of
        Plan Upon Options and Compensation Plans**.
        The adoption of the Plan shall not affect any other compensation or incentive
        plans in effect for the Company or any Subsidiary. Nothing in the Plan shall
        be
        construed to limit the right of the Company (a) to establish any other forms
        of
        incentives or compensation for Employees or Consultants of the Company or
        any
        Subsidiary or (b) to grant or assume options or other rights or awards otherwise
        than under the Plan in connection with any proper corporate purpose including
        but not by way of limitation, the grant or assumption of options in connection
        with the acquisition by purchase, lease, merger, consolidation or otherwise,
        of
        the business, stock or assets of any corporation, partnership, limited liability
        company, firm or association.**
  **12.9**Compliance
        with Laws**.
        The Plan, the granting and vesting of Awards under the Plan and the issuance
        and
        delivery of shares of Common Stock and the payment of money under the Plan
        or
        under Awards granted or awarded hereunder are subject to compliance with
        all
        applicable federal and state laws, rules and regulations (including but not
        limited to state and federal securities law and federal margin requirements)
        and
        to such approvals by any listing, regulatory or governmental authority as
        may,
        in the opinion of counsel for the Company, be necessary or advisable in
        connection therewith. Any securities delivered under the Plan shall be subject
        to such restrictions, and the person acquiring such securities shall, if
        requested by the Company, provide such assurances and representations to
        the
        Company as the Company may deem necessary or desirable to assure compliance
        with
        all applicable legal requirements. To the extent permitted by applicable
        law,
        the Plan and Awards granted or awarded hereunder shall be deemed amended
        to the
        extent necessary to conform to such laws, rules and
        regulations.**
  **12.10**Titles**.
        Titles are provided herein for convenience only and are not to serve as a
        basis
        for interpretation or construction of the Plan.**
  **12.11**Governing
        Law**.
        The Plan and any agreements hereunder shall be administered, interpreted
        and
        enforced under the internal laws of the State of Delaware without regard
        to
        conflicts of laws thereof.**
  ________________________
  I
        hereby
        certify that the foregoing Plan was duly adopted by the Board of Directors
        of
        Tegal Corporation as of May 24, 2006.
  /s/ CHRISTINE
                HERGENROTHERChristine
                HergenrotherSecretary
  
 42