Document:

exv10w55

Exhibit 10.55

APPLIED MATERIALS, INC.

EMPLOYEE STOCK INCENTIVE PLAN

(as amended and restated on September 16, 2008)

SECTION 1

BACKGROUND AND PURPOSE

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

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

SECTION 2

DEFINITIONS

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

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

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

     2.3 “Annual Meeting” means the Company’s annual meeting of stockholders.

     2.4 “Award” means, individually or collectively, a grant under the Plan of Nonqualified Stock Options,
Incentive Stock Options, SARs, Restricted Stock, Performance Units, or Performance Shares.

     2.5 “Award Agreement” means the written agreement (which may be in electronic form) setting forth the terms and
provisions applicable to each Award granted under the Plan.

     2.6 “Award Transfer Program” means any program instituted by the Committee which would permit Participants the opportunity
to transfer any outstanding Awards to a financial institution or other person or entity approved by
the Committee.

     2.7 “Board” or “Board of Directors” means the Board of Directors of the Company.

     2.8 “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the
Code or regulation thereunder shall include such section or regulation, any

 

 

valid regulation
promulgated under such section, and any comparable provision of any future legislation or
regulation amending, supplementing or superseding such section or regulation.

     2.9 “Committee” means the committee appointed by the Board (pursuant to Section 3.1) to administer the Plan.

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

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

     2.12 “Customer Satisfaction MBOs” means as to any Participant for any Performance Period, the objective and measurable
individual goals set by a “management by objectives” process and approved by the Committee, which
goals relate to the satisfaction of external or internal customer requirements and/or ratings.

     2.13 “Determination Date” means the latest possible date that will not jeopardize the
qualification of an Award granted under the Plan as “performance-based compensation” under Section
162(m) of the Code.

     2.14 “Director” means any individual who is a member of the Board of Directors of the Company.

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

     2.16 “Earnings Per Share” means as to any Performance Period, Net Income, divided by a weighted average number of common
shares outstanding and dilutive common equivalent shares deemed outstanding.

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

     2.18 “Exercise Price” means the price at which a Share may be purchased by a Participant pursuant to the exercise of
an Option.

     2.19 “Fair Market Value” means the last quoted per share selling price for Shares on the relevant date, or if there
were no sales on such date, the arithmetic mean of the highest and lowest quoted selling prices on
the nearest day before and the nearest day after the relevant date, as determined by the Committee.
Notwithstanding the preceding, for federal, state, and local income

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tax reporting purposes, fair
market value shall be determined by the Committee (or its delegate) in accordance with uniform and
nondiscriminatory standards adopted by it from time to time.

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

     2.21 “Grant Date” means, with respect to an Award, the date that the Award was granted.

     2.22 “Incentive Stock Option” means an Option to purchase Shares which is designated as an Incentive Stock Option and is
intended to meet the requirements of Section 422 of the Code.

     2.23 “Individual MBOs” means as to a Participant for any Performance Period, the objective and measurable goals set
by a “management by objectives” process and approved by the Committee, in its discretion.

     2.24 “Market Share” means as to any Performance Period, the Company’s or a business unit’s percentage of a market
segment with respect to a product or business. 

     2.25 “Net Income” means as to any Performance Period, the income after taxes for the Performance Period
determined in accordance with generally accepted accounting principles.

     2.26 “New Orders” means as to any Performance Period, the firm orders for a system, product, part, or service
that are being recorded for the first time as defined in the Company’s Order Recognition Policy.

     2.27 “Nonemployee Director” means a Director who is an employee of neither the Company nor of any Affiliate.

     2.28 “Nonqualified Stock Option” means an option to purchase Shares which is not intended to be an Incentive Stock Option.

     2.29 “Operating Profit” means as to any Performance Period, the difference between revenue and related costs and
expenses, excluding income derived from sources other than regular activities and before income
deductions.

     2.30 “Option” means an Incentive Stock Option or a Nonqualified Stock Option.

     2.31 “Participant” means an Employee, Consultant, or Nonemployee Director who has an outstanding Award.

     2.32 “Performance Goals” means the goal(s) (or combined goal(s)) determined by the Committee in its discretion to be
applicable to a Participant for a Performance Period. As determined by the Committee, the
Performance Goals applicable to each Participant shall provide for a targeted level or levels of
achievement using one or more of the following measures: (a) Customer Satisfaction MBOs,
(b) Earnings Per Share, (c) Individual MBOs, (d) Market Share, (e) Net Income, (f) New Orders, (g)
Operating Profits, (h) Return on Designated Assets, (i) Return on Equity, (j) Return on Sales, (k)
Revenue, and (l) Total Shareholder Return. Any criteria used may be measured, as applicable,
(i) in
absolute terms, (ii) in relative terms (including, but not limited, the passage of time and/or
against other companies or financial metrics), (iii) on a per share and/or share

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per capita basis,
(iv) against the performance of the Company as a whole or against particular segments or products
of the Company and/or (v) on a pre-tax or after-tax basis. Prior to the Determination Date, the
Committee shall determine whether any element(s) (for example, but not by way of limitation, the
effect of mergers or acquisitions) shall be included in or excluded from the calculation of any
Performance Goal with respect to any Participants (whether or not such determinations result in any
Performance Goal being measured on a basis other than generally accepted accounting principles).

     2.33 “Performance Period” means the time period during which the performance
objectives or continued status as an Employee, Director or Consultant must be met pursuant to
Section 8 or Section 9, as applicable.

     2.34 “Performance Share” means an Award granted to a Participant pursuant to Section 8.

     2.35 “Performance Unit” means an Award granted to a Participant pursuant to Section 8. 

     2.36 “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to
restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. As
provided in Section 7, such restrictions may be based on the passage of time, the achievement of
target levels of performance, or the occurrence of other events as determined by the Committee, in
its discretion. Notwithstanding any contrary provision of the Plan, (i) a Period of Restriction
that expires solely as the result of continued employment or service shall expire in full no
earlier than the three (3) year anniversary of the Grant Date, and (ii) a Period of Restriction
that does not expire solely as the result of continued employment or service shall expire in full
no earlier than the one (1) year anniversary of the Grant Date, unless determined otherwise by the
Committee at its discretion solely by reason of death, Disability, Retirement or major capital
change.

     2.37 “Plan” means the Applied Materials, Inc. Employee Stock Incentive Plan, as set forth in this
instrument and as hereafter amended from time to time. The Plan formerly was named the Applied
Materials, Inc. 1995 Equity Incentive Plan.

     2.38 “Reload Option” means an Option that automatically is granted if a Participant
pays the exercise price of an Option by tendering Shares.

     2.39 “Restricted Stock” means an Award granted to a Participant pursuant to Section 7.

     2.40 “Retirement” means, in the case of an Employee and, with respect to each Award granted prior to October 27,
2008, in the case of a Nonemployee Director: (a) a Termination of Service occurring on or after age
sixty-five (65), or (b) a Termination of Service occurring on or after age sixty (60) with at least
ten (10) full Years of Service. With respect to each Award granted on or after October 27, 2008
under Section 9, “Retirement” means a Termination of Service by the Nonemployee Director after the
Nonemployee Director has attained (a)  age seventy (70), or (b) age sixty (60) with at least ten
(10) full Years of Service.

     2.41 “Return on Designated Assets” means as to any Performance Period, Net Income divided by the average of beginning and ending
designated Company or business unit assets.

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     2.42 “Return on Equity”
means as to any Performance Period, the percentage equal to Net Income divided by average
stockholder’s equity, determined in accordance with generally accepted accounting principles.

     2.42 “Return on Sales” means as to any Performance Period, the percentage equal to Net Income, divided by Revenue.

     2.44 “Revenue” means net sales for the Performance Period, determined in accordance with generally accepted
accounting principles.

     2.45 “Rule 16b-3” means Rule 16b-3 promulgated under the 1934 Act, and any future regulation amending,
supplementing or superseding such regulation.

     2.46 “Section 16 Person” means a person who, with respect to the Shares, is subject to Section 16 of the 1934 Act.

     2.47 “Shares” means the shares of common stock of the Company.

     2.48 “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with a related Option, that pursuant to Section
6 is designated as an SAR. 

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

     2.50 “Tax Obligations”means tax and social insurance liability obligations and requirements in connection with the
Awards, including, without limitation, (a) all federal, state, and local taxes (including the
Participant’s FICA obligation) that are required to be withheld by the Company or the employing
Affiliate, (b) the Participant’s and, to the extent required by the Company (or the employing
Affiliate), the Company’s (or the employing Affiliate’s) fringe benefit tax liability, if any,
associated with the grant, vesting, or sale of Shares, and (c) any other Company (or employing
Affiliate) taxes the responsibility for which the Participant has agreed to bear with respect to
such Award (or exercise thereof or issuance of Shares thereunder).

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

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     2.52 “Total Shareholder Return” means as to any Performance Period, the total return (change in share price plus reinvestment
of any dividends) of a share of the Company’s common stock.

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

SECTION 3

ADMINISTRATION

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

     3.2 Authority of the Committee.  It shall be the duty of the Committee to administer the Plan in accordance with the Plan’s
provisions. The Committee shall have all powers and discretion necessary or appropriate to
administer the Plan and to control its operation, including, but not limited to, the power to (a)
determine which Employees and Consultants shall be granted Awards, (b) prescribe the terms and
conditions of the Awards, (c) interpret the Plan and the Awards, (d) adopt such procedures and
subplans as are necessary or appropriate to permit participation in the Plan by Employees,
Consultants and Directors who are foreign nationals or employed outside of the United States,
(e) to implement an Award Transfer Program in accordance with Section 10.7, (f) adopt rules for the
administration, interpretation and application of the Plan as are consistent therewith, and
(g) interpret, amend or revoke any such rules. Except as provided in Section 4.3, the Committee
may not reprice outstanding Options or institute a program whereby outstanding Awards are
surrendered or cancelled in exchange for Awards of the same type (which may have a lower exercise
price or purchase price), of a different type and/or cash (other than pursuant to an Award Transfer
Program) without first obtaining stockholder approval.

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

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

SECTION 4

SHARES SUBJECT TO THE PLAN

     4.1 Number of Shares .  Subject to adjustment as provided in Section 4.3, the total number of Shares available for
grant under the Plan shall not exceed 367,200,000. Shares granted under the Plan may be either
authorized but unissued Shares or treasury Shares. The total number of Shares that may be granted
pursuant to awards of Restricted Stock, Performance Shares and Performance Units may not exceed
90,000,000 Shares.

     4.2 Lapsed Awards.  If an Award is settled in cash, or is cancelled, terminates, expires, or lapses for any
reason, any Shares subject to such Award again shall be available to be the subject of an Award.
With respect to Stock Appreciation Rights, Shares actually issued pursuant to a Stock Appreciation
Right as well as the Shares that represent payment of the exercise price and tax related to the
Award shall cease to be available under the Plan. Shares that have actually been issued under the
Plan under any Award shall not be returned to the Plan and shall not become available for future
distribution under the Plan; provided, however, that if unvested Shares of Restricted Stock,
Performance Shares or Performance Units are repurchased by the Company or are forfeited to the
Company, such Shares shall become available for future grant under the Plan. To the extent an
Award under the Plan is paid out in cash rather than Shares, such cash payment shall not result in
reducing the number of Shares available for issuance under the Plan. Notwithstanding anything in
the Plan, or any Award Agreement to the contrary, Shares actually issued pursuant to Awards
transferred under any Award Transfer Program shall not be again available for grant under the Plan.
Notwithstanding the foregoing and, subject to adjustment provided in Section 4.3, the maximum
number of Shares that may be issued upon the exercise of Incentive Stock Options shall equal the
aggregate Share number stated in Section 4.1, plus, to the extent allowable under Section 422 of
the Code, any Shares that become available for issuance under the Plan under this Section 4.2.

     4.3 Adjustments in Awards and Authorized Shares.  In the event that any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, or other change in the corporate structure of the
Company affecting the Shares occurs, the Committee shall adjust the number and class of Shares that
may be issued under the Plan, the number, class, and price of Shares subject to outstanding Awards
and the numerical limits of Sections 5.1, 6.1, 7.1, 8.1 and 9.1, to prevent the dilution or
diminution of such Awards. Notwithstanding the preceding, the number of Shares subject to any
Award always shall be a whole number.

SECTION 5

STOCK OPTIONS

     5.1 Grant of Options.  Subject to the terms and provisions of the Plan, Options may be granted to Employees and
Consultants at any time and from time to time as determined by the

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Committee in its sole
discretion. The Committee, in its sole discretion, shall determine the number of Shares subject to
each Option, provided that during any Fiscal Year, no Participant shall be granted Options covering
more than 1,400,000 Shares. The Committee may grant Incentive Stock Options, Nonqualified Stock
Options, or a combination thereof. The Committee may not grant Reload Options.

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

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

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

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

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

     5.4 Expiration of Options.

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

               (a) The date for termination of the Option set forth in the written Award Agreement (which may
be in electronic form); or

               (b) The expiration of seven (7) years from the Grant Date; or

               (c) The expiration of three (3) years from the date of the Participant’s Termination of
Service for a reason other than the Participant’s death, Disability or Retirement; or

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               (d) The expiration of three (3) years from the date of the Participant’s Termination of
Service by reason of Disability; or

               (e) The expiration of three (3) years from the date of the Participant’s Retirement (except as
provided in Section 5.8.2 regarding Incentive Stock Options).

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

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

     5.5 Exercisability of Options.  Options granted under the Plan shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall determine in its sole discretion. After an
Option is granted, the Committee, in its sole discretion, may accelerate the exercisability of the
Option.

     5.6 Payment.  Options shall be exercised by the Participant’s delivery of a notice of exercise (in such
form and manner as the Company may designate) to the Secretary of the Company (or its designee),
setting forth the number of Shares with respect to which the Option is to be exercised, accompanied
by full payment for the Shares.

          Upon the exercise of any Option, the Exercise Price shall be payable to the Company in full in
cash or its equivalent. The Committee, in its sole discretion, also may permit exercise (a) by
tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Exercise Price, or (b) by any other means which the Committee, in its sole
discretion, determines to both provide legal consideration for the Shares, and to be consistent
with the purposes of the Plan.

          As soon as practicable after receipt of a notification of exercise (in such form and manner as
the Company may designate) and full payment for the Shares purchased, the Company shall deliver to
the Participant (or the Participant’s designated broker), Share certificates (which may be in book
entry form) representing such Shares.

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

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     5.8 Certain Additional Provisions for Incentive Stock Options.

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

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

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

          5.8.4 Expiration. No Incentive Stock Option may be exercised after the expiration of
seven (7) years from the Grant Date; provided, however, that if the Option is granted to an
Employee who, together with persons whose stock ownership is attributed to the Employee pursuant to
Section 424(d) of the Code, owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of the stock of the Company or any of its Subsidiaries, the Option may
not be exercised after the expiration of five (5) years from the Grant Date.

SECTION 6

STOCK APPRECIATION RIGHTS

     6.1 Grant of SARs.  Subject to the terms and conditions of the Plan, an SAR may be granted to Employees and
Consultants at any time and from time to time as shall be determined by the Committee, in its sole
discretion.

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

          6.1.2 Exercise Price and Other Terms. The Committee, subject to the provisions of the
Plan, shall have complete discretion to determine the terms and conditions of SARs granted under
the Plan, provided, however, that the exercise price shall be not less than one hundred percent
(100%) of the Fair Market Value of a Share on the date of grant. After a SAR is granted, the
Committee, in its sole discretion, may accelerate the exercisability of the SAR.

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

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

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

               (a) The difference between the Fair Market Value of a Share on the date of exercise over the
exercise price; times

               (b) The number of Shares with respect to which the SAR is exercised.

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

SECTION 7

RESTRICTED STOCK

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

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

     7.3 Transferability.  Except as provided in this Section 7, Shares of Restricted Stock may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction.

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

          7.4.1 General Restrictions. The Committee may set restrictions based upon the
Participant’s continued status as an Employee or Consultant, the achievement of specific
performance objectives (Company-wide, divisional, or individual), applicable federal or state
securities laws, or any other basis determined by the Committee in its discretion.

          7.4.2 Section 162(m) Performance Restrictions. For purposes of qualifying grants of
Restricted Stock as “performance-based compensation” under Section 162(m) of the Code, the
Committee, in its discretion, may set restrictions based upon the achievement of Performance Goals.

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The Performance Goals shall be set by the Committee on or before the latest date permissible to
enable the Restricted Stock to qualify as “performance-based compensation” under Section 162(m) of
the Code. In granting Restricted Stock which is intended to qualify under Section 162(m) of the
Code, the Committee shall follow any procedures determined by it from time to time to be necessary
or appropriate to ensure qualification of the Restricted Stock under Section 162(m) of the Code
(e.g., in determining the Performance Goals).

          7.4.3 Legend on Certificates. The Committee, in its discretion, may legend the
certificates representing Restricted Stock to give appropriate notice of such restrictions. For
example, the Committee may determine that some or all certificates representing Shares of
Restricted Stock shall bear the following legend:

     “The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is subject to
certain restrictions on transfer as set forth in the Applied Materials, Inc.
Employee Stock Incentive Plan, and in a Restricted Stock Agreement. A copy of the
Plan and such Restricted Stock Agreement may be obtained from the Secretary of
Applied Materials, Inc.”

     7.5 Removal of Restrictions.  Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each
Restricted Stock grant made under the Plan shall be released from escrow as soon as practicable
after the last day of the Period of Restriction. Subject to the minimum Period of Restriction
specified in Section 2.36, the Committee, in its discretion, may accelerate the time at which any
restrictions shall lapse or be removed. After the restrictions have lapsed, the Participant shall
be entitled to have any legend or legends under Section 7.4.3 removed from his or her Share
certificate, and the Shares shall be freely transferable by the Participant.

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

     7.7 Dividends and Other Distributions.  During the Period of Restriction, Participants holding Shares of Restricted Stock shall be
entitled to receive all dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement. If any such dividends or distributions are paid in
Shares, the Shares shall be subject to the same restrictions on transferability and forfeitability
as the Shares of Restricted Stock with respect to which they were paid.

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

-12-

 

SECTION 8

PERFORMANCE UNITS AND PERFORMANCE SHARES

     The provisions of this Section 8 are applicable only to Performance Units and Performance
Shares granted to Employees and Consultants (and to the extent provided in Section 9.2.11, to
Performance Shares granted to Nonemployee Directors).

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

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

     8.3 Performance Objectives and Other Terms.  The Committee shall set performance objectives (including, without limitation, continued
status as an Employee or Consultant) in its discretion which, depending on the extent to which they
are met, shall determine the number or value of Performance Units/Shares that shall be paid out to
the Participants. Each Award of Performance Units/Shares shall be evidenced by an Award Agreement
that shall specify the Performance Period, and such other terms and conditions as the Committee, in
its sole discretion, shall determine. Notwithstanding the foregoing, and except as otherwise
provided in the Plan, (i) Performance Units/Shares that vest solely as a result of continued
employment or service shall vest in full no earlier than the three (3) year anniversary of the
Grant Date, and (ii) Performance Units/Shares that do not vest solely based on continued employment
or
service shall vest in full no earlier than the one (1) year anniversary of the Grant Date.
Notwithstanding the foregoing sentence, the Committee, in its sole discretion, may provide at the
time of or following the date of grant for accelerated vesting for an Award of Performance
Units/Shares solely by reason of death, Disability, Retirement or major capital change.

          8.3.1 General Performance Objectives. The Committee may set performance objectives
based upon the achievement of Company-wide, divisional, and/or individual goals (including, but not
limited to, continued status as an Employee or Consultant), applicable federal or state securities
laws, or any other basis determined by the Committee in its discretion.

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

-13-

 

to time to be
necessary or appropriate to ensure qualification of the Performance Units/Shares under Section
162(m) of the Code (e.g., in determining the Performance Goals).

     8.4 Earning of Performance Units/Shares.  After the applicable Performance Period has ended, the holder of Performance Units/Shares
shall be entitled to receive a payout of the number of Performance Units/Shares earned by the
Participant over the Performance Period, to be determined as a function of the extent to which the
corresponding performance objectives or other vesting provisions have been achieved. After the
grant of a Performance Unit/Share, the Committee, in its sole discretion, may reduce or waive any
performance objectives for such Performance Unit/Share.

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

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

SECTION 9

NONEMPLOYEE DIRECTOR AWARDS

     The provisions of this Section 9 are applicable only to Performance Shares granted to
Nonemployee Directors.

     9.1 Granting of Performance Shares.

          9.1.1 Initial Awards. Each Nonemployee Director who first becomes a Nonemployee
Director on or after October 27, 2008, automatically shall receive, as of the date that the
individual first is appointed or elected as a Nonemployee Director, an Award of Performance Shares
(the “Initial Award”). The number of Performance Shares subject to the Initial Award will be equal
to (a) the value obtained by multiplying (x) $200,000 times (y) a fraction, the numerator of which
is the actual number of days between the date of the Nonemployee Director’s appointment or election
and the scheduled date of the next following Annual Meeting, and the denominator of which is 365,
which such resulting value divided by (b) the Fair Market Value of a Share on the date of grant,
rounded down to the nearest whole Performance Share. The Nonemployee Director shall not receive an
Initial Award if he or she is first appointed or elected as a Nonemployee Director on the date of
an Annual Meeting and instead shall receive an Ongoing Award pursuant to Section 9.1.2 on that
date.

          9.1.2 Ongoing Awards. On the date of each Annual Meeting beginning in 2009, but after
any stockholder votes taken on such date, each Nonemployee Director who is appointed or elected as
a Nonemployee Director on the date of the Annual Meeting automatically shall receive, as of such
date, an Award of the number of Performance Shares equal to $200,000 divided by the Fair Market
Value of a Share on the date of grant, rounded down to the nearest whole Performance Share

-14-

 

(the
“Ongoing Award”). Notwithstanding the foregoing, each Nonemployee Director who is required to
tender a resignation following such Annual Meeting in accordance with the Company’s majority voting
policy for election of directors shall not receive an Ongoing Award, unless the Board determines
not to accept his or her resignation in accordance with the Company’s policy, in which case such
Nonemployee Director automatically shall receive the Ongoing Award on the date the Board makes a
determination not to accept such resignation.

     9.2 Terms of Initial Award and Ongoing Awards. 

          9.2.1 Award Agreement. Each Award of Performance Shares granted pursuant to this
Section 9 shall be evidenced by a written Award Agreement (which may be in electronic form) between
the Participant and the Company.

          9.2.2 Value of Performance Shares. Each Performance Share shall have an initial value
equal to the Fair Market Value of a Share on the Grant Date.

          9.2.3 Performance Objectives and Other Terms. Subject to the other provisions of
Section 9.2, each Initial Award shall be earned and paid out as to twenty-five percent (25%) of the
Shares subject to the Initial Award on each of the first four (4) annual anniversaries of the
Grant Date. Each Ongoing Award shall be earned and paid out as to twenty-five percent (25%) of the
Shares subject to the Ongoing Award on March 1 of each year following the year in which the Grant
Date occurs. Notwithstanding the preceding, once a Participant ceases to be a Director, his or her
Performance Shares which are not then earned shall never be earned or paid out and shall be
immediately forfeited, except to the extent provided in Section 9.2.4, Section 9.2.5 and
Section 9.2.6.

          9.2.4 Retirement of Participant. Unless otherwise determined by the Committee, if a
Participant has a Termination of Service due to Retirement prior to the vesting of Performance
Shares granted on or after October 27, 2008, such Performance Shares shall continue to vest in
accordance with the schedule set forth in Section 9.2.3.

          9.2.5 Disability of Participant. If a Participant has a Termination of Service due to
Disability prior to the vesting of Performance Shares granted on or after October 27, 2008, then
one hundred percent (100%) of the Performance Shares shall immediately become vested and, subject
to the terms and conditions of any deferral pursuant to Section 9.2.8, payable.

          9.2.6 Death of Participant. If a Participant dies while serving as a Director prior
to the vesting of his or her Performance Shares, then one hundred percent (100%) of the Performance
Shares shall immediately become vested and, subject to the terms and conditions of any deferral
pursuant to Section 9.2.8, payable.

          9.2.7 Earning of Performance Shares. After the applicable Performance Period has
ended, the holder of Performance Shares shall be entitled to receive a payout of the number of
Performance Shares earned by the Participant over the Performance Period, to be determined as a
function of the extent to which the corresponding vesting provisions have been achieved.

          9.2.8 Form and Timing of Payment of Performance Shares. Payment of earned Performance
Shares shall be made as soon as practicable after the expiration of the applicable

-15-

 

Performance
Period. The Committee, in its sole discretion, may pay earned Performance Shares in the form of
cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned
Performance Shares at the close of the applicable Performance Period) or in a combination thereof.
Notwithstanding the foregoing, the Committee may, in its sole discretion, provide a Nonemployee
Director with the opportunity to defer the receipt of earned Performance Shares that would
otherwise be delivered to such Nonemployee Director under this Section 9. Any such deferral shall
be subject to such rules, conditions and procedures as shall be determined by the Committee in its
sole discretion, which rules, conditions and procedures shall comply with the requirements of
Section 409A of the Code, unless otherwise specifically determined by the Committee.

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

          9.2.10 Dividends. The Committee may, in its sole discretion, authorize the payment of
stock dividends on deferred Performance Shares granted under this Section 9 on a current, deferred
or contingent basis. Any payment of such stock dividends shall be subject to such rules,
conditions and procedures as shall be determined by the Committee in its sole discretion,
which rules, conditions and procedures shall comply with the requirements of Section 409A of the
Code, unless otherwise specifically determined by the Committee.

          9.2.11 Other Terms. All provisions of the Plan not inconsistent with this Section 9
shall apply to Performance Shares granted to Nonemployee Directors, including but not limited to
the provisions of Section 8.

     9.3 Amendments. The Committee, in its sole discretion, may change the number of
Performance Shares subject to future grants of the Initial Award and Ongoing Awards at any time.

SECTION 10

MISCELLANEOUS

     10.1 Deferrals.  The Committee, in its sole discretion, may permit a Participant to defer receipt of the
payment of cash or the delivery of Shares that would otherwise be due to such Participant under an
Award. Any such deferral elections shall be subject to such rules, conditions and procedures as
shall be determined by the Committee in its sole discretion, which rules, conditions and procedures
shall comply with the requirements of Section 409A of the Code, unless otherwise specifically
determined by the Committee.

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

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

-16-

 

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

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

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

     10.7 Limited Transferability of Awards. 

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

-17-

 

          10.7.2 Award Transfer Program. Notwithstanding any contrary provision of the Plan,
the Committee shall have all discretion and authority to determine and implement the terms and
conditions of any Award Transfer Program instituted pursuant to this Section 10.7 and shall have
the authority to amend the terms of any Award participating in the Award Transfer Program,
including (but not limited to) the authority to (i) amend (including to extend) the expiration
date,
post-termination exercise period and/or forfeiture conditions of a participating Award,
(ii) amend or remove any provisions of the Award relating to the Award holder’s continued service
to the Company, (iii) amend the permissible payment methods for the exercise or purchase such
Award, (iv) amend the adjustments to be implemented in the event of changes in capitalization and
other similar events, and (v) make such other changes to the terms of such Award as the Committee
deems necessary or appropriate, in its sole discretion.

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

SECTION 11

AMENDMENT, TERMINATION, AND DURATION

     11.1 Amendment, Suspension, or Termination.  The Board, in its sole discretion, may amend, suspend or terminate the Plan, or any part
thereof, at any time and for any reason. The Company will obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with applicable laws. In addition, an
amendment will be subject to stockholder approval if the Committee or the Board, in their sole
discretion, deems such amendment to be a material amendment, except with respect to such an
amendment which will impact Awards covering, in the aggregate, no more than five percent (5%) of
the shares reserved for issuance under the Plan. The following amendments shall be deemed material
amendments for purposes of the preceding sentence (i) material increases to the benefits accrued to
Participants under the Plan; (ii) increases to the number of securities that may be issued under
the Plan; (iii) material modifications to the requirements for participation in the Plan, and
(iv) the addition of a new provision allowing the Board or the Committee to lapse or waive
restrictions at its discretion. The amendment, suspension, or termination of the Plan shall not,
without the consent of the Participant, alter or impair any rights or obligations under any Award
theretofore granted to such Participant. No Award may be granted during any period of suspension
or after termination of the Plan.

     11.2 Duration of the Plan.  The amended and restated Plan shall be effective as of September 16, 2008, and subject to
Section 11.1 (regarding the Board’s right to amend or terminate the Plan), shall remain in effect
thereafter. However, without further stockholder approval, no Incentive Stock Option may be
granted under the Plan after January 16, 2017.

-18-

 

SECTION 12

TAX WITHHOLDING

     12.1 Withholding Requirements.  Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), or
at such earlier time as the Tax Obligations are due, the Company shall have the power and the right
to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to
satisfy all Tax Obligations.

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

SECTION 13

LEGAL CONSTRUCTION

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

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

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

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

     13.5 Governing Law.  The Plan and all Award Agreements shall be construed in accordance with and governed by the
laws of the State of California, excluding its conflict of laws provisions.

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

-19-exv10w56

Exhibit 10.56

[EMPL_NAME]

Employee ID Number: [EMPLID]

Grant Number: [GRANT_ID]

APPLIED MATERIALS, INC.

PERFORMANCE SHARES AGREEMENT

NOTICE OF GRANT

     Applied Materials, Inc. (the “Company”) hereby grants you, [EMPL_NAME] (the “Employee”), an
award of Performance Shares (also referred to as restricted stock units) under the Company’s
Employee Stock Incentive Plan (the “Plan”). The date of this Performance Shares Agreement (the
“Agreement”) is [GRANT_DATE] (the “Grant Date”). Subject to the provisions of the Terms and
Conditions of Performance Shares Agreement (the “Terms and Conditions”), which constitute part of
this Agreement, and of the Plan, the principal features of this grant are as follows:

	 	 	 
	Number of Performance Shares:

	 	[MAX_SHARES]
	(also referred to as restricted stock units)
	 	 
	 
	 	 
	Vesting of Performance Shares:

	 	Please refer to the UBS One
Source website for the
vesting schedule related to
this grant of performance
shares (click on the specific
grant under the tab labeled
“Grants/Awards/Units.”).*

 

			
	*	 	Except as otherwise provided in the Terms and Conditions of this Agreement, Employee will not
vest in the Performance Shares unless he or she is employed by the Company or one of its Affiliates
through the applicable vesting date.

IMPORTANT:

     Your electronic or written signature below indicates your agreement and understanding that
this grant is subject to all of the terms and conditions contained in the Terms and Conditions to
this Agreement and the Plan. For example, important additional information on vesting and
forfeiture of this grant is contained in paragraphs 3 through 5 and paragraph 7 of the Terms and
Conditions. PLEASE BE SURE TO READ ALL OF THE TERMS AND CONDITIONS OF THIS GRANT. CLICK HERE
TO READ THE TERMS AND CONDITIONS.

     By clicking the “ACCEPT” button below, you agree to the following: “This electronic contract
contains my electronic signature, which I have executed with the intent to sign this Agreement.”

     Please be sure to retain a copy of your returned electronically signed Agreement; you may
obtain a paper copy at any time and at the Company’s expense by requesting one from Stock Programs
(see paragraph 12 of the Terms and Conditions). If you prefer not to electronically sign this
Agreement, you may accept this Agreement by signing a paper copy of the Agreement and delivering it
to Stock Programs.

 

 

     For Employees employed in China on the Grant Date: Under the State Administration of Foreign
Exchange (“SAFE”) regulations, the receipt of funds by you from the sale of Performance Shares must
be approved by SAFE. In order to comply with the SAFE regulations, the proceeds from the sale of
Performance Shares must be repatriated into China through an approved bank account set up and
monitored by the Company.

     For Employees employed in the United Kingdom (U.K.) on the Grant Date:
National Insurance Contribution (“NIC”) The grant of your Performance Shares is subject to
the execution of a joint election between the Company and you (the “Election”), being formally
approved by the H.M. Revenue & Customs (the “HMR&C”) and remaining in force thereafter under which
you agree to pay all NICs that may become due in connection with the grant or vesting of
Performance Shares. The NICs include the “primary” NIC payable by an employee as well as the
“secondary” NIC payable by the employer in the absence of any election (referred to as the
Secondary Class 1 NIC). By accepting the Performance Shares, to the extent allowable by applicable
law, you hereby consent and agree to satisfy any liability the Company and/or your employer
realizes with respect to Secondary Class 1 NIC payments required to be paid by the Company and/or
your employer in connection with the grant or vesting of the Performance Shares.

     In addition, by accepting the Performance Shares, you hereby authorize the Company or your
employer to withhold any such Secondary Class 1 NICs from the sale of a sufficient number of Shares
upon vesting of the Performance Shares. In addition and to the maximum extent permitted by law,
the Company (or the employing Affiliate) has the right to retain without notice from salary or
other amounts payable to you to satisfy such Secondary Class 1 NICs. The Company, in its
discretion, may require you, and you hereby agree, to make payment on demand for such contributions
by cash or check to UBS Financial Services, Inc., the Company or your employer, and such
contributions will be remitted to the HMR&C. If additional consents and/or elections are required
to accomplish the foregoing, you agree to provide them promptly upon request. If the foregoing is
not allowed under applicable law, the Company may rescind your Performance Shares. If you do not
enter an Election prior to the first vesting date or if the Election is revoked at any time by the
HMR&C, the Performance Shares shall become null and void without any liability to the Company
and/or your employer and shall lapse with immediate effect.

2

 

TERMS AND CONDITIONS OF

PERFORMANCE SHARES AGREEMENT

     1. Grant. Applied Materials, Inc. (the “Company”) hereby grants to the Employee under
the Company’s Employee Stock Incentive Plan (the “Plan”) the number of Performance Shares (also
referred to as restricted stock units) set forth on the first page of the Notice of Grant of this
Agreement, subject to all of the terms and conditions in this Agreement and the Plan. When Shares
are paid to the Employee in payment for the Performance Shares, par value will be deemed paid by
the Employee for each Performance Share by past services rendered by the Employee, and will be
subject to the appropriate tax withholdings. Unless otherwise defined herein, capitalized terms
used herein will have the meanings ascribed to them in the Plan.

     2. Company’s Obligation to Pay. Each Performance Share has a value equal to the Fair
Market Value of a Share on the date of grant. Unless and until the Performance Shares have vested
in the manner set forth in paragraphs 3 through 5, or paragraph 11, the Employee will have no right
to payment of such Performance Shares. Prior to actual payment of any vested Performance Shares,
such Performance Shares will represent an unsecured obligation. Payment of any vested Performance
Shares will be made in whole Shares only, provided, however, that if the Company determines that it
is necessary or advisable, the Shares subject to this Performance Share award shall be sold
immediately upon settlement of the Performance Shares award, and the Employee shall receive the
proceeds from the sale, less any applicable fees and taxes or other required withholding. 

     3. Vesting Schedule/Period of Restriction. Except as provided in paragraphs 4, 5 and
11, and subject to paragraph 7, the Performance Shares awarded by this Agreement will vest in
accordance with the vesting provisions set forth on the UBS One Source website (click on the
specific grant under the tab labeled “Grants/Awards/Units”). Performance Shares will not vest in
the Employee in accordance with any of the provisions of this Agreement unless the Employee will
have been continuously employed by the Company or by one of its Affiliates from the Grant Date
until the date the Performance Shares are otherwise scheduled to vest occurs.

     4. Modifications to Vesting Schedule.

     (a) Vesting upon Personal Leave of Absence. In the event that the Employee takes a personal
leave of absence (“PLOA”), the Performance Shares awarded by this Agreement that are scheduled to
vest will be modified as follows:

          (i) If the duration of the Employee’s PLOA is six (6) months or less, the vesting schedule set
forth on the UBS One Source website (click on the specific grant under the tab labeled
“Grants/Awards/Units”) will not be affected by the Employee’s PLOA.

          (ii) If the duration of the Employee’s PLOA is greater than six (6) months but not more than
twelve (12) months, the scheduled vesting of any Performance Shares awarded by this Agreement that
are not then vested will be deferred for a period of time equal to the duration of the Employee’s
PLOA less six (6) months.

3

 

          (iii) If the duration of the Employee’s PLOA is greater than twelve (12) months, any
Performance Shares awarded by this Agreement that are not then vested will immediately terminate.

          (iv) Example 1. Employee is scheduled to vest in Performance Shares on January 1, 2007. On
May 1, 2006, Employee begins a six-month PLOA. Employee’s Performance Shares will still be
scheduled to vest on January 1, 2007.

          (v) Example 2. Employee is scheduled to vest in Performance Shares on January 1, 2007. On May
1, 2006, Employee begins a nine-month PLOA. Employee’s Performance Shares awarded by this Agreement
that are scheduled to vest after November 2, 2006 will be modified (this is the date on which the
Employee’s PLOA exceeds six (6) months). Employee’s Performance Shares now will be scheduled to
vest on April 1, 2007 (three (3) months after the originally scheduled date).

          (vi) Example 3. Employee is scheduled to vest in Performance Shares on January 1, 2007. On
May 1, 2006, Employee begins a 13-month PLOA. Employee’s Performance Shares will terminate on May
2, 2007.

     In general, a “personal leave of absence” does not include any legally required leave of
absence. The duration of the Employee’s PLOA will be determined over a rolling twelve (12) month
measurement period. Performance Shares awarded by this Agreement that are scheduled to vest during
the first six (6) months of the Employee’s PLOA will continue to vest as scheduled. However,
Performance Shares awarded by this Agreement that are scheduled to vest after the first six (6)
months of the Employee’s PLOA will be deferred or terminated depending on the length of the
Employee’s PLOA. The Employee’s right to vest in Performance Shares awarded by this Agreement will
be modified as soon as the duration of the Employee’s PLOA exceeds six (6) months.

     (b) Death of Employee. In the event that the Employee incurs a Termination of Service due to
his or her death, one hundred percent (100%) of the Performance Shares subject to this Performance
Shares award will vest on the date of the Employee’s death. In the event that any applicable law
limits the Company’s ability to accelerate the vesting of this award of Performance Shares, this
paragraph 4(b) will be limited to the extent required to comply with applicable law.
Notwithstanding any contrary provision of this Agreement, if the Employee is subject to Hong Kong’s
ORSO provisions, the first sentence of this paragraph 4(b) will not apply to this award of
Performance Shares.

     5. Committee Discretion. The Committee, in its discretion, may accelerate the vesting
of the balance, or some lesser portion of the balance, of the Performance Shares at any time,
subject to the terms of the Plan. If so accelerated, such Performance Shares will be considered as
having vested as of the date specified by the Committee. Subject to the provisions of this
paragraph 5, if the Committee, in its discretion, accelerates the vesting of the balance, or some
lesser portion of the balance, of the Performance Shares, the payment of such accelerated
Performance Shares shall be made within two and one-half (21/2) months following the end of the
Company’s tax year that includes the date such accelerated Performance Shares vest.

4

 

     Notwithstanding anything in the Plan or this Agreement to the contrary, if the vesting of the
balance, or some lesser portion of the balance, of the Performance Shares is accelerated in
connection with Employee’s Termination of Service (provided that such termination is a “separation
from service” within the meaning of Section 409A, as determined by the Company), other than due to
death, and if (a) the Employee is a “specified employee” within the meaning of Section 409A at the
time of such Termination of Service and (b) the payment of such accelerated Performance Shares will
result in the imposition of additional tax under Section 409A if paid to the Employee on or within
the six (6) month period following Employee’s Termination of Service, then the payment of such
accelerated Performance Shares will not be made until the date six (6) months and one (1) day
following the date of Employee’s Termination of Service, unless the Employee dies following his or
her Termination of Service, in which case, the Performance Shares will be paid in Shares to the
Employee’s estate as soon as practicable following his or her death. It is the intent of this
Agreement to comply with the requirements of Section 409A so that none of the Performance Shares
provided under this Agreement or Shares issuable thereunder will be subject to the additional tax
imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. For
purposes of this Agreement, “Section 409A” means Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”), and any proposed, temporary or final Treasury Regulations and Internal
Revenue Service guidance thereunder, as each may be amended from time to time.

     6. Payment after Vesting. Any Performance Shares that vest in accordance with
paragraphs 3 or 4 will be paid to the Employee (or in the event of the Employee’s death, to his or
her estate) as soon as practicable following the date of vesting, but in all cases within two and
one-half (21/2) months following the end of the Company’s tax year that includes the date such
Performance Shares vest, subject to paragraph 8. Any Performance Shares that vest in accordance
with paragraphs 5 or 11 will be paid to the Employee (or in the event of the Employee’s death, to
his or her estate) in accordance with the provisions of such paragraphs, subject to paragraph 8.
For each Performance Share that vests, the Employee will receive one Share, subject to paragraph 8.

     7. Forfeiture. Notwithstanding any contrary provision of this Agreement, the balance
of the Performance Shares that have not vested pursuant to paragraphs 3 through 5 or paragraph 11
at the time of the Employee’s Termination of Service for any or no reason will be forfeited and
automatically transferred to and reacquired by the Company at no cost to the Company.

     8. Withholding of Taxes. When Shares are issued as payment for vested Performance
Shares or, in the discretion of the Company, such earlier time as the Tax Obligations (defined
below) are due, the Company (or the employing Affiliate) will withhold a portion of the Shares that
have an aggregate market value sufficient to pay all taxes and social insurance liability and other
requirements in connection with the Shares, including, without limitation, (a) all federal, state
and local income, employment and any other applicable taxes that are required to be withheld by the
Company or the employing Affiliate, (b) the Employee’s and, to the extent required by the Company
(or the employing Affiliate), the Company’s (or the employing Affiliate’s) fringe benefit tax
liability, if any, associated with the grant, vesting, or sale of the Performance Shares awarded
and the Shares issued thereunder, and (c) all other taxes or social insurance liabilities with
respect to which the Employee has agreed to bear responsibility (collectively, the “Tax
Obligations”). The number of Shares withheld pursuant to the prior sentence will be rounded up to
the nearest whole Share, with no refund provided in the U. S. for any value of the Shares withheld
in excess of the tax obligation as a result of such rounding. Notwithstanding the foregoing, the
Company, in its sole discretion, may require the Employee to make alternate arrangements
satisfactory to the Company for such

5

 

withholdings or remittances in advance of the arising of any remittance obligations to which
the Employee has agreed or any withholding obligations. 

     Notwithstanding any contrary provision of this Agreement, no Shares will be issued unless and
until satisfactory arrangements (as determined by the Company) have been made by the Employee with
respect to the payment of any income and other taxes which the Company determines must be withheld
or collected with respect to such Shares. In addition and to the maximum extent permitted by law,
the Company (or the employing Affiliate) has the right to retain without notice from salary or
other amounts payable to the Employee, cash having a sufficient value to satisfy any Tax
Obligations that the Company determines cannot be satisfied through the withholding of otherwise
deliverable Shares or that are due prior to the issuance of Shares under the Performance Shares
award. All Tax Obligations related to the Performance Shares award and any Shares delivered in
payment thereof are the sole responsibility of the Employee. Further, Employee shall be bound by
any additional withholding requirements included in the Notice of Grant of this Agreement.

     9. Rights as Stockholder. Neither the Employee nor any person claiming under or
through the Employee will have any of the rights or privileges of a stockholder of the Company in
respect of any Shares deliverable hereunder unless and until certificates representing such Shares
(which may be in book entry form) will have been issued, recorded on the records of the Company or
its transfer agents or registrars, and delivered to the Employee (including through electronic
delivery to a brokerage account). Notwithstanding any contrary provisions in this Agreement, any
quarterly or other regular, periodic dividends or distributions (as determined by the Company) paid
on Shares will affect neither unvested Performance Shares nor Performance Shares that are vested
but unpaid, and no such dividends or other distributions will be paid on unvested Performance
Shares or Performance Shares that are vested but unpaid. After such issuance, recordation and
delivery, the Employee will have all the rights of a stockholder of the Company with respect to
voting such Shares and receipt of dividends and distributions on such Shares.

     10. No Effect on Employment. Subject to any employment contract with the Employee,
the terms of such employment will be determined from time to time by the Company, or the Affiliate
employing the Employee, as the case may be, and the Company, or the Affiliate employing the
Employee, as the case may be, will have the right, which is hereby expressly reserved, to terminate
or change the terms of the employment of the Employee at any time for any reason whatsoever, with
or without good cause. The transactions contemplated hereunder and the vesting schedule set forth
on the UBS One Source website (click on the specific grant under the tab labeled
“Grants/Awards/Units”) do not constitute an express or implied promise of continued employment for
any period of time. A leave of absence or an interruption in service (including an interruption
during military service) authorized or acknowledged by the Company or the Affiliate employing the
Employee, as the case may be, will not be deemed a Termination of Service for the purposes of this
Agreement.

     11. Changes in Performance Shares. In the event that as a result of a stock or
extraordinary cash dividend, stock split, distribution, reclassification, recapitalization,
combination of Shares or the adjustment in capital stock of the Company or otherwise, or as a
result of a merger, consolidation, spin-off or other corporate transaction or event, the
Performance Shares will be increased, reduced or otherwise affected, and by virtue of any such
event the Employee will in his or her capacity as owner of unvested Performance Shares which have
been awarded to him or her (the

6

 

“Prior Performance Shares”) be entitled to new or additional or different shares of stock,
cash or other securities or property (other than rights or warrants to purchase securities); such
new or additional or different shares, cash or securities or property will thereupon be considered
to be unvested Performance Shares and will be subject to all of the conditions and restrictions
that were applicable to the Prior Performance Shares pursuant to this Agreement and the Plan. If
the Employee receives rights or warrants with respect to any Prior Performance Shares, such rights
or warrants may be held or exercised by the Employee, provided that until such exercise, any such
rights or warrants, and after such exercise, any shares or other securities acquired by the
exercise of such rights or warrants, will be considered to be unvested Performance Shares and will
be subject to all of the conditions and restrictions which were applicable to the Prior Performance
Shares pursuant to the Plan and this Agreement. The Committee in its sole discretion at any time
may accelerate the vesting of all or any portion of such new or additional shares of stock, cash or
securities, rights or warrants to purchase securities or shares or other securities acquired by the
exercise of such rights or warrants; provided, however, that the payment of such accelerated new or
additional awards will be made in accordance with the provisions of paragraph 5.

     12. Address for Notices. Any notice to be given to the Company under the terms of
this Agreement shall be addressed to the Company, in care of Stock Programs, at Applied Materials,
Inc., 2881 Scott Boulevard, M/S 2023, P. O. Box 58039, Santa Clara, CA 95050, U.S.A., or at such
other address as the Company may hereafter designate in writing.

     13. Grant is Not Transferable. Except to the limited extent provided in this
Agreement, this grant of Performance Shares and the rights and privileges conferred hereby shall
not be sold, pledged, assigned, hypothecated, transferred or disposed of any way (whether by
operation of law or otherwise) and shall not be subject to sale under execution, attachment or
similar process, until the Employee has been issued Shares in payment of the Performance Shares.
Upon any attempt to sell, pledge, assign, hypothecate, transfer or otherwise dispose of this grant,
or any right or privilege conferred hereby, or upon any attempted sale under any execution,
attachment or similar process, this grant and the rights and privileges conferred hereby
immediately will become null and void.

     14. Restrictions on Sale of Securities. The Shares issued as payment for vested
Performance Shares under this Agreement will be registered under U. S. federal securities laws and
will be freely tradable upon receipt. However, Employee’s sale of the Shares may be subject to any
market blackout period that may be imposed by the Company and must comply with the Company’s
insider trading policies, and any other applicable securities laws.

     15. Binding Agreement. Subject to the limitation on the transferability of this grant
contained herein, this Agreement will be binding upon and inure to the benefit of the heirs,
legatees, legal representatives, successors and assigns of the parties hereto.

     16. Additional Conditions to Issuance of Certificates for Shares. The Company will
not be required to issue any certificate or certificates (which may be in book entry form) for
Shares hereunder prior to fulfillment of all the following conditions: (a) the admission of such
Shares to listing on all stock exchanges on which such class of stock is then listed; (b) the
completion of any registration or other qualification of such Shares under any U. S. state or
federal law or under the rulings or regulations of the Securities and Exchange Commission or any
other governmental regulatory body, which the Committee will, in its sole discretion, deem
necessary or advisable; (c) the obtaining of any approval or other clearance from any U. S. state
or federal governmental

7

 

agency, which the Committee will, in its sole discretion, determine to be necessary or
advisable; and (d) the lapse of such reasonable period of time following the date of vesting of the
Performance Shares as the Committee may establish from time to time for reasons of administrative
convenience.

     17. Plan Governs. This Agreement is subject to all the terms and provisions of the
Plan. In the event of a conflict between one or more provisions of this Agreement and one or more
provisions of the Plan, the provisions of the Plan will govern.

     18. Committee Authority. The Committee will have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation and application of
the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not
limited to, the determination of whether or not any Performance Shares have vested). All actions
taken and all interpretations and determinations made by the Committee in good faith will be final
and binding upon the Employee, the Company and all other interested persons. No member of the
Committee will be personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or this Agreement.

     19. Captions. Captions provided herein are for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.

     20. Agreement Severable. In the event that any provision in this Agreement will be
held invalid or unenforceable, such provision will be severable from, and such invalidity or
unenforceability will not be construed to have any effect on, the remaining provisions of this
Agreement.

     21. Modifications to the Agreement. This Agreement constitutes the entire
understanding of the parties on the subjects covered. The Employee expressly warrants that he or
she is not accepting this Agreement in reliance on any promises, representations, or inducements
other than those contained herein. Modifications to this Agreement or the Plan can be made only in
an express written contract executed by a duly authorized officer of the Company. Notwithstanding
anything to the contrary in the Plan or this Agreement, the Company reserves the right to revise
this Agreement as it deems necessary or advisable, in its sole discretion and without the consent
of the Employee, to comply with Section 409A or to otherwise avoid imposition of any additional tax
or income recognition under Section 409A prior to the actual payment of Shares pursuant to this
award of Performance Shares.

     22. Amendment, Suspension or Termination of the Plan. By accepting this Performance
Shares award, the Employee expressly warrants that he or she has received a right to receive stock
under the Plan, and has received, read and understood a description of the Plan. The Employee
understands that the Plan is discretionary in nature and may be amended, suspended or terminated by
the Company at any time.

     23. Labor Law. By accepting this Performance Shares award, the Employee acknowledges
that: (a) the grant of these Performance Shares is a one-time benefit which does not create any
contractual or other right to receive future grants of Performance Shares, or benefits in lieu of
Performance Shares; (b) all determinations with respect to any future grants, including, but not
limited to, the times when the Performance Shares will be granted, the number of Performance Shares
subject to each Performance Share award and the time or times when the Performance Shares

8

 

will vest, shall be at the sole discretion of the Company; (c) the Employee’s participation in
the Plan is voluntary; (d) the value of these Performance Shares is an extraordinary item of
compensation which is outside the scope of the Employee’s employment contract, if any; (e) these
Performance Shares are not part of the Employee’s normal or expected compensation for purposes of
calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service
awards, pension or retirement benefits or similar payments; (f) the vesting of these Performance
Shares shall cease upon termination of employment for any reason except as may otherwise be
explicitly provided in the Plan or this Agreement; (g) the future value of the underlying Shares is
unknown and cannot be predicted with certainty; (h) these Performance Shares have been granted to
the Employee in the Employee’s status as an employee of the Company or its Affiliates; (i) any
claims resulting from these Performance Shares will be enforceable, if at all, against the Company;
and (j) there shall be no additional obligations for any Affiliate employing the Employee as a
result of these Performance Shares.

     24. Disclosure of Employee Information. By accepting this Performance Shares award,
the Employee consents to the collection, use and transfer of personal data as described in this
paragraph. The Employee understands that the Company and its Affiliates hold certain personal
information about him or her, including his or her name, home address and telephone number, date of
birth, social security or identity number, salary, nationality, job title, any shares of stock or
directorships held in the Company, details of all awards of Performance Shares or any other
entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in his
or her favor, for the purpose of managing and administering the Plan (“Data”).

     The Employee further understands that the Company and/or its Affiliates will transfer Data
among themselves as necessary for the purpose of implementation, administration and management of
his or her participation in the Plan, and that the Company and/or any of its Affiliates may each
further transfer Data to any third parties assisting the Company in the implementation,
administration and management of the Plan. The Employee understands that these recipients may be
located in the European Economic Area, or elsewhere, such as in the U.S. or Asia.

     The Employee authorizes the Company to receive, possess, use, retain and transfer the Data in
electronic or other form, for the purposes of implementing, administering and managing his or her
participation in the Plan, including any requisite transfer to a broker or other third party with
whom he or she may elect to deposit any Shares of stock acquired from this award of Performance
Shares of such Data as may be required for the administration of the Plan and/or the subsequent
holding of Shares of stock on his or her behalf. The Employee understands that he or she may, at
any time, view the Data, require any necessary amendments to the Data or withdraw the consent
herein in writing by contacting the Human Resources department and/or the Stock Programs
Administrator for the Company and/or its applicable Affiliates.

     25. Notice of Governing Law. This award of Performance Shares will be governed by,
and construed in accordance with, the laws of the State of California, in the U.S.A., without
regard to principles of conflict of laws.

9

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