Applied Komatsu Technology, Inc.

          1994 Executive Incentive Stock Purchase Plan



SECTION 1.  PURPOSE.

     The purpose of the Plan is to offer selected employees,
directors, statutory auditors and advisors an opportunity to
acquire a participation interest in the success of Applied
Komatsu Technology, Inc. (the "Company"), or to increase such
interest, by purchasing Shares of the Company's Preferred Stock. 
The Plan provides for the direct sale of Shares.

SECTION 2.  DEFINITIONS.

     (a)  "Shareholders Committee" shall mean the Shareholders
Committee of the Company, as constituted from time to time.

     (b)  "Code" shall mean the United States Internal Revenue
Code of 1986, as amended.

     (c)  "Committee" shall mean a committee of the Shareholders
Committee, as described in Section 3(a).

     (d)  "Company" shall mean Applied Komatsu Technology, Inc.,
a Japanese corporation.

     (e)  "Employee" shall mean (i) any individual who is an
employee of the Company or of a Subsidiary, (ii) a member of the
Shareholders Committee or (iii) an advisor who performs services
for the Company or a Subsidiary.  Employee shall also include
those full-time personnel on a seconded basis, as designated by
the Committee.

     (f)  "Fair Market Value" shall mean the fair market value
of a Share, as determined by the Committee in good faith.  Such
determination shall be conclusive and binding on all persons.

     (g)  "Offeree" shall mean an individual to whom the
Committee has offered the right to acquire Shares under the
Plan.

     (h)  "Plan" shall mean this Applied Komatsu Technology,
Inc. 1994 Executive Incentive Stock Purchase Plan.

     (i)  "Purchase Price" shall mean the consideration for
which one Share may be acquired under the Plan, as specified by
the Committee.

     (j)  "Service" shall mean service as an Employee.

     (k)  "Share" shall mean one share of Stock, as adjusted in
accordance with Section 8 (if applicable).

     (l)  "Stock" shall mean the nonvoting Preferred Stock of
the Company and the Common Stock of the Company into which the
Preferred Stock may convert in accordance with the Articles of
Incorporation of the Company and the Stock Purchase Agreement.

     (m)  "Stock Purchase Agreement" shall mean the agreement
which contains the terms, conditions and restrictions pertaining
to the acquisition of such Shares.

     (n)  "Subsidiary" shall mean any corporation, if the
Company and/or one or more other Subsidiaries own not less than
50 percent of the total combined voting power of all classes of
outstanding stock of such corporation.  A corporation that
attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of
such date.

SECTION 3.  ADMINISTRATION.

     (a)  Committee Membership.  The Plan shall be administered
by the Committee, which shall consist of two or more members of
the Shareholders Committee.  The members of the Committee shall
be appointed by the Shareholders Committee.  If no Committee has
been appointed, the entire Shareholders Committee shall consti-
tute the Committee.

     (b)  Committee Procedures.  The Shareholders Committee
shall designate one of the members of the Committee as chairman. 
The Committee may hold meetings at such times and places as it
shall determine.  The Committee may only act by unanimous
agreement of all of its members.

     (c)  Committee Responsibilities.  Subject to the provisions
of the Plan, the Committee shall have full authority and discre-
tion to take the following actions:

          (i)    To interpret the Plan and to apply its
          provisions;

          (ii)   To adopt, amend or rescind rules, proce-
          dures and forms relating to the Plan;

          (iii)  To authorize any person to execute, on
          behalf of the Company, any instrument required to
          carry out the purposes of the Plan;

          (iv)   To determine when Shares are to be offered
          for sale under the Plan;

          (v)    To select the Offerees;

          (vi)   To determine the number of Shares to be
          offered to each Offeree;

          (vii)  To prescribe the terms and conditions of
          each sale of Shares, including (without limita-
          tion) the Purchase Price, and to specify the
          provisions of the Stock Purchase Agreement relat-
          ing to such sale;

          (viii) To amend any outstanding Stock Purchase
          Agreement, subject to applicable legal
          restrictions and to the consent of the Offeree
          who entered into such agreement; and

          (ix)   To take any other actions deemed necessary
          or advisable for the administration of the Plan.

All decisions, interpretations and other actions of the
Committee shall be final and binding on all Offerees and all
persons deriving their rights from an Offeree.  No member of the
Committee shall be liable for any action that he or she has
taken or has failed to take in good faith with respect to the
Plan or Shares purchased thereunder or any right to participate
or purchase Shares under the Plan.

SECTION 4.  ELIGIBILITY.

     Only Employees, as defined in Section 2(e), shall be eligi-
ble for designation as Offerees by the Committee.

SECTION 5.  STOCK SUBJECT TO PLAN.

     Shares offered under the Plan shall be authorized but
unissued Shares.  The aggregate number of Shares which may be
issued under the Plan shall not exceed 976 Shares, subject to
adjustment pursuant to Section 8.  The Company, during the term
of the Plan, shall at all times reserve and keep available
sufficient Shares to satisfy the requirements of the Plan. 
Shares acquired by Applied Materials, Inc. and Komatsu Ltd.
pursuant to the exercise of the put, call and loan foreclosure
rights that are set forth in a Stock Purchase Agreement shall be
available again for sale under the Plan.

SECTION 6.  TERMS AND CONDITIONS OF AWARDS OR SALES.

     (a)  Stock Purchase Agreement.  Each sale of Shares under
the Plan shall be evidenced by a Stock Purchase Agreement
between the Offeree and the Company, or Applied Materials, Inc.
and Komatsu Ltd. in the case of Shares that have been acquired
by Applied Materials, Inc. and Komatsu Ltd. pursuant to the
terms of a Stock Purchase Agreement.  Such sale shall be subject
to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions which are not incon-
sistent with the Plan and which the Committee deems appropriate
for inclusion in a Stock Purchase Agreement.  The provisions of
the various Stock Purchase Agreements entered into under the
Plan need not be identical.

     (b)  Duration of Offers and Nontransferability of Rights. 
Any right to acquire Shares under the Plan shall automatically
expire on the day after the date specified in the Stock Purchase
Agreement unless said right is exercised by the Offeree no later
than the date specified in the Stock Purchase Agreement.  The
Board of Directors of the Company must approve each grant by the
Committee before the time it is communicated to the Offeree. 
The right to acquire shares under the Plan shall not be
transferable and shall be exercisable only by the Offeree to
whom such right was granted.

     (c)  Purchase Price.  The Purchase Price of Shares to be
offered under the Plan shall not be less than 100 percent of the
Fair Market Value of such Shares.  The Purchase Price shall be
payable in a form described in Section 7.

     (d)  Withholding Taxes.  As a condition to the purchase of
Shares, the Offeree shall make or enter into such arrangements
as the Committee may require for the satisfaction of any
national, federal, state, local or foreign withholding tax
obligations that may arise in connection with such purchase or
the payment of any dividends with respect to the Shares.

     (e)  Restrictions on Transfer of Shares.  Any Shares
awarded or sold under the Plan shall be subject to such special
forfeiture conditions, rights of repurchase, rights of first
refusal, put and call rights and other transfer restrictions as
the Committee may determine.  Such restrictions shall be set
forth in the applicable Stock Purchase Agreement and shall apply
in addition to any restrictions that may apply to holders of
Shares generally.

SECTION 7.  PAYMENT FOR SHARES.

     (a)  General Rule.  The entire Purchase Price of Shares
issued under the Plan shall be payable in cash.

     (b)  Promissory Note.  To the extent that a Stock Purchase
Agreement so provides, and subject to the approval of the
Committee, payment must be made all or in part with the proceeds
of a loan from a lender approved by the Committee (a "Lender"). 
Such loan shall be evidenced by a full recourse promissory note
with the Lender executed by the Offeree.  The interest rate and
other terms and conditions of such note shall be determined by
the Lender, but approved by the Committee.  The Lender must
require that the Offeree pledge or assign as security his or her
Shares to the Lender, pursuant to agreement(s) in form satis-
factory to the Lender and the Committee, for the purpose of
securing the payment of such note.  In no event shall the stock
certificate(s) representing such Shares be released to the
Offeree until such note is paid in full.

SECTION 8.  ADJUSTMENT OF SHARES.

     (a)  General.  In the event of a subdivision of the out-
standing Stock, a declaration of a dividend payable in Shares, a
combination or consolidation of the outstanding Stock into a
lesser number of Shares, a recapitalization, a reclassification
or a similar occurrence, the Committee shall make appropriate
adjustments in the number of Shares available for future grants
under Section 5 to reflect such event.  In the case of any such
event, appropriate adjustments will be effected in the number of
Shares outstanding under the Plan.

     (b)  Reservation of Rights.  Except as provided in this
Section 8, an Offeree shall have no rights by reason of (i) any
subdivision or consolidation of shares of stock of any class,
(ii) the payment of any dividend or (iii) any other increase or
decrease in the number of shares of stock of any class.

SECTION 9.  LEGAL REQUIREMENTS.

     Shares shall not be issued under the Plan unless the issu-
ance and delivery of such Shares complies with (or is exempt
from) all applicable requirements of law, including (without
limitation) the Securities Act of 1933, as amended, the rules
and regulations promulgated thereunder, foreign and state secur-
ities laws and regulations, and the regulations of any stock
exchange on which the Company's securities may then be listed.

SECTION 10.  NO EMPLOYMENT RIGHTS.

     No provision of the Plan, nor any right granted under the
Plan, shall be construed to give any person any right to become,
to be treated as, or to remain an Employee.  The Company and its
Subsidiaries reserve the right to terminate any person's Service
at any time and for any reason.

SECTION 11.  DURATION AND AMENDMENTS.

     (a)  Term of the Plan.  The Plan, as set forth herein,
shall become effective on the date of its adoption by the Share-
holders Committee.  The Plan shall terminate on January 31, 2004
and may be terminated on any earlier date pursuant to Subsection
(b) below.

     (b)  Right to Amend or Terminate the Plan.  The Share-
holders Committee may amend, suspend or terminate the Plan at
any time and for any reason.

     (c)  Effect of Amendment or Termination.  No Shares shall
be issued or sold under the Plan after the termination thereof. 
The termination of the Plan, or any amendment thereof, shall not
affect any Share previously issued under the Plan.

SECTION 12.  EXECUTION.

     To record the adoption of the Plan by the Shareholders
Committee on the ____ day of __________, 199_, the Company has
caused its authorized officer to execute the same.

                               APPLIED KOMATSU TECHNOLOGY, INC.



                               By                               
                                  Tetsuo Iwasaki, President



                               APPLIED MATERIALS, INC.



                               By                               
                                  James C. Morgan, Chairman and
                                  Chief Executive Officer




                               KOMATSU LTD.



                               By                               
                                  Tetsuya Katada, President