SECURITY AGREEMENT

         SECURITY  AGREEMENT  (this  "Agreement")  dated _______, 2003,  made by
TEGAL CORPORATION, a Delaware corporation,  and the other Grantors listed on the
signature  pages  hereto,  each with its  principal  offices as set forth on the
signature pages hereto (the "Grantors"), and ORIN HIRSCHMAN, having an office at
1231 East 10th Street,  Brooklyn, New York 11230 ("Secured Party"), as agent for
the Holders (the "Holders") of the Debentures (as defined herein).

                             PRELIMINARY STATEMENT:

         Tegal  Corporation  has  issued  to  the  Holders  certain  convertible
debentures  dated as of the date  hereof  (together  with any other  convertible
debentures  issued  after the date hereof as  contemplated  in such  convertible
debentures,  collectively,  the  "Debentures").  The  parties  hereto  desire to
provide  security for the obligations of Tegal  Corporation to the Holders under
the Debentures.

         NOW,  THEREFORE,  in  consideration  of the  premises,  and in order to
induce the Holders to purchase  the  Debentures,  the  parties  hereby  agree as
follows:

         Section 1. GRANT OF  SECURITY.  Each Grantor  hereby  grants to Secured
Party,  for its benefit and for the ratable benefit of each Holder, a continuing
security  interest in all of such Grantor's right,  title and interest in and to
the  following,  whether now owned or hereafter  acquired  and wherever  located
(collectively, the "Collateral"):

                  (1)  any   and   all   copyrights   (whether   registered   or
unregistered),    copyright   rights,    copyright    applications,    copyright
registrations,  including,  without  limitation,  the registered  copyrights and
copyright applications shown in the attached EXHIBIT A, and all mask works, mask
work applications and like protections in each work or authorship and derivative
work thereof,  whether published or unpublished and whether or not the same also
constitutes a trade secret (collectively the "Copyrights");

                  (2) any and  all  trade  secrets,  know-how,  customer  lists,
franchise,  systems,  inventions,  designs,  blueprints,  engineering  drawings,
proprietary   products,   technology,   proprietary   rights  and  any  and  all
intellectual  property  rights  in  computer  software,  computer  programs  and
computer software products,  including,  without limitation,  source code on any
proprietary or licensed software (collectively, the "Trade Secrets");

                  (3) any and all  patents and patent  applications,  including,
without  limitation,  the patents and patent  applications shown in the attached
EXHIBIT  A,  and  all  registrations,   applications  and  recordings   thereof,
including, without limitation, all reissues, divisions, continuations, renewals,
extensions   and   continuations-in-part    thereof,   and   all   applications,
registrations and recordings in the United States Patent and Trademark Office or
in any similar office or agency of the United States,  or any State thereof,  or
any foreign country (collectively, the "Patents");



<PAGE>


                  (4)  any   and   all   trademarks   (whether   registered   or
unregistered) and trademark  applications,  including,  without limitation,  the
registered  trademarks and pending applications shown in the attached EXHIBIT A,
trade names,  fictitious  business names,  service marks (whether  registered or
unregistered),  service mark applications and all  registrations,  applications,
and   recordings   thereof,   including,   without   limitation,   applications,
registrations and recordings in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any State thereof,  or any
foreign  country,  together  in each  case  with the  goodwill  of the  business
asociated with such trademarks, provided, however, that the Collateral shall not
include any  application  to register a trademark  or  servicemark  prior to the
filing of a verified  statement of use with respect thereto  (collectively,  the
"Trademarks");

                  (5)  any  and  all  license  agreements  with  respect  to any
Copyright, Patent or Trademark (collectively, the "Licenses"); and

                  (6) All products and proceeds of any and all of the foregoing.

         Section 2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment
and  performance  when due of all  obligations  of each Grantor now or hereafter
existing  under  this  Agreement,  the  Debentures,  and,  if  applicable,  such
Grantor's  Subsidiary  Guaranty  (as  defined  in the  Debentures)  whether  for
principal,  interest, fees, expenses, or otherwise (all such obligations of each
Grantor  being  the  "Obligations").  Without  limiting  the  generality  of the
foregoing,  this Agreement  secures the payment of all amounts which  constitute
part of the  Obligations  and would be owed by any Grantor to the Holders  under
the  Debentures  or the  Subsidiary  Guaranty  but for the  fact  that  they are
unenforceable   or  not  allowable   owing  to  the  existence  of   bankruptcy,
reorganization, or similar proceedings involving the Grantor.

         Section 3. GRANTORS  REMAINS  LIABLE.  Anything  herein to the contrary
notwithstanding,  the  exercise  by the  Holders or Secured  Party of any rights
hereunder  shall not release any Grantor  from any of its duties or  obligations
under the contracts and agreements included in the Collateral.

         Section 4.  COLLATERAL ASSIGNMENT OF COLLATERAL.

                  (1) Concurrently and in connection with the security  interest
in the  Collateral  granted by the Grantors to Secured  Party (for itself and as
agent for the  Holders),  each Grantor also assigns and conveys to Secured Party
all of such Grantor's right, title and interest in, to and under the Collateral,
PROVIDED,  HOWEVER, that Secured Party (for itself and as agent for the Holders)
and each Grantor acknowledge and agree that the interest in the Collateral being
assigned  hereby  shall  not be  construed  as a  current  assignment,  but as a
collateral assignment only, in order to secure the Grantors' Obligations.

                  (2) The assignment and security  interest  granted hereby (the
"Assignment")  constitutes a valid  security  interest in and lien on all of the
Collateral  subject  to no equal or prior  lien  other than the lien in favor of
California Trade and Commerce Agency on the Collateral of Sputtered Films,  Inc.
(the  "Prior  Lien")or  any  subordinate  lien  other  than the lien in favor of
Silicon  Valley  Bank  (the  "Subordinate   Lienholder")  with  respect  to  the
obligations  relating to that certain Loan and Security Agreement dated June 26,
2002 (such lien, the "Subordinate Lien").

                                       2
<PAGE>



                  (3) Each Grantor  authorizes and requests that the Register of
Copyrights and the Commissioner of Patents and Trademarks  record the Agreement.
Without  limitation on any other  representation or warranty of the Grantors set
forth in this Agreement, each Grantor represents, warrants, covenants and agrees
as follows:

                           (a)  Performance of this Assignment does not conflict
with or result in a breach of any agreement to which such Grantor is party or by
which such  Grantor is bound,  except to the extent  that  certain  intellectual
property  agreements  (the  "Limited  Agreements")  by their terms  prohibit the
assignment of the rights  thereunder to a third party without the  licensor's or
other party's  consent and this Assignment  constitutes an assignment,  provided
that Grantor further  represents and warrants that the Limited Agreements do not
include any Licenses  the loss of which could  materially  adversely  affect the
business, operations, results of operations or prospects of the Grantors;

                           (b) During the term of this  Agreement,  such Grantor
will not transfer or otherwise  encumber any interest in the Collateral,  except
for (I) licenses  granted by such Grantor in the ordinary  course of business or
as set forth in this  Agreement,  (II) the Prior Lien, and (III) the Subordinate
Lien in favor of the Subordinate Lienholder,  which lien shall be subordinate to
the lien hereof at all times pursuant to the terms of that certain Subordination
Agreement,  dated  as of the  date  hereof,  among  Secured  Party,  Subordinate
Lienholder and the Grantors in the form attached hereto as EXHIBIT B (as amended
or otherwise  modified from time to time in accordance  with the terms  thereof,
the "Lien Subordination Agreement");

                           (c) Such Grantor  shall use  commercially  reasonable
efforts to: (i) protect,  defend and maintain the validity and enforceability of
the  Collateral,  (ii)  promptly  advise  Secured  Party in writing of  material
infringements  detected;  and  (iii)  not  allow  any  of the  Collateral  to be
abandoned,  forfeited or dedicated to the public without the written  consent of
the Secured Party, which shall not be unreasonably withheld, unless such Grantor
determines  that  reasonable  business  practices  suggest that  abandonment  is
appropriate.

                           (d)  Such  Grantor  shall  register  as such  Grantor
ordinarily  would in the ordinary  course of business the most recent version of
any of such Grantor's Copyrights, if not so already registered,  and shall, from
time to time,  execute and file such other  instruments,  and take such  further
actions as Secured Party may reasonably  request from time to time to perfect or
continue the perfection of the Secured Party' interest in the Collateral;

                           (e) Upon making  appropriate  filings with the United
States Patent and Trademark Office, the Registrar of Copyrights and the Delaware
Secretary  of State,  this  Assignment  creates in favor of the Secured  Party a
valid and perfected  security  interest in the  Collateral in the United States,
securing  the  payment  and  performance  of the  Obligations  evidenced  by the
Debentures.



                                       3
<PAGE>


                           (f) Such Grantor  shall not enter into any  agreement
that  would  materially  impair  or  conflict  with such  Grantor's  obligations
hereunder without the Secured Party's prior written consent, which consent shall
not be unreasonably withheld. Such Grantor shall not permit the inclusion in any
material  contract to which it becomes a party of any  provisions  that could or
might in any way prevent the creation of a security  interest in such  Grantor's
rights and  interests  in any property  included  within the  definition  of the
Collateral  acquired under such contracts.  Without limitation on the foregoing,
such  Grantor  shall  not  grant  any  license  or  similar  right to any of the
Collateral  other than on an arms  length  basis on terms no worse than the fair
market value of such license or similar right.

                           (g)  Upon  any  executive  officer  of  such  Grantor
obtaining actual knowledge thereof,
such Grantor will promptly notify the Secured Party in writing of any event that
materially  adversely  affects the value of any Collateral,  the ability of such
Grantor to dispose of any  Collateral  or the rights and remedies of the Secured
Party in relation  thereto,  including the levy of any legal process against any
of the Collateral.

         Section 5.  REPRESENTATIONS,  WARRANTIES  AND  COVENANTS.  Each Grantor
represents, warrants and covenants as follows:

                  (1) Such Grantor will notify the Secured Party  immediately in
writing of any change in its name, its jurisdiction of formation or its address.

                  (2) Such  Grantor  is the  legal and  beneficial  owner of the
Collateral  pledged  by it free and clear of any Lien  except  for the  security
interest created by this Agreement,  the Prior Lien and the Subordinate Lien. No
effective  financing  statement or other document similar in effect covering all
or any part of the  Collateral  is on file in any  recording  office  except  in
respect of this Agreement, the Prior Lien or the Subordinate Lien.

                  (3) Such Grantor is a corporation duly  incorporated,  validly
existing,  and in  good  standing  under  the  laws of the  jurisdiction  of its
organization;  has the  corporate  power and  authority to own its assets and to
transact its business and enter into this  Agreement,  and is duly qualified and
in good standing under the laws of each  jurisdiction in which  qualification is
required.

                  (4) The  execution  and  performance  by such  Grantor of this
Agreement have been duly authorized by all necessary corporate action and do not
and will not (a) require any  consent or  approval of the  stockholders  of such
corporation;  (b) contravene such  corporation's  charter or bylaws; (c) violate
any provision of any law, rule, or  regulation;  or (d) result in a breach of or
constitute a default  under,  any  indenture or loan or credit  agreement or any
other agreement, lease, or instrument to which such corporation is a party or by
which it or its properties may be bound or affected.

                  (5) This Agreement is the legal, valid, and binding obligation
of such Grantor,  enforceable in accordance with its terms, except to the extent
that such enforcement may be limited by applicable bankruptcy,  insolvency,  and
other similar laws affecting creditor's rights generally.



                                       4
<PAGE>


                  (6) Except for the filing of appropriate  financing statements
under the Uniform  Commercial Code, and the recordation of this Agreement in the
United States Copyright Office and the United States Patent and Trademark Office
and any similar offices in any foreign countries, no consent of any other person
or entity and no authorization,  approval,  or other action by, and no notice to
or filing with, any  governmental  authority or regulatory  body is required (a)
for the grant by such Grantor of the  assignment and security  interest  granted
hereby or for the execution,  delivery, or performance of this Agreement by such
Grantor;  (b) for the perfection or maintenance of the assignment,  and security
interest created hereby  (including the priority of such assignment and security
interest);  or (c) for the exercise by the Secured Party of the rights  provided
for in this Agreement or the remedies in respect of the  Collateral  pursuant to
this Agreement.

                  (7) There are no conditions  precedent to the effectiveness of
this Agreement that have not been satisfied or waived.

                  (8) Such Grantor  shall not pledge,  sell,  assign,  transfer,
create or suffer to exist any security  interest in or other lien or encumbrance
on any part of the Collateral to anyone other than the Secured Party, California
Trade and Commerce  Agency in respect of the Prior Lienor,  subject to the terms
of the Lien Subordination  Agreement,  the Subordinate  Lienholder in respect of
the  Subordinate  Lien,  without  Secured  Party's prior written  consent.  Such
Grantor hereby agrees to defend the same against any and all persons whatsoever.

         Section 6. FURTHER ASSURANCES.

                  (1) Each Grantor,  at its sole expense,  will take any and all
actions as may be necessary or  appropriate  to facilitate  the  perfection  and
preservation of the security  interest granted herein,  or to enable the Secured
Party to exercise and enforce its rights and remedies  hereunder with respect to
any Collateral.

                  (2) Each Grantor  hereby  authorizes the Secured Party to file
one or more  financing  or  continuation  statements,  and  amendments  thereto,
relating  to all or any part of the  Collateral  without  the  signature  of any
Grantor  where  permitted  by law. A  photocopy  or other  reproduction  of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.

                  (3) Each Grantor  will furnish to the Secured  Party from time
to  time  statements  and  schedules  further  identifying  and  describing  the
Collateral  and such other reports in connection  with the Collateral as Secured
Party may reasonably request, all in reasonable detail.

                  (4) Each Grantor,  upon  acquiring or organizing a Subsidiary,
shall  cause such  Subsidiary  to execute  and  deliver to the  Secured  Party a
Guaranty Agreement in substantially the same form executed by other Grantors and
an  agreement to become bound as a Grantor  under this  Agreement.  "Subsidiary"
shall mean any  corporation  or other  entity of which  stock or other  interest
having  ordinary  power to elect a majority of the board of directors  (or other
governing


                                       5
<PAGE>


body)  of such  entity  (regardless  of  whether  or not at the  time  stock  or
interests  of any other class or classes of such  corporation  shall have or may
have voting power by reason of the happening of any  contingency) is at the time
directly or indirectly owned by a Grantor or by one or more Subsidiaries.

         Section 7.  SECURED  PARTY  APPOINTED  ATTORNEY-IN-FACT.  Each  Grantor
hereby   irrevocably    appoints   the   Secured   Party   as   such   Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such  Grantor  or  otherwise,  from  time to time in the  Secured
Party's  discretion,  to take any action and to execute any instrument which the
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement.

         Section 8. THE SECURED  PARTY'S  DUTIES.  The powers  conferred  on the
Secured  Party  hereunder  are solely to protect  the  Holders'  interest in the
Collateral  and shall not impose any duty upon the Secured Party to exercise any
such powers. Except for the safe custody of any Collateral in his possession and
the accounting for moneys actually received by him hereunder,  the Secured Party
shall have no duty as to any  Collateral,  as to  ascertaining  or taking action
with  respect  to any  Collateral,  whether or not the  Secured  Party has or is
deemed to have  knowledge of such matters,  or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining to
any Collateral.  The Secured Party shall be deemed to have exercised  reasonable
care in the custody and  preservation  of any Collateral in their  possession if
such  Collateral  is  accorded  treatment  substantially  equal to that which it
accords its own property.

         Section  9.  EVENTS OF  DEFAULT.  It shall be an event of  default  (an
"Event of  Default")  hereunder  if any Event of  Default  under the  Debentures
occurs and is continuing.

         Section 10.  REMEDIES.  If any Event of Default shall have occurred and
be continuing,  the Secured Party may exercise in respect of the Collateral,  in
addition  to any other  rights and  remedies  provided  for herein or  otherwise
available to it, all the rights and remedies of a secured party on default under
the Uniform Commercial Code (the "Code") (whether or not the Code applies to the
affected Collateral), and also may (a) require each Grantor to, and each Grantor
hereby agrees that it will, at its expense and upon request of the Secured Party
forthwith,  assemble  all or part of the  Collateral  as directed by the Secured
Party and make it available to the Secured  Party at a place to be designated by
the Secured  Party  which is  convenient  to the parties and (b) without  notice
except as specified  below,  sell the  Collateral  or any part thereof in one or
more parcels at public or private sale, at any of the Secured  Party' offices or
elsewhere, for cash, on credit or for future delivery, and upon such other terms
as the Secured Party may deem commercially reasonable. Each Grantor agrees that,
to the extent  notice of sale shall be  required  by law, at least ten (10) days
notice to each  applicable  Grantor of the time and place of any public  sale or
the time after which any private sale is to be made shall constitute  reasonable
notification.  The  Secured  Party  shall not be  obligated  to make any sale of
Collateral regardless of notice of sale having been given. The Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor,  and such sale may, without further notice, be made at
the time and place to which it was adjourned.  All proceeds of the sale or other
disposition of all or any portion of the Collateral  shall be applied FIRST,  to
the payment of the reasonable  fees,  costs and expenses of or from time to time
incurred by the


                                       6
<PAGE>


Secured  Party of the type  described  in clauses  (b) and (c) of Section  11(2)
hereof, including,  without limitation,  reasonable fees and expenses of counsel
and any agents or  experts,  SECOND,  to the  payment,  pro rata by  outstanding
principal amount of each Debenture,  of all Obligations  until paid in full, and
THIRD,  the remainder if any to the  applicable  Grantor or such other person or
persons lawfully entitled thereto.

         Section 11. INDEMNITY AND EXPENSES.

                  (1) Each Grantor agrees to indemnify the Secured Party and the
Holders from and against any and all reasonable claims,  losses, and liabilities
(including,  without  limitation,  reasonable  attorney  fees) growing out of or
resulting from this Agreement  (including,  without  limitation,  enforcement of
this Agreement),  except claims, losses, or liabilities resulting from the gross
negligence or willful misconduct of the Holders or Secured Party.

                  (2) Each  Grantor  will upon  demand pay the amount of any and
all reasonable expenses,  including, without limitation, the reasonable fees and
expenses of counsel and of any experts and agents,  which the Holders or Secured
Party may incur in connection  with (a) the preparation  and  administration  of
this  Agreement,  the Debentures and the Subsidiary  Guaranty;  (b) the custody,
preservation,  use or operation  of, or the sale of,  collection  from, or other
realization upon, any of the Collateral;  (c) the exercise or enforcement of any
of the rights of the Holders or Secured Party  hereunder;  or (d) the failure by
any Grantor to perform or observe any of the provisions hereof.

                  (3) Each Holder agrees to protect,  defend, indemnify and hold
harmless  the Secured  Party from all  liabilities,  costs,  damages or expenses
(including  without  limitation  legal fees and  expenses)  arising out of or in
connection  with his acts or  omissions  of any kind in his  capacity as Secured
Party,  unless  caused by the gross  negligence  or  willful  misconduct  of the
Secured Party.

         Section 12. AMENDMENTS; ETC. No amendment,  modification,  termination,
or waiver of any provision of this Agreement, and no consent to any departure by
any Grantor here from,  shall in any event be effective unless the same shall be
in writing and signed by Secured  Party and then such waiver or consent shall be
effective only in the specific  instance and for the specific  purpose for which
given.

         Section 13. ADDRESSES FOR NOTICES. All notices and other communications
provided for  hereunder  shall be given in  accordance  with the  provisions  of
Section 10 of the Debentures,  mailed or transmitted or delivered to the address
for each such  party set forth  above  or,  as to either  party,  at such  other
address as shall be  designated  by such party in a written  notice to the other
party.

         Section 14. WAIVER OF RIGHTS.  Each Grantor  waives the right to assert
against  any of the  Holders  or  Secured  Party or other  holder  any  defense,
counterclaim  or set-off which it could assert against such person in any action
brought by such person upon any Grantor's obligations hereunder.


                                       7
<PAGE>


         Section  15.  CONTINUING  SECURITY  INTEREST;   ASSIGNMENTS  UNDER  THE
DEBENTURES.  This Agreement shall create a continuing  security  interest in the
Collateral  and shall:  (1) remain in full force and effect  until the sooner to
occur of (a) the  payment and  performance  in full of the  Obligations  and all
other amounts  payable under this  Agreement,  the Debentures and the Subsidiary
Guaranty or (b) the conversion of all the  Debentures;  (2) be binding upon each
Grantor,  its  successors  and assigns;  and (3) inure to the benefit of, and be
enforceable by, the Secured Party and Holders and their  respective  successors,
transferees,  and assigns.  Without  limiting the  generality  of the  foregoing
clause (3) the Secured Party and Holders may assign or otherwise transfer all or
any portion of their rights and  Obligations to any other person or entity,  and
such other person or entity shall thereupon  become vested with all the benefits
in respect thereof granted to the respective  Secured Party or Holder therein or
otherwise.  Upon the payment and  performance in full of the Obligations and all
other amounts  payable under this  Agreement  and the  Debentures,  the security
interest  granted hereby shall terminate and all rights to the Collateral  shall
revert to the Grantors.  Upon any such  termination,  the Secured Party will, at
the Grantors' expense, execute and deliver to the Grantors such documents as the
Grantor shall reasonably request to evidence such termination.

         Section 16.  GOVERNING LAW; TERMS.  This Agreement shall be governed by
and  construed  in  accordance  with the laws of the  State of New York  without
regard to principles of conflicts of law, except to the extent that the validity
or perfection of the security  interest  hereunder,  or remedies  hereunder,  in
respect of any particular  Collateral are governed by the laws of a jurisdiction
other than the State of New York.  Each party  hereby  irrevocably  consents and
submits to the jurisdiction of any New York State or United States Federal Court
sitting  in the  State of New  York,  County  of New  York,  over any  action or
proceeding arising out of or relating to this Agreement and irrevocably consents
to the  service  of any and all  process  in any such  action or  proceeding  by
registered mail addressed to such party at its address  specified  herein (or as
otherwise  noticed to the other party).  Each party further waives any objection
to venue in New York and any  objection to an action or proceeding in such state
and county on the basis of FORUM NON  CONVENIENS.  Each  party  also  waives any
right to trial by jury.

         Section 17. SUBMISSION TO JURISDICTION.  Each Grantor hereby submits to
the  non-exclusive  jurisdiction  of the United  States  District  Court for the
Southern  District of New York and of any State court sitting in New York County
for  purposes of all legal  proceedings  which may arise  hereunder or under the
Debenture.  Each Grantor  irrevocably  waives to the fullest extent permitted by
law,  any  objection  which it may have or  hereafter  have to the laying of the
venue of any such  proceeding  brought  in such a court,  and any claim that any
such  proceeding  brought in such a court has been  brought  in an  inconvenient
forum and trial by jury. Each Grantor hereby consents to process being served in
any such  proceeding by the mailing of a copy thereof by registered or certified
mail,  postage  prepaid,  to its address  specified above or in any other manner
permitted by law.

THE SECURED  PARTY AND THE  GRANTORS  HEREBY  WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING,  CLAIM OR  COUNTERCLAIM,  WHETHER IN CONTRACT OR TORT,  AT LAW OR IN
EQUITY,  ARISING OUT OF OR IN ANY WAY RELATED TO THIS  AGREEMENT.  NO OFFICER OF
THE SECURED PARTY HAS AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION.


                                       8
<PAGE>



Section 18. ACTION BY SECURED  PARTY.  The Secured  Party shall  provide  prompt
notice of any material action under this Agreement to the Holders.






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                                       9
<PAGE>




         IN WITNESS WHEREOF, the Grantors and the Secured Party have caused this
Agreement to be duly executed and delivered by their  respective duly authorized
representatives as of the date first above written.

THE GRANTORS:

                                            TEGAL CORPORATION


                                            By:
                                               --------------------------------
                                            Name:
                                            Title:

                                            Address:

                                            Tegal Corporation
                                            2201 South McDowell Boulevard
                                            Petaluma, California 94954
                                            Attention:  President
                                            Fax Number:  (707) 765-9311
                                            Email:  mparodi@tegal.com

                                            with a copy to:

                                            Latham & Watkins LLP
                                            505 Montgomery Street, Suite 1900
                                            San Francisco, California 94111
                                            Attention:  Taitt Sato, Esq.
                                            Fax Number:  (415) 395-8095
                                            Email:  taitt.sato@lw.com


                                            SPUTTERED FILMS, INC.

                                            By:
                                               --------------------------------
                                            Name:
                                            Title:

                                            Address:

                                            Sputtered Films, Inc.
                                            320 Nopal Street
                                            Santa Barbara, California 93103



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<PAGE>



                                            TEGAL GERMANY

                                            By:
                                               --------------------------------
                                            Name:
                                            Title:

                                            Address:

                                            c/o Tegal Corporation
                                            2201 South McDowell Boulevard
                                            Petaluma, California 94954
                                            Attention:  President
                                            Fax Number:  (707) 765-9311
                                            Email:  mparodi@tegal.com



                                            TEGAL JAPAN, INC.

                                            By:
                                               --------------------------------
                                            Name:
                                            Title:

                                            Address:

                                            c/o Tegal Corporation
                                            2201 South McDowell Boulevard
                                            Petaluma, California 94954
                                            Attention:  President
                                            Fax Number:  (707) 765-9311
                                            Email:  mparodi@tegal.com


                                            TEGAL ITALY, SRL

                                            By:
                                               --------------------------------
                                            Name:
                                            Title:

                                            Address:

                                            c/o Tegal Corporation
                                            2201 South McDowell Boulevard
                                            Petaluma, California 94954
                                            Attention:  President
                                            Fax Number:  (707) 765-9311
                                            Email:  mparodi@tegal.com



                                       11
<PAGE>

                                            In each case with a copy to:

                                            Latham & Watkins LLP
                                            505 Montgomery Street, Suite 1900
                                            San Francisco, California 94111
                                            Attention:  Taitt Sato, Esq.
                                            Fax Number:  (415) 395-8095
                                            Email:  taitt.sato@lw.com



                                       12

<PAGE>


THE SECURED PARTY:


-----------------------
Orin Hirschman








                                       13
<PAGE>


ACKNOWLEDGEMENT PAGE
SECURITY AGREEMENT
TEGAL CORPORATION
_______, 2003


         The  undersigned  Holder  hereby  acknowledges  the  execution  of this
Agreement by Orin Hirschman as the collateral agent of the Holders,  consents to
the terms hereof and agrees to be bound by Section 11(3) hereof.



                                                        [                     ]





                                                        By:
                                                           ---------------------
                                                        Name:
                                                        Title:
                                                        Address:

                                                        Fax:
                                                        Email:


                                       14
<PAGE>




EXHIBIT A

[Schedule all patents (by number), patent applications (by number),  trademarks,
URL's, copyrights, etc.]



                                       15

<PAGE>




EXHIBIT B


                      FORM OF LIEN SUBORDINATION AGREEMENT


                                       16