Document:

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work thereof,  whether published or unpublished and whether or not the same also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");

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                  (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").

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                  (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.

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<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.

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<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

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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

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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.

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         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.

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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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         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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                                            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

                                       16REGISTRATION RIGHTS AGREEMENT

         This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made as of
_______, 2003 by and among Tegal Corporation, a Delaware corporation (the
"COMPANY") and (ii) the investors listed on EXHIBIT A hereto (collectively the
"INVESTORS")

         WHEREAS, the Company desires to sell to the Investors, and the
Investors desire to purchase up to $7,000,000 in principal amount of 2%
Convertible Secured Debentures (the "DEBENTURES") and up to 3,999,940 eight-year
warrants, each exercisable to purchase one share of Common Stock (the
"WARRANTS"), upon the terms and conditions set forth in that certain Unit
Subscription Agreement, dated of even date herewith, between the Company and the
Investors (the "UNIT SUBSCRIPTION AGREEMENT"); and

         WHEREAS, the terms of the Unit Subscription Agreement provide that it
shall be a condition precedent to the closing of the transactions thereunder for
the Company and the Investors to execute and deliver this Agreement.

         NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:

         1. DEFINITIONS. The following terms shall have the meanings provided
below:

                  "ADDITIONAL SHARES" shall mean any additional shares of Common
Stock which may be issued or become issuable from time to time upon the exercise
of a Warrant or the conversion of a Debenture, or a distribution with respect
to, or in exchange for, or in replacement of, a Warrant or Debenture, as a
result of anti-dilution provisions of a Warrant or Debenture, as a result of the
accrual of interest on a Debenture or otherwise.

                  "BOARD OF DIRECTORS" shall mean the board of directors of the
Company.

                  "COMMON STOCK" shall mean the common stock, $.01 par value per
share, of the Company.

                   "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and all of the rules and regulations promulgated thereunder.

                  "FIRST CLOSING" shall have the meaning ascribed to such term
in the Unit Subscription Agreement.

                  "MAJORITY HOLDERS" shall mean, at the relevant time of
reference thereto, those Investors holding more than fifty percent (50%) of the
Registrable Shares held by all of the Investors.

                  "REGISTRABLE SHARES" shall mean any shares of Common Stock
issued or issuable from time to time upon the exercise of a

<PAGE>

Warrant or the conversion of a Debenture,  or a distribution with respect to, or
in exchange for, or in replacement of, a Warrant or Debenture, including without
limitation Additional Shares and Second Closing Shares.

                  "RULE 144" shall mean Rule 144 promulgated under the
Securities Act and any successor or substitute rule, law or provision.

                  "SEC" shall mean the Securities and Exchange Commission.

                  "SECOND CLOSING" shall have the meaning ascribed to such term
in the Unit Subscription Agreement.

                  "SECOND CLOSING SHARES" shall mean any shares of Common Stock
issued or issuable from time to time upon the exercise of a Warrant or the
conversion of a Debenture, or a distribution with respect to, or in exchange
for, or in replacement of, a Warrant or Debenture, in each case originally
issued on the Second Closing Date.

                  "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and all of the rules and regulations promulgated thereunder.

                  "TRIGGER DATE" shall mean the date of an event triggering an
anti-dilution adjustment (such as an adjustment to the Conversion Price pursuant
to the Debentures or the Purchase Price pursuant the Warrants).

         2.  EFFECTIVENESS.  This  Agreement  shall become  effective upon
the First Closing.

         3. MANDATORY REGISTRATION. (a) No later than thirty (30) days after
the First Closing (the "FILING DEADLINE"), the Company will prepare and file
with the SEC a registration statement on Form S-3 (or, if Form S-3 is not then
available to the Company, on such form of registration statement that is then
available to effect a registration of all Registrable Shares) for the purpose of
registering under the Securities Act all of the Registrable Shares for resale
by, and for the account of, the Investors as selling stockholders thereunder
(the "REGISTRATION STATEMENT"). The Registration Statement shall permit the
Investors to offer and sell, on a delayed or continuous basis pursuant to Rule
415 under the Securities Act, any or all of the Registrable Shares. Such
Registration Statement also shall cover, to the extent allowable under the
Securities Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Shares.

         (b) The Company agrees to use commercially reasonable efforts to cause
the Registration Statement to become effective as soon as practicable after
filing, but in no event later than one hundred twenty (120) days after filing
(the "MANDATORY EFFECTIVE DATE").

         (c) No later than ten (10) days after the Second Closing Date and each
Trigger Date (each an "ADDITIONAL FILING DEADLINE"), the Company shall prepare
and file with the SEC one or more Registration Statements on Form S-3 (the "NEW
REGISTRATION STATEMENTS") or amend the Registration Statement filed pursuant to
clause (b) above, if such Registration Statement has not previously been
declared effective (or, if Form S-3 is not then available to the Company,

                                        2
<PAGE>

on such form of registration statement as is then available to effect a
registration for resale of such Second Closing Shares or Additional Shares,
subject to the Investors' consent) covering the resale of the Second Closing
Shares or Additional Shares, as applicable, but only to the extent such Second
Closing Shares or Additional Shares are not at the time covered by an effective
Registration Statement. Unless otherwise specifically provided herein, the term
Registration Statement shall include without limitation any New Registration
Statement, as amended from time to time. Such Registration Statement also shall
cover, to the extent allowable under the Securities Act and the rules
promulgated thereunder (including Rule 416), such indeterminate number of
additional shares of Common Stock resulting from stock splits, stock dividends
or similar transactions with respect to the Second Closing Shares and Additional
Shares. The Company agrees to use commercially reasonable efforts to cause the
Registration Statement, as amended from time to time, and each New Registration
Statement, as amended from time to time, to become effective as soon as
practicable after filing of each amendment and each New Registration Statement,
but in no event later than thirty (30) days after filing of each such amendment
and each New Registration Statement (each such date, an "ADDITIONAL MANDATORY
EFFECTIVE DATE").

         (d) The Company shall be required to keep the Registration Statement,
as amended, effective until such date that is the earlier of (i) two years after
the Second Closing, (ii) the date when all of the Registrable Shares registered
thereunder shall have been sold, or (iii) such time as all the Registrable
Shares held by the Investors can be sold pursuant to Rule 144(k) and without
compliance with the registration requirements of the Securities Act (such date
is referred to herein as the "MANDATORY REGISTRATION TERMINATION DATE").
Thereafter, the Company shall be entitled to withdraw the Registration Statement
and the Investors shall have no further right to offer or sell any of the
Registrable Shares pursuant to the Registration Statement (or any prospectus
relating thereto).

         (e) The Company shall not grant any registration rights that are pari
passu with or senior to the registration rights of the Investors under this
Agreement.

         (f) If a Registration Statement covering the Registrable Securities is
not filed with the SEC on or prior to the Filing Deadline or any Additional
Filing Deadline, the Company will make pro rata payments to each Investor, as
liquidated damages and not as a penalty, in an amount equal to 1.5% of the
aggregate amount invested by such Investor for each 30-day period or pro rata
for any portion thereof following the date by which such Registration Statement
should have been filed for which no Registration Statement is filed with respect
to Registrable Securities.

         (g) If (A) a Registration Statement covering the Registrable Securities
is not declared effective by the SEC before the Mandatory Effective Date, or (B)
a Registration Statement, as amended, or New Registration Statement, as amended,
covering Additional Shares or Second Closing Shares is not declared effective by
the SEC within thirty (30) days following a Additional Mandatory Effective Date,
then the Company will make pro rata payments to each Investor, as liquidated
damages and not as a penalty, in an amount equal to 1.5% of the aggregate amount
invested by such Investor for each 30-day period or pro rata for any portion
thereof following the date by which such Registration Statement should have been
effective.

                                        3
<PAGE>

         (h) If the Investor shall be prohibited from selling Registrable Shares
under the Registration Statement as a result of a Suspension of more than
forty-five (45) days or Suspensions on more than two (2) occasions of not more
than an aggregate of ninety (90) days in any 12-month period, then for each day
on which a Suspension is in effect that exceeds the maximum allowed period for a
Suspension or Suspensions, but not including any day on which a Suspension is
lifted, the Company shall pay the Purchaser, as liquidated damages and not as a
penalty, an amount equal to 0.05% of the aggregate amount invested by such
Investor for each such day, and such payment shall be made no later than the
first business day of the calendar month next succeeding the month in which such
day occurs. For purposes of this Section 3(h), a Suspension shall be deemed
lifted on the day after notice that the Suspension has been lifted is delivered
to the Purchaser pursuant to this Agreement.

         (i) Any payments made pursuant to Sections 3(f), (g) or (h) shall be in
partial compensation to the Investors, and shall not constitute the Investors'
exclusive remedy for such events. Such payments shall be made to each Investor
in cash monthly no later than the second business day of the calendar month next
succeeding each calendar month in which such obligation to make payments
accrues. Any such payments shall not constitute the Investor's exclusive remedy
for such events.

         4. OBLIGATIONS OF THE COMPANY. In connection with the Company's
obligation under Section 3 hereof to file a Registration  Statement with the SEC
and to use its reasonable efforts to cause the Registration  Statement to become
effective  as  soon  as  practicable   after  filing,   the  Company  shall,  as
expeditiously as reasonably  possible,  subject to Section 9 hereof:

            (a) Prepare and file with the SEC such  amendments  and
supplements to the Registration  Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement effective until
the Mandatory Registration Termination Date;

            (b) Furnish to the selling Investors such reasonable number of
copies of the Registration Statement,  prospectus and preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
(including,  without  limitation,  prospectus  amendments and supplements as are
prepared by the Company in  accordance  with  Section 4(a) above) as the selling
Investors may  reasonably  request,  in order to facilitate  the public or other
disposition of such selling  Investors'  Registrable  Shares;

            (c) Use reasonable efforts  to  register  and  qualify  the
Registrable  Shares  covered  by the  Registration  Statement  under  such other
securities or Blue Sky laws of all states  requiring such securities or Blue Sky
registration or  qualification,  PROVIDED that the Company shall not be required
in connection  therewith or as a condition  thereto to qualify to do business or
to  file a  general  consent  to  service  of  process  in any  such  states  or
jurisdictions; and

            (d) Use reasonable efforts to cause all such Registrable  Shares
registered hereunder to be listed on each securities exchange (including without
limitation  any Nasdaq  market) on which  securities of the same class issued by
the Company are then listed.

         5. FURNISH INFORMATION. (a) It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Investors shall

                                        4
<PAGE>

furnish to the Company such information regarding them and the securities held
by them as the Company shall reasonably request and as shall be required in
order to effect any registration by the Company pursuant to this Agreement.

            (b) The Registration Statement will provide for a plan of
distribution with respect to the Registrable Shares substantially as follows:
The Registrable Shares may be sold from time to time by the Investors, or by
pledgees, donees, transferees or other successors in interest. Such sales may be
made on one or more exchanges or in the over-the-counter market, or otherwise at
prices and at terms then prevailing or at prices related to the then-current
market price, or in negotiated transactions. The Registrable Shares may be sold
by one or more of the following: (a) a block trade in which the broker or dealer
so engaged will attempt to sell the shares as agent but may position and resell
a portion of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to the resale registration statement; (c) an exchange
distribution in accordance with the rules of such exchange; (d) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
and (e) transactions between sellers and purchasers without a broker/dealer. In
addition, any securities covered by the Registration Statement which qualify for
sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to the
Registration Statement. From time to time the selling Investors may engage in
short sales, short sales versus the box, puts and calls and other transactions
in securities of the issuer or derivatives thereof, and may sell and deliver the
shares in connection therewith. In effecting sales, brokers or dealers engaged
by the selling Investors may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or discounts from
selling Investors in amounts to be negotiated immediately prior to the sale.

         6. EXPENSES OF REGISTRATION. All expenses incurred in connection with
the registration of the Registrable Shares pursuant to this Agreement (excluding
underwriting, brokerage and other selling commissions and discounts), including
without limitation all registration and qualification and filing fees, printing
expenses, fees and disbursements of counsel for the Company, and the reasonable
fees and disbursements of one counsel for the selling Investors selected by the
selling Investors, shall be borne by the Company.

         7. INDEMNIFICATION. (a) To the extent permitted by law, the Company
will indemnify and hold harmless each selling Investor (including the partners
or officers, directors and stockholders of such Investor), and each person, if
any, who controls such selling Investor within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which they may become subject under the Securities Act, the Exchange Act, and
other federal or state securities laws, or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) (i) arise out of
or are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, in any preliminary prospectus or final
prospectus relating thereto or in any amendments or supplements to the
Registration Statement or any such preliminary prospectus or final prospectus,
(ii) arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading or (iii) arise out of any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other
federal or

                                        5

<PAGE>

state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any other federal or state securities law; and will
reimburse such selling Investor, or such officer, director or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that the indemnity agreement contained in this Section 7(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld or delayed), nor shall
the Company be liable in any such case for any such loss, damage, liability or
action to the extent that it arises out of or is based upon an untrue statement
or alleged untrue statement or omission made in connection with the Registration
Statement, any preliminary prospectus or final prospectus relating thereto or
any amendments or supplements to the Registration Statement or any such
preliminary prospectus or final prospectus, in reliance upon and in conformity
with written information furnished expressly for use in connection with the
Registration Statement or any such preliminary prospectus or final prospectus by
the selling Investors, any broker/dealer acting on their behalf or controlling
person with respect to them.

         (b) To the extent permitted by law, each selling Investor will
severally and not jointly indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the Registration Statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, or any selling Investors, and all other selling Investors against any
losses, claims, damages or liabilities to which the Company or any such
director, officer, controlling person or such other selling Investor may become
subject to, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement or any preliminary prospectus or final
prospectus, relating thereto or in any amendments or supplements to the
Registration Statement or any such preliminary prospectus or final prospectus,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent and only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, in any preliminary
prospectus or final prospectus relating thereto or in any amendments or
supplements to the Registration Statement or any such preliminary prospectus or
final prospectus, in reliance upon and in conformity with written information
furnished by the selling Investor expressly for use in connection with the
Registration Statement, or any preliminary prospectus or final prospectus; and
such selling Investor will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person, or
other selling Investor in connection with investigating or defending any such
loss, claim, damage, liability or action, PROVIDED, HOWEVER, that the liability
of each selling Investor hereunder (when aggregated with amounts contributed, if
any, pursuant to Section 7(d)) shall be limited to the difference (the
"Difference") between the amount received by such Investor from the sale of the
Registrable Securities pursuant to the Registration Statement and the amount
paid by such Investor to the Company for such Registrable Securities pursuant to
the Unit Subscription Agreement, and PROVIDED FURTHER, HOWEVER, that the
indemnity agreement contained in this Section 7(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of those selling Investor(s) against
which the request for indemnity is being made (which consent shall not be
unreasonably withheld or delayed).

                                       6

<PAGE>

            (c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 7, notify the indemnifying party in writing of the
commencement thereof and the indemnifying party shall have the right to
participate in and, to the extent the indemnifying party desires, jointly with
any other indemnifying party similarly noticed, to assume at its expense the
defense thereof with counsel mutually satisfactory to the indemnifying parties
with the consent of the indemnified party which consent will not be unreasonably
withheld, conditioned or delayed. In the event that the indemnifying party
assumes any such defense, the indemnified party may participate in such defense
with its own counsel and at its own expense, PROVIDED, HOWEVER, that the counsel
for the indemnifying party shall act as lead counsel in all matters pertaining
to such defense or settlement of such claim and the indemnifying party shall
only pay for such indemnified party's reasonable legal fees and expenses for the
period prior to the date of its participation in such defense, and PROVIDED
FURTHER, HOWEVER, that the indemnified party (together with all indemnified
parties which may be represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses to be paid by
the indemnifying party, if the representation of the indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between the indemnified party and any other
party represented by such counsel in such proceeding. Notwithstanding the
foregoing, the indemnifying party shall not be obligated to pay the fees of more
than one separate counsel. The failure to notify an indemnifying party of the
commencement of any such action will not relieve such indemnifying party of any
liability to the indemnified party under this Section 7 (except to the extent
that such failure materially and adversely affects the indemnifying party's
ability to defend such action), nor shall the omission so to notify an
indemnifying party relieve such indemnifying party of any liability which it may
have to any indemnified party otherwise other than under this Section 7. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation and otherwise in form and substance reasonably satisfactory to the
indemnified party.

         (d) If the indemnification provided in this Section 7 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that shall have resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations; provided that in no event shall any contribution by an Investor
under this Section 7(d), when aggregated with amounts paid, if any, pursuant to
Section 7(b), exceed the Difference. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the

                                       7

<PAGE>

indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.

         (e) The obligations of the Company and Investors under this Section 7
shall survive the completion of any offering of Registrable Shares in a
Registration Statement under Section 3, and otherwise.

         (f) Notwithstanding anything to the contrary herein, the indemnifying
party shall not be entitled to settle any claim, suit or proceeding without the
written consent of the indemnified party unless in connection with such
settlement the indemnified party receives an unconditional release with respect
to the subject matter of such claim, suit or proceeding.

         8. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to
the Investors the benefits of Rule 144 and any other rule or regulation of the
SEC that may at any time permit the Investors to sell the Registrable Shares to
the public without registration, the Company agrees to use reasonable efforts:
(i) to make and keep public information available, as those terms are understood
and defined in the General Instructions to Form S-3, or any successor or
substitute form, and in Rule 144, (ii) to file with the SEC in a timely manner
all reports and other documents required to be filed by an issuer of securities
registered under the Securities Act or the Exchange Act and (iii) undertake any
additional actions reasonably necessary to maintain the availability of the
Registration Statement or the use of Rule 144.

         9. SELLING PROCEDURES. Any sale of Registrable Shares pursuant to the
registration statement filed in accordance with Section 3 hereof shall be
subject to the following conditions and procedures:

         (a) Updating the Prospectus.

                         (i) If the Company informs the selling Investor
that the Registration Statement or final prospectus then on file with the SEC is
not current or otherwise does not comply with the Securities Act, the Company
shall use its best efforts to provide to the selling Investor a current
prospectus that complies with the Securities Act as soon as practicable, but in
no event later than three (3) business days after delivery of such notice. The
Company's obligation to update the Registration Statement or final prospectus
under this Section 9(a)(i) shall not be subject to the limitations of Section
9(a)(ii) or (c) below.

                        (ii) If the Company requires more than three (3)
business days to update the prospectus under Section 9(a)(i) above, the Company
shall have the right to delay the preparation of a current prospectus that
complies with the Securities Act without explanation to such Investor, subject
to the limitations set forth in Section 9(c) below, for a period of not more
than forty-five (45) days (or two periods which total not more than ninety (90)
days in the aggregate) during any twelve-month period.

         (b) GENERAL. Notwithstanding the foregoing, upon receipt of
any notice from the Company of (i) any request by the SEC or any other federal
or state governmental authority during the period of effectiveness of the
Registration Statement for amendments or supplements to the Registration
Statement or related prospectus or for additional information relating to the
Registration Statement, (ii) the issuance by the SEC or any other federal or

                                       8

<PAGE>

state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose, (iii) the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (iv) the happening of any event
which makes any statement made in the Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or which requires the making of any
changes in the Registration Statement or prospectus so that, in the case of the
Registration Statement, it will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and that in the case of the
prospectus, it will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading or (v)
that, in the judgment of the Company's Board of Directors, it is advisable to
suspend use of the prospectus for a discrete period of time due to pending
corporate developments, public filings with the Commission or that there exists
material nonpublic information about the Company that the Board of Directors,
acting in good faith, determines not to disclose in a registration statement,
then the Company may suspend use of the prospectus, in which case the Company
shall promptly so notify each Investor and each Investor shall not dispose of
Registrable Shares covered by the Registration Statement or prospectus until
copies of a supplemented or amended prospectus are distributed to the Investors
or until the Investors are advised in writing by the Company that the use of the
applicable prospectus may be resumed; PROVIDED, however, that, notwithstanding
the foregoing, the Company may suspend use of the prospectus pursuant to
Sections 9(a)(ii), 9(b)(iv) and 9(b)(v), and an Investor may be prohibited from
selling or otherwise disposing of the Registrable Shares covered by the
Registration Statement or prospectus, on NOT MORE than two occasions (each a
"SUSPENSION") in total during any twelve-month period and for NO MORE than
ninety (90) days in the aggregate during any such twelve-month period. The
Company shall use its best efforts to ensure the use of the prospectus may be
resumed as soon as practicable. The Company shall use its best efforts to obtain
the withdrawal of any order suspending the effectiveness of the Registration
Statement, or the lifting of any suspension of the qualification (or exemption
from qualification) of any of the securities for sale in any jurisdiction, at
the earliest practicable moment. The Company shall, upon the occurrence of any
event contemplated by clause (iv), prepare a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Shares being sold thereunder, such prospectus will not contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.

         10. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the Investors shall also be for the benefit of and enforceable by any
subsequent holder of any Registrable Securities who has executed a copy of this
Agreement or otherwise indicated its agreement to be bound hereby. Without
limitation on

                                       9
<PAGE>

the Investors' rights to transfer Registrable Securities, the Company
acknowledges that any Investor may, at any time, transfer any of the Registrable
Securities which they may own, beneficially or of record, to (a) their
affiliates, or (b) their partner(s), investor(s), security holder(s) or
beneficial holder(s) pursuant to their organization documents or other
agreements, and that, upon the consummation of any such transfer, the provisions
of this Agreement shall be binding upon and inure to the benefit of each
transferee of such Registrable Securities.

         11. ENTIRE AGREEMENT. This Agreement (including the exhibits hereto)
constitutes and contains the entire agreement and understanding of the parties
with respect to the subject matter hereof, and it also supersedes any and all
prior negotiations, correspondence, agreements or understandings with respect to
the subject matter hereof.

         12. MISCELLANEOUS.

         (a) AMENDMENTS. This Agreement may not be amended, modified or
terminated, and no rights or provisions may be waived, except with the written
consent of the Majority Holders and the Company.

         (b) GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of 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.

         (c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors or assigns. This Agreement shall also be
binding upon and inure to the benefit of any transferee of any of the
Registrable Shares. Notwithstanding anything in this Agreement to the contrary,
if at any time any Investor shall cease to own any Registrable Shares, all of
such Investor's rights under this Agreement shall immediately terminate.

         (d) NOTICES

                     (i) Any notices, reports or other correspondence
(hereinafter collectively referred to as "CORRESPONDENCE") required or permitted
to be given hereunder shall be sent by mail, courier (overnight or same day) or
fax or delivered by hand to the party to whom such correspondence is required or
permitted to be given hereunder (except that notices of Suspensions or stop
orders must be made by fax). The date of giving any notice shall be the date of
its actual receipt.

                                       10
<PAGE>

                     (ii) All correspondence to the Company shall be addressed
as follows:

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

                           with a copy to:

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

                  (iii) All  correspondence to any Investor shall be sent to the
most recent address furnished by the Investor to the Company.

                  (iv)  Any   Investor   may   change   the   address  to  which
correspondence to it is to be addressed by notification as provided for herein.

         (e) INJUNCTIVE RELIEF. The parties acknowledge and agree that
in the event of any breach of this Agreement, remedies at law may be inadequate,
and each of the parties hereto shall be entitled to seek specific performance of
the obligations of the other parties hereto and such appropriate injunctive
relief as may be granted by a court of competent jurisdiction.

         (f) ATTORNEY'S FEES. If any action at law or in equity is
necessary to enforce or interpret any of the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.

         (g) SEVERABILITY. If any provision of this Agreement is held
by a court of competent jurisdiction to be unenforceable under applicable law,
such provision shall be replaced with a provision that accomplishes, to the
extent possible, the original business purpose of such provision in a valid and
enforceable manner, and the balance of the Agreement shall be interpreted as if
such provision were so modified and shall be enforceable in accordance with its
terms.

         (h) AGGREGATION OF SHARES. Registrable Shares held or acquired
by affiliated entities or persons shall be aggregated together for the purpose
of determining the availability of any rights under this Agreement.

         (i) COUNTERPARTS. This Agreement may be executed in a number
of counterparts, any of which together shall for all purposes constitute one
Agreement, binding on all the parties hereto notwithstanding that all such
parties have not signed the same counterpart.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       11

<PAGE>

IN WITNESS WHEREOF,  the parties hereto have executed this  Registration  Rights
Agreement as of the date and year first above written.

                            TEGAL CORPORATION

                            By:
                                 ----------------------------------------------

                            Name:
                            Title:

                            INVESTOR

                            [                                         ]

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

               [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

<PAGE>

                                    EXHIBIT A

                              SCHEDULE OF INVESTORS

Orin Hirschman
1231 East 10th Street
Brooklyn, NY  11230

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[Address]

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[Address]

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[Address]

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