Contract

0000 X-00 Xxxxxxxx Xx. Xxx. 000
Xxxxxxxx, XX 00000 XXX
Telephone (000) 000-0000
Fax (000) 000-0000
xxx.xxxxxxxxxxxx.xxx

May 15, 2006

Xx. Xxxxxx X. Xxxxx
Applied Films Corporation

Dear Xxx:

      This letter will confirm that the Severance Agreement between you arid Applied Films Corporation (the ‘Company’), dated July 26, 2002. is amended to delete the last clause of Section 2,6(c)(v) so that such subparagraph will read as follows:

        (v)        Any transactions or series of related transactions having, directly or indirectly, the same effect as any of the foregoing.

      This amendment shall be retroactive and shall be effective as of May 3,2006.

      However, since 108,654 of your options vested on May 4, 2006, and the vesting cannot be rescinded, you agree that, prior to the closing of the merger contemplated by the Agreement and Plan of Merger among the Company, Blue Acquisition, Inc. and Applied Materials, Inc. dated May 4, 2006, you will not exercise any of the 108,654 options to purchase common stock of the Company which became vested on May 4, 2006 under the terms of your Severance Agreement.

      If no closing occurs under the Agreement and Plan of Merger, this letter agreement shall be null and void and of no force and effect.

      If you agree with the terms of this letter, please sign a copy of this letter and return it.

APPLIED FILMS CORPORATION


By /s/ Xxxxxxxx X. Xxxxxxxxx
      ——————————————
      Xxxxxxxx X. Xxxxxxxxx, Xx. Vice President and
            Chief Financial Officer

Accepted:


/s/ Xxxxxx X. Xxxxx
——————————————
Xxxxxx X. Xxxxx

Dated May 15, 2006.