EX-10.12 9 ex12.htm

         Employment Agreement

        This Agreement between Tegal Corporation (“Tegal”) and Carole Anne
Demachkie (“Demachkie”) is dated and entered into as of August 30, 2002. Tegal
and Demachkie hereby agree as follows:

        1. Employment. As of the date hereof, Tegal will employ Demachkie and
Demachkie will accept employment by Tegal, as Vice President and General Manager
of Sputtered Films, with such duties and responsibilities consistent with such
offices.

        2. Term. This Agreement shall continue until the eighteen month
anniversary of the date hereof. At the end of the initial eighteen (18) month
term, Demachkie will continue on as an “at will employee” with the same terms
and benefits granted herein or may renew the agreement if employee and employer
mutually agree to do so.

        3. Salary. Demachkie’s base salary shall be $120,000.00 annually.
Demachkie’s salary will be temporarily reduced by 20% to $96,000.00, until such
time as full pay is reinstated in accordance with Section 10.7 of the “Agreement
and Plan of Merger”, dated as of August 13, 2002. Demachkie’s salary will also
be subject to discretionary increases in accordance with Tegal’s normal review
procedures and policies. The base pay will be paid in bi-weekly installments.
This position is classified as Exempt.

        3.  

Hire Date. Demachkie’s hire date for employment and benefits purposes will be
carried-over from Sputtered Films (“SF”).

        4. Health & Savings Benefits & Vacation. During the term of this
Agreement, Demachkie will be entitled to participate in all fringe benefit
programs as shall be provided from time to time to Tegal’s employees. Currently
Tegal’s fringe benefit programs include medical and dental plans, flexible
spending account, 401(k) savings plan, Employee Qualified Stock Purchase Plan,
sick pay, vacation pay, life insurance, short and long term disability
insurance, and an employee assistance program.

        Tegal reserves the right to modify or eliminate any employee benefit
and/or policies as necessary and prudent.

        5. Retention Bonus. If Demachkie remains actively employed with Tegal
for the first full twelve months of this Agreement, a bonus of $24,000.00 will
be paid within 30 days of the twelve month anniversary of the signing of this
Agreement. In the event that Demachkie’s employment is terminated by Tegal
without cause within the twelve-month period, or in the event that Demachkie
shall terminate her employment for reason of a mandated change of location from
Santa Barbara, CA, Demachkie shall be entitled to receive the retention bonus on
a prorata basis for the time served through the twelve-month period.

        7. Stock Options. Tegal will grant Demachkie, subject to Tegal Board
approval, an option to purchase 30,000 shares of Tegal Common Stock with a four
year vesting period, at the prevailing price established by the Board of
Directors. This grant is subject to the terms and conditions of the Tegal Stock
Option Plan. Demachkie will receive documentation from our Finance Department
once this proposal has received Board confirmation.

        8. Maintaining Confidential Information/Property Rights. Demachkie
agrees to sign and abide by the enclosed Tegal policies regarding Confidential &
Proprietary Information and Intellectual Property/Property Rights.

        9. Severability. In the event that any provision of this Agreement shall
be determined by any court of competent jurisdiction to be unenforceable or
otherwise invalid as written, the same shall be enforced and validated to the
extent permitted by law. All provisions of this Agreement are severable, and the
unenforceability or invalidity of any single provision hereof shall not affect
the remaining provisions.

        10. Termination. The term of Demachkie’s employment hereunder may be
terminated by either party at any time, with or without cause and with or
without prior notice. Until the term of Demachkie’s employment hereunder is
terminated, all other terms and provisions of this contract shall remain in full
force and effect.

        11. Entire Agreement. This Agreement contains the sole and entire
agreement and understanding between Tegal and Demachkie with respect to the
subject matter hereof, and supersedes and replaces any prior agreement to the
extent any such agreement is inconsistent herewith. This Agreement can be
amended, modified, released or changed in whole or in part only by written
agreement executed by Tegal and Demachkie.

        IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement on the date set forth above.

                                                                                                 TEGAL
CORPORATION

                                                                                                BY:
/s/ Michael L Parodi                         
                                                                                                      
Michael L. Parodi, CEO and
                                                                                                      
Chairman of the Board of Directors
 

                                                                                                /s/
Carole Anne Demachkie                      
                                                                                                CAROLE
ANNE DEMACHKIE

                                                                                                Date:
8/30/02