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<A NAME=A001></A>
<P ALIGN=center><b><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         Employment
Agreement </FONT></b></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        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: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        1.
          <U>Employment.</U> 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. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        2.
          <U>Term.</U> 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. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        3.
          <U>Salary.</U> 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. </FONT></P>

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     <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
          <TR VALIGN=TOP>
          <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                  3.   </FONT></TD>
          <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
          <U>Hire Date.</U> Demachkie’s hire date for employment and benefits
          purposes will be carried-over from Sputtered Films (“SF”). </FONT></P></TD>
          </TR>
          </TABLE>
          <BR>

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     <FONT FACE="Times New Roman, Times, Serif" SIZE=2>        4.
          <U>Health & Savings Benefits & Vacation.</U> 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. </FONT>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        Tegal reserves the right to modify or
eliminate any employee benefit and/or policies as necessary and prudent. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        5.
          <U>Retention Bonus.</U> 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. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        7.
          <U>Stock Options</U>. 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. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        8.
          <U>Maintaining Confidential Information/Property Rights</U>. Demachkie agrees to
          sign and abide by the enclosed Tegal policies regarding Confidential &
          Proprietary Information and Intellectual Property/Property Rights. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        9.
          <U>Severability.</U> 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. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        10.
          <U>Termination.</U> 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. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        11.
          <U>Entire Agreement.</U> 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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        IN WITNESS WHEREOF,
the parties have executed and entered into this Agreement on the date set forth
above. </FONT></P>

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<A NAME=A002></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                                                                                        <I> </I>        TEGAL
CORPORATION </FONT></P>

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<A NAME=A003></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                                                                                                BY:<i> </i>
<u>/s/ Michael L Parodi                         <br>
</u>                                                                                                      
Michael
L. Parodi, CEO and <br>
                                                                                                       Chairman of the Board of Directors
<br>
 </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                                                                                                <u>/s/
Carole Anne Demachkie                      <br>
</u>                                                                                                CAROLE ANNE DEMACHKIE </FONT></P>

<FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                                                                                                </FONT>Date:
8/30/02