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Tegal Completes Acquisition of First Derivative Systems, Inc.
[June 16, 2004]

Tegal Completes Acquisition of First Derivative Systems, Inc.

PETALUMA, Calif. --(Business Wire)-- June 16, 2004 -- Tegal Corporation (Nasdaq:TGAL), a leading designer and manufacturer of plasma etch and deposition systems used in the production of integrated circuits and nanotechnology devices, today announced the closing of the transaction to acquire First Derivative Systems, Inc. (FDSI), the developer of a unique physical vapor deposition (PVD) system for 300mm applications. Tegal announced a definitive agreement to make the acquisition on April 29, 2004.



Tegal purchased substantially all of the assets of FDSI for just over one million four hundred thousand (1,400,000) shares of common stock and approximately $200,000 in assumed liabilities. All of the shares of common stock are subject to a registration rights agreement in which the Company has agreed to register the shares with the Securities and Exchange Commission for resale. In addition, the Company entered into employment agreements with key FDSI personnel.

First Derivative Systems, Inc., privately held and based in Goleta, CA, was founded in 1999 as a spin-off of Sputtered Films, Inc., which itself was acquired by Tegal in August 2002. FDSI has developed a high-throughput, low cost-of-ownership PVD system with highly differentiated technology for leading edge memory and logic device production.


"We are pleased to have closed the FDSI transaction," said Michael L. Parodi, Tegal's Chairman, President and CEO. "The best parts of our S-gun technology, stress control and wafer handling capabilities already proven in our Endeavor deposition system are incorporated into the FDSI system. Combined with the platform and source innovations designed by FDSI, we believe we have a formidable offering for 300 mm customers in various metallization applications."

Safe Harbor Statement

Except for historical information, matters discussed in this news release contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements, which are based on assumptions and describe our future plans, strategies and expectations, are generally identifiable by the use of the words "anticipate," "believe," "estimate," "expect," "intend," "project" or similar expressions. These forward-looking statements are subject to risks, uncertainties and assumptions about the company including, but not limited to industry conditions, economic conditions, acceptance of new technologies and market acceptance of the company's products and services. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. For a further discussion of these risks and uncertainties, please refer to the company's periodic filings with the Securities and Exchange Commission.

About Tegal

Tegal provides process and equipment solutions to leading edge suppliers of advanced semiconductor and nanotechnology devices. Incorporating unique, patented etch and deposition technologies, Tegal's system solutions are backed by over 35 years of advanced development and over 100 patents. Some examples of devices enabled by Tegal technology are energy efficient memories found in portable computers, cellphones, PDAs and RFID applications; megapixel imaging chips used in digital and cellphone cameras; power amplifiers for portable handsets and wireless networking gear; and MEMS devices like accelerometers for automotive airbags, microfluidic control devices for ink jet printers; and laboratory-on-a-chip medical test kits. More information is available about Tegal Corporation on the Internet at: www.tegal.com.

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