Exhibit 10.3

NOVELLUS SYSTEMS, INC. 2001 STOCK INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK BONUS AWARD

         
 
  Grantee’s Name and Address:    

       
 
       

       
 
       

       

     You (the “Grantee”) have been granted shares of Common Stock of the Company
(the “Award”), subject to the terms and conditions of this Notice of Restricted
Stock Bonus Award (the “Notice”), the Novellus Systems, Inc. 2001 Stock
Incentive Plan, as amended from time to time (the “Plan”) and the Restricted
Stock Bonus Award Agreement (the “Agreement”) attached hereto, as follows.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Notice.

                 

  Award Number            

               
 
               

  Date of Award            

               
 
               

  Total Number of Shares            

  of Common Stock Awarded     5,000      
 
               

  Aggregate Fair Market            

  Value of the Shares     $      

               

Vesting Schedule:

     Subject to the Grantee’s Continuous Service and other limitations set forth
in this Notice, the Agreement and the Plan, the Shares will “vest” in accordance
with the following schedule:

One-third of the Shares shall vest on each yearly anniversary of the Date of
Award such that the Shares will be fully vested three (3) years after the Date
of Award.

     In the event of a Corporate Transaction, 100% of the Shares shall become
vested immediately prior to the effective date of such Corporate Transaction.

     For purposes of this Notice and the Agreement, the term “vest” shall mean,
with respect to any Shares, that such Shares are no longer subject to forfeiture
to the Company. Shares that have not vested are deemed “Restricted Shares.” If
the Grantee would become vested in a fraction of a Restricted Share, such
Restricted Share shall not vest until the Grantee becomes vested in the entire
Share.

     Vesting shall cease upon the date of termination of the Grantee’s
Continuous Service for any reason, including death or Disability. In the event
the Grantee’s Continuous Service is terminated for any reason, including death
or Disability, any Restricted Shares held by the Grantee immediately following
such termination of Continuous Service shall be deemed reconveyed to the Company
and the Company shall thereafter be the legal and beneficial owner

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of the Restricted Shares and shall have all rights and interest in or related
thereto without further action by the Grantee. The foregoing forfeiture
provisions set forth in this Notice as to Restricted Shares shall apply to the
new capital stock or other property (including cash paid other than as a regular
cash dividend) received in exchange for the Shares in consummation of any
transaction described in Section 10 of the Plan and such stock or property shall
be deemed Additional Securities (as defined in the Agreement) for purposes of
the Agreement, but only to the extent the Shares are at the time covered by such
forfeiture provisions.

     IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice
and agree that the Award is to be governed by the terms and conditions of this
Notice, the Plan, and the Agreement.

              Novellus Systems, Inc.,     a California corporation
 
       

  By:    

       
 
       

  Title:    

       

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE’S CONTINUOUS SERVICE.

     The Grantee acknowledges receipt of a copy of the Plan and the Agreement
and represents that he or she is familiar with the terms and provisions thereof,
and hereby accepts the Award subject to all of the terms and provisions hereof
and thereof. The Grantee has reviewed this Notice, the Agreement and the Plan in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Notice and fully understands all provisions of this Notice, the
Agreement and the Plan. The Grantee hereby agrees that all questions of
interpretation and administration relating to this Notice, the Plan and the
Agreement shall be resolved by the Administrator in accordance with Section 12
of the Agreement. The Grantee further agrees to the venue selection and waiver
of a jury trial in accordance with Section 13 of the Agreement. The Grantee
further agrees to notify the Company upon any change in the residence address
indicated in this Notice.

             
Dated:
      Signed:    

           

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Award Number:                                         

NOVELLUS SYSTEMS, INC. 2001 STOCK INCENTIVE PLAN

RESTRICTED STOCK BONUS AWARD AGREEMENT

     1. Issuance of Shares. Novellus Systems, Inc., a California corporation
(the “Company”), hereby issues to the Grantee (the “Grantee”) named in the
Notice of Restricted Stock Bonus Award (the “Notice”), the Total Number of
Shares of Common Stock Awarded set forth in the Notice (the “Shares”), subject
to the Notice, this Restricted Stock Bonus Award Agreement (the “Agreement”) and
the terms and provisions of the Company’s 2001 Stock Incentive Plan, as amended
from time to time (the “Plan”), which is incorporated herein by reference.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Agreement. All Shares issued hereunder will be
deemed issued to the Grantee as fully paid and nonassessable shares, and the
Grantee will have the right to vote the Shares at meetings of the Company’s
shareholders. The Company shall pay any applicable stock transfer taxes imposed
upon the issuance of the Shares to the Grantee hereunder.

     2. Transfer Restrictions. The Shares issued to the Grantee hereunder may
not be sold, transferred by gift, pledged, hypothecated, or otherwise
transferred or disposed of by the Grantee prior to the date when the Shares
become vested pursuant to the Vesting Schedule set forth in the Notice. Any
attempt to transfer Restricted Shares in violation of this Section 2 will be
null and void and will be disregarded.

     3. Escrow of Stock. For purposes of facilitating the enforcement of the
provisions of this Agreement and the payment of withholding taxes (if any)
pursuant to Section 5 of this Agreement, the Grantee agrees, immediately upon
receipt of the certificate(s) for the Restricted Shares, to deliver such
certificate(s), together with an Assignment Separate from Certificate in the
form attached hereto as Exhibit A, executed in blank by the Grantee with respect
to each such stock certificate, to the Secretary or Assistant Secretary of the
Company, or their designee, to hold in escrow for so long as such Restricted
Shares have not vested pursuant to the Vesting Schedule set forth in the Notice,
with the authority to take all such actions and to effectuate all such transfers
and/or releases as may be necessary or appropriate to accomplish the objectives
of this Agreement in accordance with the terms hereof. The Grantee hereby
acknowledges that the appointment of the Secretary or Assistant Secretary of the
Company (or their designee) as the escrow holder hereunder with the stated
authorities is a material inducement to the Company to make this Agreement and
that such appointment is coupled with an interest and is accordingly
irrevocable. The Grantee agrees that such escrow holder shall not be liable to
any party hereto (or to any other party) for any actions or omissions unless
such escrow holder is grossly negligent relative thereto. The escrow holder may
rely upon any letter, notice or other document executed by any signature
purported to be genuine and may resign at any time. Upon the vesting of the
Restricted Shares, the escrow holder will, without further order or instruction,
transmit to the Grantee the certificate evidencing such Shares, subject,
however, to satisfaction of any withholding obligations provided in Section 5
below.

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     4. Distributions. The Company shall disburse to the Grantee all regular
cash dividends with respect to the Shares and Additional Securities (whether
vested or not), less any applicable withholding obligations.

     5. Withholding of Taxes.

          (a) General. The Grantee is ultimately liable and responsible for all
taxes owed by the Grantee in connection with the Award, regardless of any action
the Company or any Related Entity takes with respect to any tax withholding
obligations that arise in connection with the Award. Neither the Company nor any
Related Entity makes any representation or undertaking regarding the treatment
of any tax withholding in connection with the grant or vesting of the Award or
the subsequent sale of Shares subject to the Award. The Company and its Related
Entities do not commit and are under no obligation to structure the Award to
reduce or eliminate the Grantee’s tax liability.

          (b) Payment of Withholding Taxes. Prior to any event in connection
with the Award (e.g., vesting) that the Company determines may result in any tax
withholding obligation, whether United States federal, state, local or non-U.S.,
including any employment tax obligation (the “Tax Withholding Obligation”), the
Grantee must arrange for the satisfaction of the minimum amount of such Tax
Withholding Obligation in a manner acceptable to the Company.

               (i) By Share Withholding. To the extent the vesting of any Shares
occurs during a “blackout period” of the Company wherein certain Employees are
precluded from selling Shares and unless the Grantee determines to satisfy the
Tax Withholding Obligation by some other means in accordance with clause
(iii) below, the Grantee authorizes the Company to withhold from those Shares
issuable to the Grantee the whole number of Shares sufficient to satisfy the
minimum applicable Tax Withholding Obligation. The Grantee acknowledges that the
withheld Shares may not be sufficient to satisfy the Grantee’s minimum Tax
Withholding Obligation. Accordingly, the Grantee agrees to pay to the Company or
any Related Entity as soon as practicable, including through additional payroll
withholding, any amount of the Tax Withholding Obligation that is not satisfied
by the withholding of Shares described above.

               (ii) By Sale of Shares. Unless the Grantee determines to satisfy
the Tax Withholding Obligation by some other means in accordance with clause
(iii) below, the Grantee’s acceptance of this Award constitutes the Grantee’s
instruction and authorization to the Company and any brokerage firm determined
acceptable to the Company for such purpose to sell on the Grantee’s behalf a
whole number of Shares from those Shares issuable to the Grantee as the Company
determines to be appropriate to generate cash proceeds sufficient to satisfy the
minimum applicable Tax Withholding Obligation. Such Shares will be sold on the
day such Tax Withholding Obligation arises (e.g., a vesting date) or as soon
thereafter as practicable. The Grantee will be responsible for all broker’s fees
and other costs of sale, and the Grantee agrees to indemnify and hold the
Company harmless from any losses, costs, damages, or expenses relating to any
such sale. To the extent the proceeds of such sale exceed the Grantee’s minimum
Tax Withholding Obligation, the Company agrees to pay such excess in cash to the
Grantee. The Grantee acknowledges that the Company or its designee is under no
obligation to arrange for such sale at any particular price, and that the
proceeds of any such sale may not be sufficient to satisfy the Grantee’s minimum
Tax Withholding Obligation. Accordingly, the Grantee agrees to

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pay to the Company or any Related Entity as soon as practicable, including
through additional payroll withholding, any amount of the Tax Withholding
Obligation that is not satisfied by the sale of Shares described above.

               (iii) By Check, Wire Transfer or Other Means. At any time not
less than five (5) business days before any Tax Withholding Obligation arises
(e.g., a vesting date), the Grantee may elect to satisfy the Grantee’s Tax
Withholding Obligation by delivering to the Company an amount that the Company
determines is sufficient to satisfy the Tax Withholding Obligation by (x) wire
transfer to such account as the Company may direct, (y) delivery of a certified
check payable to the Company, or (z) such other means as specified from time to
time by the Administrator.

     6. Additional Securities. Any securities or cash received (other than a
regular cash dividend) as the result of ownership of the Restricted Shares (the
“Additional Securities”), including, but not by way of limitation, warrants,
options and securities received as a stock dividend or stock split, or as a
result of a recapitalization or reorganization or other similar change in the
Company’s capital structure, shall be retained in escrow in the same manner and
subject to the same conditions and restrictions as the Restricted Shares with
respect to which they were issued, including, without limitation, the Vesting
Schedule set forth in the Notice. The Grantee shall be entitled to direct the
Company to exercise any warrant or option received as Additional Securities upon
supplying the funds necessary to do so, in which event the securities so
purchased shall constitute Additional Securities, but the Grantee may not direct
the Company to sell any such warrant or option. If Additional Securities consist
of a convertible security, the Grantee may exercise any conversion right, and
any securities so acquired shall constitute Additional Securities. In the event
of any change in certificates evidencing the Shares or the Additional Securities
by reason of any recapitalization, reorganization or other transaction that
results in the creation of Additional Securities, the escrow holder is
authorized to deliver to the issuer the certificates evidencing the Shares or
the Additional Securities in exchange for the certificates of the replacement
securities.

     7. Stop-Transfer Notices. In order to ensure compliance with the
restrictions on transfer set forth in this Agreement, the Notice or the Plan,
the Company may issue appropriate “stop transfer” instructions to its transfer
agent, if any, and, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.

     8. Refusal to Transfer. The Company shall not be required (i) to transfer
on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     9. Restrictive Legends. The Grantee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by the Company or by state
or federal securities laws:

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THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THAT
CERTAIN RESTRICTED STOCK BONUS AWARD AGREEMENT BETWEEN THE COMPANY AND THE NAMED
SHAREHOLDER. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH SUCH AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY
OF THE COMPANY.

     10. Entire Agreement: Governing Law. The Notice, the Plan and this
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee’s interest except by
means of a writing signed by the Company and the Grantee. These agreements are
to be construed in accordance with and governed by the internal laws of the
State of California without giving effect to any choice of law rule that would
cause the application of the laws of any jurisdiction other than the internal
laws of the State of California to the rights and duties of the parties. Should
any provision of the Notice or this Agreement be determined to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable.

     11. Headings. The captions used in this Agreement are inserted for
convenience and shall not be deemed a part of this Agreement for construction or
interpretation.

     12. Administration and Interpretation. Any question or dispute regarding
the administration or interpretation of the Notice, the Plan or this Agreement
shall be submitted by the Grantee or by the Company to the Administrator. The
resolution of such question or dispute by the Administrator shall be final and
binding on all persons.

     13. Venue and Waiver of Jury Trial. The parties agree that any suit,
action, or proceeding arising out of or relating to the Notice, the Plan or this
Agreement shall be brought in the United States District Court for the Northern
District of California (or should such court lack jurisdiction to hear such
action, suit or proceeding, in a California state court in the County of San
Mateo) and that the parties shall submit to the jurisdiction of such court. The
parties irrevocably waive, to the fullest extent permitted by law, any objection
the party may have to the laying of venue for any such suit, action or
proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT
THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If
any one or more provisions of this Section 13 shall for any reason be held
invalid or unenforceable, it is the specific intent of the parties that such
provisions shall be modified to the minimum extent necessary to make it or its
application valid and enforceable.

     14. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid,

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addressed to the other party at its address as shown in these instruments, or to
such other address as such party may designate in writing from time to time to
the other party.

END OF AGREEMENT

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EXHIBIT A

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

[Please sign this document but do not date it. The date and information of the
transferee will be completed if and when the shares are assigned.]

     FOR VALUE RECEIVED,                                      hereby sells,
assigns and transfers unto                                             , five
thousand (5,000) shares of the Common Stock of Novellus Systems, Inc., a
California Company (the “Company”), standing in his name on the books of, the
Company represented by Certificate No. herewith, and does hereby irrevocably
constitute and appoint the Secretary of the Company attorney to transfer the
said stock in the books of the Company with full power of substitution.

DATED:                              

         

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