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                                                                   Exhibit 10.40

                    SEPARATION AGREEMENT AND GENERAL RELEASE

                  In consideration of the commitments set forth below, Richard
J. Faubert ("you") and Novellus Systems, Inc. ("Novellus") enter into this
Separation Agreement and General Release ("Release").

         1. SEVERANCE BENEFIT. Within ten (10) days after your execution of the
Release, you will be eligible to receive from Novellus the benefits described in
subparagraphs 1.a. ,1.b., and 1.c below, which, for purposes of this Release
will be defined as the "Severance Benefit."

     a.  Payment equal to two (2) years of your base salary ($400,000 x 2) and
         your annual bonus payment calculated at 100% of your total target
         bonus amount prorated from 5/31/02 through your last day of
         employment, April 18, 2003. ($400,000 times 100%, prorated through
         April 18, 2003, which equals $352,877). These payments equal
         $1,152,877.00.

     b.  Accelerated vesting of the 140,072 shares of the Novellus stock
         options shares as currently constituted in your account (see
         attachment).

     c.  Continuation of health, dental and vision insurance for a period of 24
         months (April 18, 2003-April 18, 2005). You will also be eligible to
         convert certain benefits including your Medical, Dental, and Vision,
         insurance coverage under COBRA for up to 18 months, and will be
         provided with information describing this conversion election.

The Severance Benefit shall be less any applicable withholdings. In addition,
Novellus makes no representations or warranties regarding the tax consequences
of the Severance Benefit and will issue a W-2 and/or Form 1099-MISC as it deems
appropriate. You will be eligible for the Severance Benefit within ten (10) days
of Novellus' receipt of this Release signed by you. You acknowledge that you are
not otherwise entitled to this consideration under the policies and procedures
of Novellus or applicable law.

         2. RELEASE OF CLAIMS. In return for the Severance Benefit, you,
including your representatives, heirs, successors, and assigns, completely
release and forever discharge from and agree to not file, cause to be filed or
pursue against Novellus, including their respective affiliated corporations,
present and former officers, directors, agents, employees, and assigns
("Released Parties") all claims, rights, demands, actions, liabilities, causes
of action, and obligations of any kind whatsoever, whether known or unknown,
suspected or unsuspected, which you may now have or ever have had against the
Released Parties from the beginning of time through the Effective Date (as
defined below) including, but not limited to, claims for breach of contract,
tort, employment discrimination (including any claims arising under Title VII of
the Civil Rights Act of 1964, the California Fair Employment and Housing Act,
the Arizona Civil Rights Act, the Americans with Disabilities Act, the Worker
Adjustment and Retraining Notification Act), and all claims otherwise arising
from your employment relationship with any of the Released Parties or
termination thereof, including claims for stock grants or options, compensation,
severance pay, any and all claims for violation of any federal, state, or
municipal statutes or common law, and any and all claims for attorneys' fees and
costs ("Released Claims").

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         3. AGE DISCRIMINATION CLAIMS. You also acknowledge that the release of
claims under the Age Discrimination in Employment Act ("ADEA") is subject to
special waiver protection. Accordingly, you specifically agree that you
knowingly and voluntarily release and waive any rights or claims of
discrimination under the ADEA. In particular, you represent and acknowledge that
you understand the following: (a) you are not waiving rights or claims for age
discrimination under the ADEA that may arise after the date you sign this
Release; (b) you are waiving rights or claims for age discrimination under the
ADEA in exchange for the payments described herein; (c) you have been given an
opportunity to consider fully the terms of this Release for twenty-one (21)
days, although you are not required to do so and have the option of signing
earlier; (d) no change to the terms of this Release, whether material or
immaterial, will extend the twenty-one (21) day review period; (e) you have been
advised to consult with an attorney of your choosing before signing this
Release; (f) you understand you have seven (10) days after you sign this Release
in which to revoke only your waiver of ADEA claims in this Release by sending a
certified letter to that effect to David Powell, HR Director, 3960 N. First
Street, M/S 235 San Jose, CA 95134; and (g) the portion of this Release that
pertains to the release of claims under the ADEA shall not become effective or
enforceable until the 7-day revocation period has expired, but that all other
provisions of this Release will become effective upon your execution of this
Release ("Effective Date").

         4. RELEASE OF UNKNOWN CLAIMS. You further agree that because this
Release specifically covers known and unknown claims, you waive your rights
under Section 1542 of the California Civil Code or under any other comparable
law of another jurisdiction that limits a general release to claims that are
known to exist at the date of this Release. Section 1542 of the California Civil
Code states as follows:

     A general release does not extend to claims that the creditor does not know
     or suspect to exist in his favor at the time of executing the release,
     which if known by him must have materially affected his settlement to the
     debtor.

         5. PROPRIETARY INFORMATION AND POST-TERMINATION OBLIGATIONS. You agree
not to disclose, use or otherwise misappropriate any trade secrets or other
confidential and proprietary information belonging to any of the Released
Parties or acquired by you during your employment with any of the Released
Parties. You also acknowledge that agreements you signed related to the
proprietary, confidential, and/or trade secret information of any of the
Released Parties, including but not limited to your Novellus Systems, Inc.
Employee Proprietary Information and Inventions Agreement, remain in effect even
following your execution of this Release. You further agree that you shall not,
for yourself or any third party, directly or indirectly (a) divert or attempt to
divert from the Company any business of any kind, including without limitation
the solicitation or interference with any of its customers, clients, members,
business partners or suppliers, or (b) solicit or otherwise induce any person
employed by Novellus to terminate his or her employment.

         6. CONFIDENTIALITY. You further agree to maintain this Release and its
contents in the strictest confidence and agree that you will not disclose the
terms of this Release to any third party without the prior written consent of
Novellus, unless otherwise required by law. You also agree not to make any
disparaging statements about any of the Released Parties.

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Notwithstanding the foregoing, you may disclose the terms of this Release to
your spouse, and for legitimate business reasons, to legal, financial, and tax
advisors.

         7. ARBITRATION. The parties agree that any and all disputes arising out
of the terms of this Release or their interpretation, or any of the matters
herein being released shall be resolved by final and binding arbitration in
Santa Clara County, California before the American Arbitration Association under
its National Rules for the Resolution of Employment Disputes.

         8. ENTIRE AGREEMENT. The parties also agree that this letter contains
all of our agreements and understandings with respect to the subject matter of
this Release and may not be contradicted by evidence of any prior or
contemporaneous agreement, except to the extent that the provisions of any such
agreement have been expressly referred to in this Release as having continued
effect. With the exception of enforceability issues related to the arbitration
procedure in the preceding section, which shall be governed by the Federal
Arbitration Act, it is agreed that this Release shall be governed by the laws of
the State of California. If any provision of this Release or the application
thereof to any person, place, or circumstance shall be held by a court of
competent jurisdiction to be invalid, unenforceable, or void, the remainder of
this Release and such provision as applied to other person, places, and
circumstances shall remain in full force and effect.

         9. KNOWING WAIVER. Finally, you acknowledge each of the following: (a)
you have read this Release or have been afforded every opportunity to do so; (b)
you are fully aware of the Release's contents and legal effect; and (c) you have
chosen to enter into this Release freely, without coercion and based upon your
own judgement and not in reliance upon any promises other than those contained
in this Release.

/s/ Richard J. Faubert                              April 18, 2003
___________________________________      Date:  ___________________
         Richard J. Faubert


/s/ Kevin S. Royal                               April 18, 2003
___________________________________      Date:  ___________________

         Kevin S. Royal, Chief Financial Officer

         Novellus Systems, Inc.

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