<PAGE>
                                                                    EXHIBIT 10.1



                             NOVELLUS SYSTEMS, INC.

                            INDEMNIFICATION AGREEMENT



               THIS AGREEMENT (the "Agreement") is made and entered into as of
this ____ day of ___________, 2002, by and between Novellus Systems, Inc., a
California corporation (the "Company"), and _____________________
("Indemnitee"). Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Section 16.

                                    RECITALS

               WHEREAS, the Company believes it is essential to retain and
attract qualified directors and officers;

               WHEREAS, Indemnitee is a director and/or officer of the Company;

               WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors and
officers of public companies;

               WHEREAS, the Board of Directors of the Company (the "Board") has
adopted bylaws (the "Bylaws") providing for the indemnification of the officers
and directors of the Company to the maximum extent not prohibited by the
California Corporations Code, as amended (the "Code");

               WHEREAS, the Company's articles of incorporation (the "Articles")
expressly authorize rights to indemnification "to the fullest extent permissible
under California law";

               WHEREAS, Indemnitee has been serving and intends to continue
serving as a director and/or officer of the Company in part in reliance on the
Articles and Bylaws;

               WHEREAS, in recognition of Indemnitee's need for (i) substantial
protection against personal liability, (ii) specific contractual assurance that
the protection promised by the Articles and Bylaws will be available to
Indemnitee, regardless of, among other things, any amendment to or revocation of
the Articles or Bylaws, or any change in the composition of the Board or an
acquisition transaction relating to the Company and (iii) an inducement to
continue to provide effective services to the Company as a director and/or
officer thereof, the Company wishes to provide for the indemnification of
Indemnitee and to advance Expenses (as hereinafter defined) to Indemnitee to the
fullest extent permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained by the Company, to provide for the continued
coverage of Indemnitee under the Company's directors' and officers' liability
insurance policies;

               NOW, THEREFORE, in consideration of the premises contained herein
and of Indemnitee continuing to serve the Company directly, or at its request,
with another Enterprise (as hereinafter defined), and intending to be legally
bound hereby, the parties hereto agree as follows:

                                    AGREEMENT

               1. Indemnity of Indemnitee. The Company hereby agrees to hold
harmless and indemnify Indemnitee to the maximum extent not prohibited by the
Code, as such may be amended from time to time, the Articles and the Bylaws, as
such may be amended. In furtherance of the foregoing indemnification, and
without limiting the generality thereof:

<PAGE>

                      (a) Proceedings Other Than Proceedings by or in the Right
of the Company. Indemnitee shall be entitled to the rights of indemnification
provided in this Section l(a) if, by reason of his Corporate Status (as
hereinafter defined), he is, or is threatened to be made, a party to or
participant (as a witness or otherwise) in any Proceeding (as hereinafter
defined) other than a Proceeding by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 1(a), Indemnitee shall be
indemnified against all Expenses (as hereinafter defined), judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by him or
on his behalf in connection with such Proceeding or any claim, issue or matter
therein, if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company and, with respect to any
criminal Proceeding, had no reasonable cause to believe his conduct was
unlawful.

                      (b) Proceedings by or in the Right of the Company.

                         (i) Indemnitee shall be entitled to the rights of
indemnification provided in this Section 1(b) if, by reason of his Corporate
Status, he is, or is threatened to be made, a party to or participant (as a
witness or otherwise) in any Proceeding brought by or in the right of the
Company to procure a judgment in its favor. Pursuant to this Section 1(b),
Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection with the defense or settlement of
such Proceeding or any claim, issue or matter therein, if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company and its shareholders.

                         (ii) Notwithstanding the foregoing, no indemnification
shall be permitted under this section for any of the following:

                             (A) In respect of any claim, issue or matter as to
which Indemnitee shall have been adjudged by a court of competent jurisdiction
to be liable to the Company in the performance of Indemnitee's duty to the
Company and its shareholders, unless and only to the extent that the court in
which such proceeding is or was pending shall determine upon application that,
in view of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for expenses and then only to the extent that
the court shall determine;

                             (B) Amounts paid in settling or otherwise disposing
of a pending action without court approval; or

                             (C) Expenses incurred in defending a pending action
which is settled or otherwise disposed of without court approval.

                      (c) Indemnification for Expenses of a Party Who is Wholly
or Partly Successful. Notwithstanding any other provision of this Agreement, to
the extent that Indemnitee is, by reason of his Corporate Status, a party to or
participant and is successful on the merits or otherwise, in any Proceeding or
in defense of any claim, issue or matter therein, he shall be indemnified to the
maximum extent permitted by law against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith. If Indemnitee is not
wholly successful in such Proceeding but is successful on the merits or
otherwise as to one or more but less than all claims, issues or matters in such
Proceeding, the Company shall indemnify Indemnitee against all Expenses actually
and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this Section 1(c),
and without limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.



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               2. Additional Indemnity. In addition to, and without regard to
any limitations on, the indemnification provided for in Section 1, the Company
shall and hereby does indemnify and hold harmless Indemnitee against all
Expenses, judgments, penalties, fines and amounts paid in settlement actually
and reasonably incurred by him or on his behalf if, by reason of his Corporate
Status, he is, or is threatened to be made, a party to or participant (as a
witness or otherwise) in any Proceeding (including a Proceeding by or in the
right of the Company), including, without limitation, all liability arising out
of the negligence or active or passive wrongdoing of Indemnitee. The only
limitation that shall exist upon the Company's obligations pursuant to this
Agreement shall be that the Company shall not be obligated to make any payment
to Indemnitee that is finally determined (under the procedures, and subject to
the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful under
California law.

               3. Limitations on Indemnity.

                      (a) No indemnity pursuant to Section 1 or 2 hereof shall
be paid by the Company for any of the following:

                             (i) Any suit in which judgment is rendered against
Indemnitee for an accounting of profits made from the purchase or sale by
Indemnitee of securities of the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or similar provisions of any federal, state or local statutory law;

                             (ii) Any action, claim or proceeding (other than a
proceeding referred to in Section 8(a) hereof) initiated by Indemnitee unless
such action, claim or proceeding was authorized in the specific case by action
of the Board;

                             (iii) Any solicitation of proxies by Indemnitee, or
by a group of which he was or became a member consisting of two or more persons
that had agreed (whether formally or informally and whether or not in writing)
to act together for the purpose of soliciting proxies, in opposition to any
solicitation of proxies approved by the Board;

                             (iv) Any activities by Indemnitee that constitute a
breach of or default under any written agreement between Indemnitee and the
Company;

                             (v) Any action, claim or proceeding brought by the
Company and approved by a majority of the Board which alleges willful
misappropriation of corporate assets by Indemnitee, disclosure of confidential
information in breach of Indemnitee's fiduciary duty or contractual obligations
of the Company, or any other willful and deliberate breach in bad faith of
Indemnitee's duty to the Company or its shareholders; or

                             (vi) If a final decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful (and, in this respect, both the Company and Indemnitee have been advised
that the Securities and Exchange Commission believes that indemnification for
liabilities arising under the federal securities laws is against public policy
and is, therefore, unenforceable and that claims for indemnification should be
submitted to appropriate courts for adjudication).

                      (b) No indemnification or advance shall be made under this
Agreement, unless a court of competent jurisdiction determines otherwise or
unless required pursuant to Section 317(d) of the Code, in the following
circumstances:



                                       3
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                             (i) If such indemnification would be inconsistent
with a provision of the Articles, the Bylaws, a resolution of the shareholders
or an agreement in effect at the time of the accrual of the alleged cause of
action asserted in the Proceeding which prohibits or otherwise limits
indemnification; or

                             (ii) If such indemnification would be inconsistent
with any condition expressly imposed by a court in approving a settlement.

                      (c) Notwithstanding any other provision in this Agreement,
in the case of an action brought by or in the right of the Company for breach of
a director's duty to the Company and its shareholders, the rights to
indemnification in this Agreement in excess of those provided by Section 317 of
the Code shall be subject to the limitations on indemnification set forth in
Section 204(a)(11) of the Code. However, the rights to indemnification in this
Agreement shall not be subject to the limitations set forth in such Section
204(a)(11) in the case of, (i) an action brought by or in the right of the
Company for a breach of the director's duty to the Company and its shareholders
for indemnification not in excess of the rights for indemnification provided by
Section 317 of the Code or (ii) an action other than an action by or in the
right of the Company for breach of a director's duty to the Company and its
shareholders.

               4. Contribution in the Event of Joint Liability.

                      (a) Whether or not the indemnification provided in
Sections 1 and 2 hereof is available, in respect of any threatened, pending or
completed action, suit or proceeding in which the Company is jointly liable with
Indemnitee (or would be if joined in such action, suit or proceeding), the
Company shall pay, in the first instance, the entire amount of any judgment or
settlement of such action, suit or proceeding without requiring Indemnitee to
contribute to such payment and the Company hereby waives and relinquishes any
right of contribution it may have against Indemnitee. The Company shall not
enter into any settlement of any action, suit or proceeding in which the Company
is jointly liable with Indemnitee (or would be if joined in such action, suit or
proceeding) unless such settlement provides for a full and final release of all
claims asserted against Indemnitee.

                      (b) Without diminishing or impairing the obligations of
the Company set forth in the preceding subparagraph, if, for any reason,
Indemnitee shall elect or be required to pay all or any portion of any judgment
or settlement in any threatened, pending or completed action, suit or proceeding
in which the Company is jointly liable with Indemnitee (or would be if joined in
such action, suit or proceeding), the Company shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Indemnitee in
proportion to the relative benefits received by the Company and all officers,
directors or employees of the Company other than Indemnitee who are jointly
liable with Indemnitee (or would be if joined in such action, suit or
proceeding), on the one hand, and Indemnitee, on the other hand, from the
transaction from which such action, suit or proceeding arose; provided, however,
that the proportion determined on the basis of relative benefit may, to the
extent necessary to conform to law, be further adjusted by reference to the
relative fault of the Company and all officers, directors or employees of the
Company other than Indemnitee who are jointly liable with Indemnitee (or would
be if joined in such action, suit or proceeding), on the one hand, and
Indemnitee, on the other hand, in connection with the events that resulted in
such expenses, judgments, fines or settlement amounts, as well as any other
equitable considerations which the law may require to be considered. The
relative fault of the Company and all officers, directors or employees of the
Company other than Indemnitee who are jointly liable with Indemnitee (or would
be if joined in such action, suit or proceeding), on the one hand, and
Indemnitee, on the other hand, shall be determined by reference to, among other
things, the degree to which their actions were motivated by intent to gain
personal profit or advantage, the degree to which their liability is primary or
secondary, and the degree to which their conduct is active or passive.



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                      (c) The Company hereby agrees to fully indemnify and hold
Indemnitee harmless from any claims of contribution which may be brought by
officers, directors or employees of the Company other than Indemnitee who may be
jointly liable with Indemnitee.

               5. Indemnification for Expenses of a Witness. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by reason
of his Corporate Status, a witness in any Proceeding to which Indemnitee is not
a party, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.

               6. Advancement of Expenses. Notwithstanding any other provision
of this Agreement, the Company shall advance any and all Expenses incurred by or
on behalf of Indemnitee in connection with any Proceeding by reason of
Indemnitee's Corporate Status within ten (10) days after the receipt by the
Company of a statement or statements from Indemnitee requesting such advance or
advances from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the Expenses
incurred by Indemnitee and shall include or be preceded or accompanied by an
undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
by the Company. Any advances and undertakings to repay pursuant to this Section
6 shall be unsecured and interest free. Notwithstanding the foregoing, the
obligation of the Company to advance Expenses pursuant to this Section 6 shall
be subject to the condition that, if, when and to the extent that the Company
determines that Indemnitee would not be permitted to be indemnified under
applicable law, the Company shall be entitled to be reimbursed, within thirty
(30) days of such determination, by Indemnitee (who hereby agrees to reimburse
the Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Company that
Indemnitee would not be permitted to be indemnified under applicable law shall
not be binding and Indemnitee shall not be required to reimburse the Company for
any advance of Expenses until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been exhausted
or lapsed).

               7. Procedures and Presumptions for Determination of Entitlement
to Indemnification. It is the intent of this Agreement to secure for Indemnitee
rights of indemnity that are as favorable as may be permitted under the law and
public policy of the State of California. Accordingly, the parties agree that
the following procedures and presumptions shall apply in the event of any
question as to whether Indemnitee is entitled to indemnification under this
Agreement:

                      (a) To obtain indemnification (including, but not limited
to, the advancement of Expenses and contribution by the Company) under this
Agreement, Indemnitee shall submit to the Company a written request, including
therein or therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to
what extent Indemnitee is entitled to indemnification. The Secretary of the
Company shall, promptly upon receipt of such a request for indemnification,
advise the Board in writing that Indemnitee has requested indemnification.

                      (b) Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 7(a) hereof, a determination, if
required by applicable law, with respect to Indemnitee's entitlement thereto
shall be made in the specific case by one of the following four (4) methods,
which shall be at the election of Indemnitee: (1) by a majority vote of a quorum
consisting of directors who are not parties to such proceeding, (2) if such
quorum is not obtainable, by Independent Counsel (as hereinafter defined) in a
written opinion, (3) by the shareholders (within the meaning of Section 153 of
the Code), with the shares owned by Indemnitee not being entitled to vote
thereon or (4)



                                       5
<PAGE>

by the court in which the proceeding is, or was pending upon application made by
the Company or the agent or the attorney or other person rendering services in
connection with the defense, whether or not the application by the agent,
attorney or other person is opposed by the Company.

                      (c) If the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 7(b) hereof, the
Independent Counsel shall be selected as provided in this Section 7(c). The
Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall
request that such selection be made by the Board). Indemnitee or the Company, as
the case may be, may, within ten (10) days after such written notice of
selection shall have been given, deliver to the Company or to Indemnitee, as the
case may be, a written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so
selected does not meet the requirements of "Independent Counsel" as defined in
Section 16 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. Absent a proper and timely
objection, the person so selected shall act as Independent Counsel. If a written
objection is made and substantiated, the Independent Counsel selected may not
serve as Independent Counsel unless and until such objection is withdrawn or a
court has determined that such objection is without merit. If, within twenty
(20) days after submission by Indemnitee of a written request for
indemnification pursuant to Section 7(a) hereof, no Independent Counsel shall
have been selected and not objected to, either the Company or Indemnitee may
petition the state courts of the State of California or other court of competent
jurisdiction for resolution of any objection which shall have been made by the
Company or Indemnitee to the other's selection of Independent Counsel and/or for
the appointment as Independent Counsel of a person selected by the court or by
such other person as the court shall designate, and the person with respect to
whom all objections are so resolved or the person so appointed shall act as
Independent Counsel under Section 7(b) hereof. The Company shall pay any and all
reasonable fees and expenses of Independent Counsel incurred by such Independent
Counsel in connection with acting pursuant to Section 7(b) hereof, and the
Company shall pay all reasonable fees and expenses incident to the procedures of
this Section 7(c), regardless of the manner in which such Independent Counsel
was selected or appointed.

                      (d) In making a determination with respect to entitlement
to indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 7(a) of this Agreement. Anyone seeking to overcome this
presumption shall have the burden of proof and the burden of persuasion, by
clear and convincing evidence.

                      (e) Indemnitee shall be deemed to have acted in good faith
if Indemnitee's action is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to
Indemnitee by the officers of the Enterprise in the course of their duties, or
on the advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care by
the Enterprise. In addition, the knowledge and/or actions, or failure to act, of
any director, officer, agent or employee of the Enterprise shall not be imputed
to Indemnitee for purposes of determining the right to indemnification under
this Agreement. Whether or not the foregoing provisions of this Section 7(e) are
satisfied, it shall in any event be presumed that Indemnitee has at all times
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. Anyone seeking to overcome this
presumption shall have the burden of proof and the burden of persuasion, by
clear and convincing evidence.

                      (f) If the person, persons or entity empowered or selected
under Section 7 to determine whether Indemnitee is entitled to indemnification
shall not have made a determination within



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thirty (30) days after receipt by the Company of the request therefor, the
requisite determination of entitlement to indemnification shall be deemed to
have been made and Indemnitee shall be entitled to such indemnification, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification or (ii) a
prohibition of such indemnification under applicable law; provided, however,
that such thirty (30) day period may be extended for a reasonable time, not to
exceed an additional fifteen (15) days, if the person, persons or entity making
the determination with respect to entitlement to indemnification in good faith
requires such additional time for the obtaining or evaluating documentation
and/or information relating thereto; and provided, further, that the foregoing
provisions of this Section 7(f) shall not apply if the determination of
entitlement to indemnification is to be made by the shareholders pursuant to
Section 7(b) of this Agreement and if (A) within fifteen (15) days after receipt
by the Company of the request for such determination the Board or the directors
who are not parties to the proceeding in respect of which indemnification is
sought by Indemnitee, if appropriate, resolve to submit such determination to
the shareholders for their consideration at an annual meeting thereof to be held
within seventy-five (75) days after such receipt and such determination is made
thereat or (B) a special meeting of shareholders is called within fifteen (15)
days after such receipt for the purpose of making such determination, such
meeting is held for such purpose within sixty (60) days after having been so
called and such determination is made thereat.

                      (g) Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
Independent Counsel, member of the Board or shareholder of the Company shall act
reasonably and in good faith in making a determination under the Agreement of
Indemnitee's entitlement to indemnification. Any costs or expenses (including
attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with
the person, persons or entity making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.

                      (h) The Company acknowledges that a settlement or other
disposition short of final judgment may be successful if it permits a party to
avoid expense, delay, distraction, disruption and uncertainty. In the event that
any action, claim or proceeding to which Indemnitee is a party is resolved in
any manner other than by adverse judgment against Indemnitee (including, without
limitation, settlement of such action, claim or proceeding with or without
payment of money or other consideration) it shall be presumed that Indemnitee
has been successful on the merits or otherwise in such action, suit or
proceeding. Anyone seeking to overcome this presumption shall have the burden of
proof and the burden of persuasion, by clear and convincing evidence.

               8. Remedies of Indemnitee.

                      (a) In the event that (i) a determination is made pursuant
to Section 7 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not timely
made pursuant to Section 6 of this Agreement, (iii) no determination of
entitlement to indemnification shall have been made pursuant to Section 7(b) of
this Agreement within ninety (90) days after receipt by the Company of the
request for indemnification, (iv) payment of indemnification is not made
pursuant to this Agreement within ten (10) days after receipt by the Company of
a written request therefor or (v) payment of indemnification is not made within
ten (10) days after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 7 of this Agreement, Indemnitee shall be entitled to an adjudication in
an



                                       7
<PAGE>

appropriate court of the State of California, or in any other court of competent
jurisdiction, of his entitlement to such indemnification or advancement of
Expenses. Indemnitee shall commence such proceeding seeking an adjudication
within one hundred eighty (180) days following the date on which Indemnitee
first has the right to commence such proceeding pursuant to this Section 8(a).
The Company shall not oppose Indemnitee's right to seek any such adjudication.

                      (b) In the event that a determination shall have been made
pursuant to Section 7(b) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding commenced pursuant to this Section 8
shall be conducted in all respects as a de novo trial, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination under
Section 7(b). The Company shall have the burden of proof to show that Indemnitee
is not entitled to indemnification hereunder.

                      (c) If a determination shall have been made pursuant to
Section 7(b) of this Agreement that Indemnitee is entitled to indemnification,
the Company shall be bound by such determination in any judicial proceeding
commenced pursuant to this Section 8, absent a prohibition of such
indemnification under applicable law.

                      (d) In the event that Indemnitee, pursuant to this Section
8, seeks a judicial adjudication of his rights under, or to recover damages for
breach of, this Agreement, or to recover under any directors' and officers'
liability insurance policies maintained by the Company, the Company shall pay on
his behalf, in advance, any and all expenses (of the types described in the
definition of Expenses in Section 16 of this Agreement) actually and reasonably
incurred by him in such judicial adjudication, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, advancement of
expenses or insurance recovery.

                      (e) The Company shall be precluded from asserting in any
judicial proceeding commenced pursuant to this Section 8 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court that the Company is bound by all the provisions of
this Agreement.

               9. Non-Exclusivity; Survival of Rights; Subrogation.

                      (a) The rights of indemnification as provided by this
Agreement (including without limitation the right to advancement of Expenses)
shall not be deemed exclusive of any other rights to which Indemnitee may at any
time be entitled under applicable law, the Articles, the Bylaws, any agreement,
a vote of shareholders or a resolution of directors or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit or
restrict any right of Indemnitee under this Agreement in respect of any action
taken or omitted by such Indemnitee in his Corporate Status prior to such
amendment, alteration or repeal. To the extent that a change in the Code,
whether by statute or judicial decision, permits greater indemnification or
advancement of Expenses than would be afforded currently under the Bylaws and
this Agreement, it is the intent of the parties hereto that Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by such change. No
right or remedy herein conferred is intended to be exclusive of any other right
or remedy, and every other right and remedy shall be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other right or remedy.

                      (b) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee. Following receipt of indemnification payments
hereunder, as further assurance, Indemnitee shall execute all papers required



                                       8
<PAGE>

and take all action reasonably necessary to secure such rights, including
execution of such documents as are reasonably necessary to enable the Company to
bring suit to enforce such rights.

                      (c) The Company shall not be liable under this Agreement
to make any payment of amounts otherwise indemnifiable hereunder if and to the
extent that Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.

               10. Duration of Agreement. All agreements and obligations of the
Company contained herein shall continue during the period Indemnitee is an
officer or director of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other Enterprise) and shall continue
thereafter so long as Indemnitee shall be subject to any Proceeding (or any
proceeding commenced under Section 8 hereof) by reason of his Corporate Status,
whether or not he is acting or serving in any such capacity at the time any
liability or expense is incurred for which indemnification can be provided under
this Agreement. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors
(including any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business or assets of the
Company), assigns, spouses, heirs, executors and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the Company or any
other Enterprise at the Company's request.

               11. Change in Control. The Company agrees that if there is a
Change in Control of the Company, other than a Change in Control which has been
approved by a majority of the Company's Board who were directors immediately
prior to such Change in Control, then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnification and advancement
of Expenses under this Agreement or any other Agreement or under applicable law
or the Company's Articles or Bylaws now or hereafter in effect relating to
indemnification, the Company shall seek legal advice only from Independent
Counsel selected by Indemnitee and approved by the Company, which approval shall
not be unreasonably withheld.

               12. Establishment of Trust. In the event of a Potential Change in
Control, the Company shall, upon written request by Indemnitee, create a trust
(the "Trust") for the benefit of Indemnitee, and from time to time upon written
request of Indemnitee shall fund such Trust in an amount sufficient to satisfy
any and all Expenses reasonably anticipated at the time of each such request to
be incurred in connection with investigating, preparing for and defending any
Proceeding by reason of Indemnitee's Corporate Status, and any and all
judgments, fines, penalties and settlement amounts of any and all Proceedings by
reason of Indemnitee's Corporate Status from time to time actually paid or
claimed, reasonably anticipated or proposed to be paid. The amount or amounts to
be deposited in the Trust pursuant to the foregoing funding obligation shall be
determined by the Reviewing Party (as hereinafter defined) in any case in which
the Independent Counsel referred to in Section 7 is involved. The terms of the
Trust shall provide that upon a Change in Control (i) the Trust shall not be
revoked or the principal thereof invaded, without the written consent of
Indemnitee, (ii) the trustee of the Trust (the "Trustee") shall advance, within
ten (10) days of a request by Indemnitee, any and all Expenses to Indemnitee
(and Indemnitee hereby agrees to reimburse the Trust under the circumstances
under which Indemnitee would be required to reimburse the Company under Section
6 of this Agreement), (iii) the Trust shall continue to be funded by the Company
in accordance with the funding obligation set forth above, (iv) the Trustee
shall promptly pay to Indemnitee all amounts for which Indemnitee shall be
entitled to indemnification pursuant to this Agreement or otherwise and (v) all
unexpended funds in the Trust shall revert to the Company upon a final
determination by the Reviewing Party or a court of competent jurisdiction, as
the case may be, that Indemnitee has been fully indemnified under the terms of
this Agreement. The Trustee shall be a bank or trust company or other individual
or entity chosen by



                                       9
<PAGE>

Indemnitee and acceptable to and approved of by the Company. Nothing in this
Section 12 shall relieve the Company of any of its obligations under this
Agreement. All income earned on the assets held in the Trust shall be reported
as income by the Company for federal, state, local and foreign tax purposes.

               13. Insurance. The Company shall, from time to time, make the
good faith determination whether or not it is practicable for the Company to
obtain and maintain a policy or policies of insurance with reputable insurance
companies providing the directors and officers of the Company with coverage for
losses from wrongful acts, or to ensure the Company's performance of its
indemnification obligations under this Agreement. Among other considerations,
the Company will weigh the costs of obtaining such insurance coverage against
the protection afforded by such coverage. In all policies of directors' and
officers' liability insurance, Indemnitee shall be named as an insured in such a
manner as to provide Indemnitee the same rights and benefits as are accorded to
the most favorably insured of the Company's directors, if Indemnitee is a
director; or of the Company's officers, if Indemnitee is not a director of the
Company but is an officer or of the Company's key employees, if Indemnitee is
not an officer or director but is a key employee. Notwithstanding the foregoing,
the Company shall have no obligation to obtain or maintain such insurance if the
Company determines in good faith that such insurance is not reasonably
available, if the premium costs for such insurance are disproportionate to the
amount of coverage provided, if the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit or if Indemnitee
is covered by similar insurance maintained by a subsidiary or parent of the
Company.

               14. Enforcement.

                      (a) The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it hereby in
order to induce Indemnitee to serve as an officer or director of the Company,
and the Company acknowledges that Indemnitee is relying upon this Agreement in
serving as an officer or director of the Company.

                      (b) This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral, written and implied,
between the parties hereto with respect to the subject matter hereof.

               15. Limitation of Actions and Release of Claims. No proceeding
shall be brought and no cause of action shall be asserted on behalf of the
Company or any subsidiary against Indemnitee, his spouse, heirs, estate,
executors or administrators after the expiration of one (1) year from the act or
omission of Indemnitee upon which such proceeding is based; however, in a case
where Indemnitee fraudulently conceals the facts underlying such cause of
action, no proceeding shall be brought and no cause of action shall be asserted
after the expiration of one (1) year from the earlier of (i) the date the
Company or any subsidiary of the Company discovers such facts or (ii) the date
the Company or any subsidiary of the Company could have discovered such facts by
the exercise of reasonable diligence. Any claim or cause of action of the
Company or any subsidiary of the Company, including claims predicated upon the
negligent act or omission of Indemnitee, shall be extinguished and deemed
released unless asserted by filing of a legal action within such period. This
Section 15 shall not apply to any cause of action which has accrued on the date
hereof and of which Indemnitee is aware on the date hereof, but as to which the
Company has no actual knowledge apart from Indemnitee's knowledge.

               16. Definitions. For purposes of this Agreement:

                      (a) "Change in Control" shall be deemed to have occurred
if (i) any "person," as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, other than (i) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company; (ii) a corporation



                                       10
<PAGE>

owned directly or indirectly by the shareholders of the Company in substantially
the same proportions as their ownership of stock of the Company or (iii) any
current beneficial shareholder or group, as defined by Rule 13d-5 of the
Exchange Act, including the heirs, assigns and successors thereof, of beneficial
ownership within the meaning of, Rule 13d-3 of the Exchange Act of securities
possessing more than 50% of the total combined voting power of the Company's
outstanding securities, hereafter becomes the "beneficial owner," as defined in
Rule 13d-3 of the Exchange Act, directly or indirectly, of securities of the
Company representing 20% or more of the total combined voting power represented
by the Company's then outstanding Voting Securities or (ii) during any period of
two (2) consecutive years, individuals who at the beginning of such period
constitute the Board and any new director whose election by the Board or
nomination for election by the Company's shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority of the Board or (iii) the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation, other than a merger
or consolidation that would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (iv) the shareholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company, in one transaction or a series of
transactions of all or substantially all of the Company's assets.

                      (b) "Corporate Status" describes the status of a person
who is or was a director, officer, employee or other agent or fiduciary of (i)
the Company, (ii) any other corporation, partnership, joint venture, trust,
employee benefit plan or other Enterprise which such person is or was serving at
the express written request of the Company or (iii) a foreign or domestic
corporation which was a predecessor corporation of the Company or of another
enterprise at the request of the predecessor corporation.

                      (c) "Enterprise" shall mean the Company and any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the express written request
of the Company as a director, officer, employee, agent or fiduciary.

                      (d) "Expenses" shall include all reasonable attorneys'
fees, retainers, court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees and all other disbursements or expenses
of the types customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, participating or being or
preparing to be a witness in a Proceeding, or incurred in connection with any
appeal resulting from any Proceeding.

                      (e) "Independent Counsel" means a law firm, or a member of
a law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent: (i)
the Company or Indemnitee in any matter material to either such party (other
than with respect to matters concerning Indemnitee under this Agreement, or of
other indemnitees under similar indemnification agreements) or (ii) any other
party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement. The Company agrees to pay the reasonable fees and expenses of the
Independent Counsel referred to above and to fully indemnify such counsel
against any and all Expenses, claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.



                                       11
<PAGE>

                      (f) "Potential Change in Control" shall be deemed to occur
if (i) the Company enters into an agreement or arrangement, the consummation of
which would result in the occurrence of a Change in Control; (ii) any person
(including the Company) publicly announces an intention to take or to consider
taking actions which, if consummated, would constitute a Change in Control;
(iii) any person (other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company acting in such capacity or a
corporation owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company),
who is or becomes the Beneficial Owner, directly or indirectly, of securities of
the Company representing 10% or more of the combined voting power of the
Company's then outstanding Voting Securities, increases his beneficial ownership
of such securities by 5% or more over the percentage so owned by such person on
the date hereof or (iv) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.

                      (g) "Proceeding" includes any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought by or in the right of the Company or
otherwise and whether civil, criminal, administrative or investigative, in which
Indemnitee was, is or Indemnitee in good faith believes he will be involved as a
party or otherwise, by reason of the fact that Indemnitee is or was a director
of the Company, by reason of any action taken by him or of any inaction on his
part while acting as an officer or director of the Company, or by reason of the
fact that he is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other Enterprise; in each case whether or not he is acting or serving
in any such capacity at the time any liability or expense is incurred for which
indemnification can be provided under this Agreement; including one pending on
or before the date of this Agreement; and excluding one initiated by an
Indemnitee pursuant to Section 8 of this Agreement to enforce his rights under
this Agreement.

                      (h) "Reviewing Party" shall mean any appropriate person or
body consisting of a member or members of the Board or any other person or body
appointed by Indemnitee (including the Independent Counsel referred to in
Section 7(c)) who is not a party to the particular Proceeding with respect to
which Indemnitee is seeking indemnification.

                      (i) "Voting Securities" means any securities of the
Company which vote generally in the election of directors.

               17. Severability. If any provision or provisions of this
Agreement shall be held by a court of competent jurisdiction to be invalid,
void, illegal or otherwise unenforceable for any reason whatsoever: (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested thereby.

               18. Modification and Waiver. No supplement, modification,
termination or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.



                                       12
<PAGE>

Except as specifically provided herein, no failure to exercise or any delay in
exercising a right or remedy hereunder shall constitute a waiver thereof.

               19. Notice by Indemnitee. Indemnitee agrees promptly to notify
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification covered hereunder. The failure
to so notify the Company shall not relieve the Company of any obligation which
it may have to Indemnitee under this Agreement or otherwise unless and only to
the extent that such failure or delay materially prejudices the Company.

               20. Notice to Insurers. If, at the time of the receipt of
Indemnitee's written notice of a claim pursuant to Section 19, the Company has
directors' and officers' liability insurance in effect, the Company shall give
prompt notice of the commencement of the Proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The Company
shall thereafter take all necessary or desirable action to cause such insurers
to pay, on behalf of Indemnitee, all amounts payable as a result of such
Proceeding in accordance with the terms of such policies.

               21. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date of such mailing:

                      (a) If to Indemnitee, to the address set forth below
Indemnitee signature hereto.

                      (b) If to the Company, to:

                             Novellus Systems, Inc.
                             4000 North First Street
                             San Jose, California  95134
                             Attention:  Secretary

or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.

               22. Identical Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.

               23. Headings. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.

               24. Governing Law. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of California without application of the conflict of laws principles
thereof. The Company and Indemnitee each hereby irrevocably consent to the
jurisdiction of the courts of the State of California for all purposes in
connection with any action or proceeding which arises out of or relates to this
Agreement and agree that any action instituted under this Agreement shall be
brought only in the state courts of the State of California. Should any
provision of this Agreement be determined by a court of law to be illegal or
unenforceable, such provision shall be



                                       13
<PAGE>

enforced to the fullest extent allowed by law and the other provisions shall
nevertheless remain effective and shall remain enforceable.

               25. Gender. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate.



                                       14
<PAGE>

               IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement on and as of the day and year first above written.



                                        NOVELLUS SYSTEMS, INC.



                                        By:
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                                             Name:
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                                             Title:
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                                        Name:
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                               Address:

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