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                                                                   EXHIBIT 10.37

                             NOVELLUS SYSTEMS, INC.

                               AMENDMENT NO. 2 TO
                              EMPLOYMENT AGREEMENT

         This Amendment No. 2 ("Amendment No. 2") is made and dated January 14,
2004 by and between Novellus Systems, Inc., a California corporation (the
"Company"), and Richard Hill ("Executive") (collectively, "the parties") with
respect to that certain Employment Agreement between the parties dated October
1, 1998, as amended December 17, 1999 (the "Amended Agreement").

                                    RECITALS

         1.       Executive has been employed by the Company and is currently
serving as the Company's Chairman and Chief Executive Officer pursuant to the
terms and conditions of the Amended Agreement.

         2.       The parties now desire to amend certain terms of the Amended
Agreement upon the following terms and conditions.

                                    AGREEMENT

         Accordingly, the parties agree as follows:

         1.       AMENDMENT OF PARAGRAPH 3(a). Paragraph 3(a) of the Amended
Agreement (regarding Executive's salary) is hereby amended in its entirety to
read as follows:

                  a.       The Company shall pay Executive at an initial base
                           annual salary of $775,000.00, payable bi-weekly.
                           Executive's salary will be reviewed from time to time
                           in accordance with Company's established procedures
                           for adjusting salaries for similarly situated
                           employees. Executive shall also be eligible to
                           participate in the Company's executive bonus plan, as
                           already established by the Company, and as may be
                           amended from time to time in the Company's sole
                           discretion.

         2.       AMENDMENT OF PARAGRAPH 3(d). Paragraph 3(d) of the Amended
Agreement (regarding certain golf club expenses) is hereby amended in its
entirety to read as follows:

                  d.       The Company shall reimburse Executive in accordance
                           with Company guidelines and procedures for golf club
                           expenses associated with the normal course of conduct
                           with customers.

         3.       AGREEMENT CONTINUES. Except as specifically modified herein,
the terms and conditions of the Amended Agreement shall remain in full force and
effect. This Amendment No. 2 shall be attached to the Amended Agreement as
EXHIBIT B.

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         4.       DEFINITIONS. Capitalized terms used herein shall have the
meanings set forth in the Amended Agreement, unless otherwise specifically
defined herein.

         5.       REPRESENTATION BY COUNSEL. The parties acknowledge that (a)
they have had the opportunity to consult counsel in regard to this Amendment No.
2; (b) they have read and understand Amendment No. 2 and they are fully aware of
its legal effect; and (c) they are entering into Amendment No. 2 freely and
voluntarily, and based on each party's own judgment and not on any
representations or promises made by the other party, other than those contained
in this Amendment No. 2.

         6.       DATE OF AMENDMENT. The parties have duly executed this
Amendment No. 2 as of the date first written above.

                                      /s/ Richard Hill
                                      ----------------------------------
                                                 Richard Hill

                                      NOVELLUS SYSTEMS, INC.

                                      By: /s/ Kevin S. Royal
                                          ------------------------------
                                                 Kevin S. Royal
                                                 Chief Financial Officer<PAGE>

                                                                   EXHIBIT 10.38

                              [Novellus Letterhead]

December 11, 2003

Mr. Peter Hanley
5130 Blackhawk Drive
Danville, CA 94506

Dear Peter:

Congratulations on your retirement as an officer of Novellus effective December
31, 2003. While you will continue as a part-time employee of the Company over
the next several years until December 31, 2007, it will not be at the hectic
pace of the last eleven years.

As you and I discussed and as set forth below, you will be entitled to receive a
one-time bonus payment of $650,000 payable 50% on January 1, 2004, 25% on
January 1, 2005, 12-1/2% on January 1, 2006 and 12-1/2% on January 1, 2007. In
addition, you will be paid $50,000 per year for your part-time employment from
January 1, 2004 until December 31, 2007. Your unvested stock options will
continue to vest until December 31, 2007. You may exercise your company stock
options until the earlier of their contractual termination or March 30, 2008.

Novellus will continue to pay one hundred percent of the cost of your medical,
dental, vision, life and long term disability insurance coverage and a portion
for your dependents during this entire period. Your pre-tax payroll deductions
for your share in the cost of dependent coverage must continue in order to
maintain coverage for them. The life insurance benefit would be paid to your
beneficiary at 2x the rate of your then current salary. That means because your
salary will be $50,000 it would pay the maximum benefit allowed of $100,000.
After December 31, 2007 you will be eligible to convert your life insurance
coverage to an individual policy.

After December 31, 2007, you and your spouse will also receive medical, dental
and vision insurance coverage for life under the Company's "Officers' Retirement
Medical and Dental Coverage Plan." Except for the terms outlined in this letter,
you will not be entitled to any compensation, benefits or other perquisites of
employment after December 31, 2007.

As a result of the retirement benefits outlined above, you consent that all
prior agreements related to employment, retirement or severance benefits are
void including your original employment agreement dated June 18, 1992.

As a continuing part-time employee of the Company, you represent and warrant
that, during the term of this agreement, you shall not, without the prior
written consent of the Company, either (i) undertake or perform any work,
whether in the form of an employment, independent contractor, or other
relationship, for or on behalf of a competitor or potential competitor of the
Company; or (ii) engage, directly or indirectly, in any other business activity
(whether or not pursued for pecuniary advantage) that might interfere with your
duties and responsibilities hereunder or create a conflict of interest with the
Company. You shall make full and complete written disclosure to the Company of
your intention to provide services to a third party prior to commencement of any
work for a third party. The parties agree that the Company's consent and your
disclosure are necessary to ensure that you do not, directly or indirectly,
disclose to any third parties the confidential and/or proprietary information of
the Company. In the event that you do not disclose, or the Company does not
consent, and the Company determines that you have undertaken or actually
performed any work which conflicts or impedes successful accomplishment of the
purposes of this agreement; then the Company reserves the right to

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terminate this agreement with you for cause. The December 31, 2007 termination
date could then be adjusted to the date you received written termination for
cause. In addition, any violation of this agreement will result in forfeiture of
all compensation, including any otherwise accrued bonus, set forth in this
agreement.

It has been enjoyable working with you over the last eleven years. You have made
many lasting contributions to the company that will always be appreciated. You
have had a lasting effect on the company and the people with whom you have
worked and we look forward to continuing to work with you over the next four
years.

Sincerely,

NOVELLUS SYSTEMS, INC.

/s/ Richard S. Hill

Richard S. Hill
Chairman and CEO

Accepted:

/s/ Peter R. Hanley

Peter R. Hanley
President

cc:      Novellus Board of Directors
         Novellus Human Resources Department<PAGE>

                                                                   EXHIBIT 10.39

                             [Novellus Letterhead]

January 23, 2004

Mr. Sasson Somekh
25625 Moody Road
Los Altos Hills, CA  94022

Dear Sass:

I am pleased to offer you the position of President of Novellus Systems, Inc.
You will be a member of the Office of the CEO. You will report to Richard S.
Hill, Chairman of the Board and Chief Executive Officer.

Your starting salary will be $39,583.33 per month, which when annualized is
$475,000.00.

In addition to this, a Non-Qualified Stock Option Grant of 250,000 shares will
be available to you subject to approval by the Board of Directors. These options
will vest 25% per year over a four (4) year period beginning on your start date.
In addition, you will be given a restricted stock grant of 50,000 shares,
subject to approval by the Board of Directors. These 50,000 shares will vest at
a rate of 10,000 per year for 5 years.

You will be eligible to participate in the Novellus Key Director/VP Bonus
Program, with a target bonus of 125% of base salary contingent upon successful
completion of company and personal performance objectives. Your actual bonus may
be higher or lower than your target bonus percentage if actual company results
are lower or higher than target. This bonus will not be pro-rated for the first
year.

You will be eligible for the Novellus benefits program including health (PPO or
HMO), dental, vision, life and long term disability insurance coverage. Novellus
will pay one hundred percent of the cost of your coverage and a portion for your
dependents in accordance with the terms of the benefits program in question.

As a senior member of the executive team, you are entitled to unlimited use of
our executive financial counselors at no cost to you. This benefit is available
to you for the entire duration of your employment. In addition, you are entitled
to use Ernst & Young LLP to prepare your personal tax returns.

This offer of employment is contingent upon your:

(1)      Completion of the Novellus Employment Application
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(2)      Signing of the Novellus Proprietary Information Agreement
(3)      Signing of the Novellus Employment Practices Acknowledgement
(4)      Providing verification of your eligibility for employment in the United
         States

A Novellus Application and an Employment Eligibility Verification form (I-9) are
enclosed to assist you in providing the information to Novellus on your first
day of work.

Novellus is an at-will employer, which means that either you or the Company has
the right to terminate employment at any time, with or without advance notice,
and with or without cause, for any reason or no reason.

This offer is the full and complete statement of the parties understanding,
supersedes any other communication, whether verbal or written, regarding your
employment and can only be modified by a written statement signed by you and an
Officer of the Company (or his or her authorized designee).

Please acknowledge your acceptance of this offer by signing below. The entire
Novellus staff looks forward to you joining us and becoming a key person with
our growing team.

Sincerely,

/s/ Richard S. Hill

Richard S. Hill
Chairman of the Board and Chief Executive Officer
Novellus Systems, Inc.

I accept the terms to this offer:

/s/ Sasson Somekh
---------------------------------
Sasson Somekh               Date

January 23, 2004
---------------------------------
Available Start Date

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