Document:

<PAGE>

                                                                   EXHIBIT 10.42

                             NOVELLUS SYSTEMS, INC.

                          NOTICE OF STOCK OPTION AWARD

         Grantee's Name and Address:                 Sasson Somekh
                                                     4000 N. First Street
                                                     San Jose, CA 95134

         You (the "Grantee") have been granted an option to purchase shares of
Common Stock of Novellus Systems, Inc. (the "Company"), subject to the terms and
conditions of this Notice of Stock Option Award (the "Notice") and the Stock
Option Award Agreement (the "Option Agreement") attached hereto, as follows.
Unless otherwise defined herein, the terms defined in the Option Agreement shall
have the same defined meanings in this Notice.

<TABLE>
<S>                                         <C>
Award Number                                017778

Date of Award                               January 29, 2004

Vesting Commencement Date                   January 26, 2004

Exercise Price per Share                    $32.53

Total Number of Shares Subject
to the Option (the "Shares")                250,000

Total Exercise Price                        $8,132,500

Type of Option                              Non-Qualified Stock Option

Expiration Date:                            January 29, 2014
</TABLE>

Vesting Schedule:

         Subject to the Grantee's Continuous Service and other limitations set
forth in this Notice and the Option Agreement, the Option may be exercised, in
whole or in part, in accordance with the following schedule:

         62,500 Shares subject to the Option shall vest on each yearly
anniversary of the Vesting Commencement Date such that the Option is 100% vested
four years after the Vesting Commencement Date.

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

                                    Novellus Systems, Inc.,
                                    a California corporation

                                    By: /s/ Robin Yim
                                        ----------------------------------------
                                    Title: V.P., Treasurer and Secretary
                                           -------------------------------------

                                       1

<PAGE>

         The Grantee acknowledges receipt of a copy of the Option Agreement, and
represents that he or she is familiar with the terms and provisions thereof, and
hereby accepts the Option subject to all of the terms and provisions hereof and
thereof. The Grantee has reviewed this Notice and the Option Agreement 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 and
the Option Agreement. The Grantee hereby agrees that all questions of
interpretation and administration relating to this Notice and the Option
Agreement shall be resolved by the Board in accordance with Section 13 of the
Option Agreement. The Grantee further agrees to the venue selection and waiver
of a jury trial in accordance with Section 14 of the Option Agreement. The
Grantee further agrees to notify the Company upon any change in the residence
address indicated in this Notice.

Dated:      March 7, 2004                Signed:     /s/ Sasson Somekh
       --------------------------               -------------------------------
                                                          Grantee

                                       2

<PAGE>

                                                           AWARD NUMBER:  017778

                             NOVELLUS SYSTEMS, INC.

                          STOCK OPTION AWARD AGREEMENT

         1.       Grant of Option. Novellus Systems, Inc., a California
corporation (the "Company"), hereby grants to the Grantee (the "Grantee") named
in the Notice of Stock Option Award (the "Notice"), an option (the "Option") to
purchase the Total Number of Shares of Common Stock subject to the Option (the
"Shares") set forth in the Notice, at the Exercise Price per Share set forth in
the Notice (the "Exercise Price") subject to the terms and provisions of this
Stock Option Award Agreement (the "Option Agreement") and the Notice which are
incorporated herein by reference.

         2.       Exercise of Option.

                  (a)      Right to Exercise. The Option shall be exercisable
during its term in accordance with the Vesting Schedule set out in the Notice
and with the applicable provisions of this Option Agreement. The Option shall be
subject to the provisions of Section 17 of this Option Agreement relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction. The Grantee shall be subject to reasonable limitations on the
number of requested exercises during any monthly or weekly period as determined
by the Board. In no event shall the Company issue fractional Shares.

                  (b)      Vesting. THE SHARES SUBJECT TO THE OPTION SHALL VEST,
IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE'S CONTINUOUS SERVICE (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER). NOTHING IN THE NOTICE OR THE OPTION AGREEMENT SHALL CONFER UPON THE
GRANTEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF THE GRANTEE'S
CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE'S RIGHT
OR THE RIGHT OF THE GRANTEE'S EMPLOYER TO TERMINATE THE GRANTEE'S CONTINUOUS
SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. UNLESS THE GRANTEE
HAS A WRITTEN EMPLOYMENT AGREEMENT TO THE CONTRARY, THE GRANTEE'S STATUS IS AT
WILL.

                  (c)      Post-Termination Exercise Period. The
Post-Termination Exercise Period shall be three (3) months.

                  (d)      Leave of Absence. During any authorized leave of
absence, the continued vesting of the Option shall be determined in accordance
with the Company's leave of absence policy as may be amended from time to time.

                  (e)      Change in Status. In the event of the Grantee's
change in status from Employee to Consultant or from an Employee whose customary
employment is 20 hours or more per week to an Employee whose customary
employment is fewer than 20 hours per week,

                                       1

<PAGE>

vesting of the Option shall continue only to the extent determined by the Board
as of such change in status.

                  (f)      Method of Exercise. The Option shall be exercisable
by delivery of an exercise notice or by such other procedure as specified from
time to time by the Board which shall state the election to exercise the Option,
the whole number of Shares in respect of which the Option is being exercised,
and such other provisions as may be required by the Board. The exercise notice
shall be delivered in person, by certified mail, or by such other method
(including electronic transmission) as determined from time to time by the Board
to the Company accompanied by payment of the Exercise Price. The Option shall be
deemed to be exercised upon receipt by the Company of such notice accompanied by
the Exercise Price, which, to the extent selected, shall be deemed to be
satisfied by use of the broker-dealer sale and remittance procedure to pay the
Exercise Price provided in Section 3(d), below.

                  (g)      Taxes. No Shares will be delivered to the Grantee or
other person pursuant to the exercise of the Option until the Grantee or other
person has made arrangements acceptable to the Board for the satisfaction of
applicable income tax and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of Shares. Upon exercise
of the Option, the Company or the Grantee's employer may offset or withhold
(from any amount owed by the Company or the Grantee's employer to the Grantee)
or collect from the Grantee or other person an amount sufficient to satisfy such
withholding obligations.

         3.       Method of Payment. Payment of the Exercise Price shall be made
by any of the following, or a combination thereof, at the election of the
Grantee; provided, however, that such exercise method does not then violate any
Applicable Law:

                  (a)      cash;

                  (b)      check;

                  (c)      surrender of Shares or delivery of a properly
executed form of attestation of ownership of Shares as the Board may require
which have a Fair Market Value on the date of surrender or attestation equal to
the aggregate Exercise Price of the Shares as to which the Option is being
exercised, provided, however, that Shares acquired under the Option or any other
equity compensation plan or agreement of the Company must have been held by the
Grantee for a period of more than six (6) months (and not used for another
option exercise by attestation during such period); or

                  (d)      payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (i) shall provide written instructions
to a Company-designated brokerage firm to effect the immediate sale of some or
all of the purchased Shares and remit to the Company sufficient funds to cover
the aggregate exercise price payable for the purchased Shares and (ii) shall
provide written directives to the Company to deliver the certificates for the
purchased Shares directly to such brokerage firm in order to complete the sale
transaction.

                                       2

<PAGE>

         4.       Restrictions on Exercise. The Option may not be exercised if
the issuance of the Shares subject to the Option upon such exercise would
constitute a violation of any Applicable Laws.

         5.       Termination or Change of Continuous Service. In the event the
Grantee's Continuous Service terminates, the Grantee may, but only during the
Post-Termination Exercise Period, exercise the portion of the Option that was
vested at the date of such termination (the "Termination Date"). In no event,
however, shall the Option be exercised later than the Expiration Date set forth
in the Notice. In the event of the Grantee's change in status from Employee,
Director or Consultant to any other status of Employee, Director or Consultant,
the Option shall remain in effect and vesting of the Option shall continue only
to the extent determined by the Board as of such change in status. Except as
provided in Sections 6 and 7 below, to the extent that the Option was unvested
on the Termination Date, or if the Grantee does not exercise the vested portion
of the Option within the Post-Termination Exercise Period, the Option shall
terminate.

         6.       Disability of Grantee. In the event the Grantee's Continuous
Service terminates as a result of his or her Disability, the Grantee may, but
only within twelve (12) months from the Termination Date (but in no event later
than the Expiration Date), exercise the portion of the Option that was vested on
the Termination Date. To the extent that the Option was unvested on the
Termination Date, or if the Grantee does not exercise the vested portion of the
Option within the time specified herein, the Option shall terminate.

         7.       Death of Grantee. In the event of the termination of the
Grantee's Continuous Service as a result of his or her death, or in the event of
the Grantee's death during the Post-Termination Exercise Period or during the
twelve (12) month period following the Grantee's termination of Continuous
Service as a result of his or her Disability, the person who acquired the right
to exercise the Option pursuant to Section 8 may exercise the portion of the
Option that was vested at the date of termination within twelve (12) months from
the date of death (but in no event later than the Expiration Date). To the
extent that the Option was unvested on the date of death, or if the vested
portion of the Option is not exercised within the time specified herein, the
Option shall terminate.

         8.       Transferability of Option. The Option may not be transferred
in any manner other than by will or by the laws of descent and distribution,
provided, however, that the Option may be transferred during the lifetime of the
Grantee to the extent and in the manner authorized by the Board. Notwithstanding
the foregoing, the Grantee may designate one or more beneficiaries of the
Grantee's Option in the event of the Grantee's death on a beneficiary
designation form provided by the Board. Following the death of the Grantee, the
Option, to the extent provided in Section 7, may be exercised (a) by the person
or persons designated under the deceased Grantee's beneficiary designation or
(b) in the absence of an effectively designated beneficiary, by the Grantee's
legal representative or by any person empowered to do so under the deceased
Grantee's will or under the then applicable laws of descent and distribution.
The terms of the Option shall be binding upon the executors, administrators,
heirs and successors of the Grantee.

         9.       Term of Option. The Option must be exercised no later than the
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein. After the Expiration

                                       3

<PAGE>

Date or such earlier date, the Option shall be of no further force or effect and
may not be exercised.

         10.      Tax Consequences. Set forth below is a brief summary as of the
date of this Option Agreement of some of the federal tax consequences of
exercise of the Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR
DISPOSING OF THE SHARES.

                  (a)      Exercise of Non-Qualified Stock Option. On exercise
of a Non-Qualified Stock Option, the Grantee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If the Grantee is an Employee or a former Employee, the Company
will be required to withhold from the Grantee's compensation or collect from the
Grantee and pay to the applicable taxing authorities an amount in cash equal to
a percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.

                  (b)      Disposition of Shares. If Shares are held for more
than one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.

         11.      Entire Agreement: Governing Law. The Notice and this Option
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. The Notice and this
Option Agreement 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 Option Agreement be
determined to be illegal or unenforceable, such provision shall be enforced to
the fullest extent allowed by law and the other provisions shall nevertheless
remain effective and shall remain enforceable.

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

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

                                       4

<PAGE>

         14.      Venue and Waiver of Jury Trial. The parties agree that any
suit, action, or proceeding arising out of or relating to the Notice or this
Option 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
Santa Clara) 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 14 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.

         15.      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, 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.

         16.      Adjustments Upon Changes in Capitalization. Subject to any
required action by the shareholders of the Company, the number of Shares covered
by the Option, the exercise price of the Option, as well as any other terms that
the Board determines require adjustment shall be proportionately adjusted for
(i) any increase or decrease in the number of issued Shares resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Shares, or similar transaction affecting the Shares,
(ii) any other increase or decrease in the number of issued Shares effected
without receipt of consideration by the Company, or (iii) as the Board may
determine in its discretion, any other transaction with respect to Common Stock
including a corporate merger, consolidation, acquisition of property or stock,
separation (including a spin-off or other distribution of stock or property),
reorganization, liquidation (whether partial or complete) or any similar
transaction; provided, however that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board and its determination
shall be final, binding and conclusive. Except as the Board determines, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason hereof shall be made with respect to, the number or price of Shares
subject to the Option.

         17.      Corporate Transactions.

                  (a)      Termination of Option to Extent Not Assumed in
Corporate Transaction. Effective upon the consummation of a Corporate
Transaction, the Option shall terminate. However, the Option shall not terminate
to the extent it is Assumed in connection with the Corporate Transaction.

                  (b)      Acceleration of Option Upon Corporate Transaction.
The Board shall have the authority, exercisable either in advance of any actual
or anticipited Corporate

                                       5

<PAGE>

Transaction or at the time of an actual Corporate Transaction and exercisable at
any time while the Option remains outstanding, to provide for the full or
partial automatic vesting and exercisability of the Option and the release from
restrictions on transfer and repurchase or forfeiture rights of the Option in
connection with a Corporate Transaction, on such terms and conditions as the
Board may specify. The Board also shall have the authority to condition the
Option vesting and exercisability or release from such limitations upon the
subsequent termination of the Continuous Service of the Grantee within a
specified period following the effective date of the Corporate Transaction.

         18.      Definitions. As used herein, the following definitions shall
apply:

                  (a)      "Applicable Laws" means the legal requirements
applicable to the Option, if any, under applicable provisions of federal
securities laws, state corporate and securities laws, the Code, the rules of any
applicable stock exchange or national market system, and the rules of any
non-U.S. jurisdiction applicable to Options granted to residents therein.

                  (b)      "Assumed" means that pursuant to a Corporate
Transaction either (i) the Option is expressly affirmed by the Company or (ii)
the contractual obligations represented by the Option are expressly assumed (and
not simply by operation of law) by the successor entity or its Parent in
connection with the Corporate Transaction with appropriate adjustments to the
number and type of securities of the successor entity or its Parent subject to
the Option and the exercise or purchase price thereof which at least preserves
the compensation element of the Option existing at the time of the Corporate
Transaction as determined in accordance with the instruments evidencing the
agreement to assume the Option.

                  (c)      "Board" means the Board of Directors of the Company
and shall include any committee of the Board or Officer of the Company to which
the Board has delegated its authority under this Agreement.

                  (d)      "Code" means the Internal Revenue Code of 1986, as
amended.

                  (e)      "Common Stock" means the common stock of the Company.

                  (f)      "Company" means Novellus Systems, Inc., a California
corporation.

                  (g)      "Consultant" means any person (other than an Employee
or a Director, solely with respect to rendering services in such person's
capacity as a Director) who is engaged by the Company or any Related Entity to
render consulting or advisory services to the Company or such Related Entity.

                  (h)      "Continuous Service" means that the provision of
services to the Company or a Related Entity in any capacity of Employee,
Director or Consultant is not interrupted or terminated. In jurisdictions
requiring notice in advance of an effective termination as an Employee, Director
or Consultant, Continuous Service shall be deemed terminated upon the actual
cessation of providing services to the Company or a Related Entity
notwithstanding any required notice period that must be fulfilled before a
termination as an Employee, Director or Consultant can be effective under
Applicable Laws. Continuous Service shall not be considered interrupted in the
case of (i) any approved leave of absence, (ii) transfers among the Company,

                                       6

<PAGE>

any Related Entity, or any successor, in any capacity of Employee, Director or
Consultant, or (iii) any change in status as long as the individual remains in
the service of the Company or a Related Entity in any capacity of Employee,
Director or Consultant (except as otherwise provided in the Option Agreement).
An approved leave of absence shall include sick leave, military leave, or any
other authorized personal leave.

                  (i)      "Corporate Transaction" means any of the following
transactions:

                           (i)      a merger or consolidation in which the
Company is not the surviving entity, except for a transaction the principal
purpose of which is to change the state in which the Company is incorporated;

                           (ii)     the sale, transfer or other disposition of
all or substantially all of the assets of the Company (including the capital
stock of the Company's subsidiary corporations);

                           (iii)    approval by the Company's shareholders of
any plan or proposal for the complete liquidation or dissolution of the Company;
or

                           (iv)     any reverse merger in which the Company is
the surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
are transferred to a person or persons different from those who held such
securities immediately prior to such merger.

                  (j)      "Director" means a member of the Board or the board
of directors of any Related Entity.

                  (k)      "Disability" shall have the same meaning as defined
under the long-term disability policy of the Company or the Related Entity to
which the Grantee provides services regardless of whether the Grantee is covered
by such policy. If the Company or the Related Entity to which the Grantee
provides service does not have a long-term disability plan in place,
"Disability" means that the Grantee is unable to carry out the responsibilities
and functions of the position held by the Grantee by reason of any medically
determinable physical or mental impairment for a period of not less than ninety
(90) consecutive days. The Grantee will not be considered to have incurred a
Disability unless he or she furnishes proof of such impairment sufficient to
satisfy the Board in its discretion.

                  (l)      "Employee" means any person, including an Officer or
Director, who is in the employ of the Company or any Related Entity, subject to
the control and direction of the Company or any Related Entity as to both the
work to be performed and the manner and method of performance. The payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.

                  (m)      "Exchange Act" means the Securities Exchange Act of
1934, as amended.

                  (n)      "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:

                                       7

<PAGE>

                           (i)      If the Common Stock is listed on one or more
established stock exchanges or national market systems, including without
limitation The Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on the
principal exchange or system on which the Common Stock is listed (as determined
by the Board) on the date of determination (or, if no closing sales price or
closing bid was reported on that date, as applicable, on the last trading date
such closing sales price or closing bid was reported), as reported in The Wall
Street Journal or such other source as the Board deems reliable;

                           (ii)     If the Common Stock is regularly quoted on
an automated quotation system (including the OTC Bulletin Board) or by a
recognized securities dealer, its Fair Market Value shall be the closing sales
price for such stock as quoted on such system or by such securities dealer on
the date of determination, but if selling prices are not reported, the Fair
Market Value of a share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the date of determination (or, if
no such prices were reported on that date, on the last date such prices were
reported), as reported in The Wall Street Journal or such other source as the
Board deems reliable; or

                           (iii)    In the absence of an established market for
the Common Stock of the type described in (i) and (ii), above, the Fair Market
Value thereof shall be determined by the Board in good faith.

                  (o)      "Non-Qualified Stock Option" means an Option not
intended to qualify as an incentive stock option within the meaning of Section
422 of the Code.

                  (p)      "Officer" means a person who is an officer of the
Company or a Related Entity within the meaning of Section 16 of the Exchange Act
and the rules and regulations promulgated thereunder.

                  (q)      "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

                  (r)      "Related Entity" means any Parent or Subsidiary of
the Company and any business, corporation, partnership, limited liability
company or other entity in which the Company or a Parent or a Subsidiary of the
Company holds a substantial ownership interest, directly or indirectly.

                  (s)      "Share" means a share of the Common Stock.

                  (t)      "Subsidiary" means a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code.

                                END OF AGREEMENT

                                       8<PAGE>

                                                                   EXHIBIT 10.43

                             NOVELLUS SYSTEMS, INC.

                        NOTICE OF RESTRICTED STOCK AWARD

         Grantee's Name and Address:                 Sasson Somekh
                                                     4000 N. First Street
                                                     San Jose, CA 95134

         You (the "Grantee") have been issued shares of Common Stock of Novellus
Systems, Inc. (the "Company"), subject to the terms and conditions of this
Notice of Restricted Stock Award (the "Notice") and the Restricted Stock Award
Agreement (the "Agreement") attached hereto, as follows. Unless otherwise
defined herein, the terms defined in the Agreement shall have the same defined
meanings in this Notice.

<TABLE>
<S>                                         <C>
Award Number                                017779

Date of Award                               January 29, 2004

Vesting Commencement Date                   January 26, 2004

Total Number of Shares
of Common Stock Awarded
(the "Shares")                              50,000

Aggregate Fair Market
Value of the Shares                         $1,626,500
</TABLE>

Consideration:

         The Shares have been issued to the Grantee in consideration for
continued service with the Company, which consideration has a value of $32.53
per share, the Fair Market Value of the Shares.

Vesting Schedule:

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

         10,000 Shares shall vest on each yearly anniversary of the Vesting
Commencement Date such that 100% of the Shares are vested five years after the
Vesting Commencement Date.

         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. In the event the Grantee's Continuous Service
is terminated for any reason, 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

                                       1

<PAGE>

legal and beneficial owner of the Restricted Shares and shall have all rights
and interest in or related thereto without further action by the Grantee.

         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 and the Agreement.

                                            Novellus Systems, Inc.
                                            a California corporation

                                            By: /s/ Robin Yim
                                                --------------------------------
                                            Title: V.P., Treasurer and Secretary
                                                   -----------------------------

         The Grantee acknowledges receipt of a copy of 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 and the Agreement 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 and
the Agreement. The Grantee hereby agrees that all questions of interpretation
and administration relating to this Notice and the Agreement shall be resolved
by the Board in accordance with Section 13 of the Agreement. The Grantee further
agrees to the venue selection and waiver of a jury trial in accordance with
Section 14 of the Agreement. The Grantee further agrees to notify the Company
upon any change in the residence address indicated in this Notice.

Dated:       March 7, 2004                  Signed:     /s/ Sasson Somekh
       ----------------------------                 ----------------------------
                                                             Grantee

                                       2
<PAGE>

                                                            AWARD NUMBER: 017779

                             NOVELLUS SYSTEMS, INC.

                        RESTRICTED STOCK 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 Award (the "Notice"), the Total Number of Shares of
Common Stock Awarded set forth in the Notice (the "Shares"), subject to the
Notice and this Restricted Stock Award Agreement (the "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. Consideration. The Shares have been issued to the Grantee in
consideration for continued service with the Company as set forth in the Notice.

         3. Conditions and Restrictions.

                  (a) Vesting. THE SHARES SHALL VEST, IF AT ALL, ONLY DURING THE
PERIOD OF THE GRANTEE'S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED THIS AWARD OR ACQUIRING SHARES HEREUNDER). NOTHING IN THE NOTICE
OR THE AGREEMENT SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO FUTURE
AWARDS OR CONTINUATION OF THE GRANTEE'S CONTINUOUS SERVICE, NOR SHALL IT
INTERFERE IN ANY WAY WITH THE GRANTEE'S RIGHT OR THE RIGHT OF THE GRANTEE'S
EMPLOYER TO TERMINATE THE GRANTEE'S CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE,
AND WITH OR WITHOUT NOTICE. UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT
AGREEMENT TO THE CONTRARY, THE GRANTEE'S STATUS IS AT WILL.

                  (b) Leave of Absence. During any authorized leave of absence,
the continued vesting of the Shares shall be determined in accordance with the
Company's leave of absence policy as may be amended from time to time.

                  (c) Change in Status. In the event of the Grantee's change in
status from Employee to Consultant or from an Employee whose customary
employment is 20 hours or more per week to an Employee whose customary
employment is fewer than 20 hours per week, vesting of the Shares shall continue
only to the extent determined by the Board as of such change in status.

                  (d) 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

                                       1

<PAGE>

forth in the Notice. Any attempt to transfer Restricted Shares in violation of
this Section 3 will be null and void and will be disregarded.

         4. Escrow of Stock. For purposes of facilitating the enforcement of the
provisions of this Agreement and the payment of withholding taxes pursuant to
Section 6 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 and the Grantee's spouse
(if required for transfer) 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 6 below.

         5. 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.

         6. 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.

                                       2

<PAGE>

                           (i)      By Share Withholding. The Grantee authorizes
the Company, in its discretion, 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 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 Board.

         7. 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

                                       3

<PAGE>

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.

         8. Stop-Transfer Notices. In order to ensure compliance with the
restrictions on transfer set forth in this Agreement and the Notice, 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.

         9. 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.

         10. 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:

                  THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY
                  THE TERMS OF THAT CERTAIN RESTRICTED STOCK 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.

         11. Entire Agreement: Governing Law. The Notice 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. The Notice and this
Agreement 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, such provision shall be enforced to the fullest
extent allowed by law and the other provisions shall nevertheless remain
effective and shall remain enforceable.

         12. 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.

                                       4

<PAGE>

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

         14. Venue and Waiver of Jury Trial. The parties agree that any suit,
action, or proceeding arising out of or relating to the Notice 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 Santa Clara) 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 14 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.

         15. 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, 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.

         16. Corporate Transactions. If the Award is Assumed in connection with
a Corporate Transaction, any Restricted Shares shall continue to be subject to a
forfeiture right held by the Company or the successor entity (or Parent
thereof). If the Award is not Assumed in connection with a Corporate
Transaction, any Restricted Shares held by the Grantee shall be forfeited to the
Company or the successor entity (or Parent thereof) as if the Grantee's
Continuous Service had terminated immediately prior to the effective date of
such Corporate Transaction. Notwithstanding the foregoing, the Board shall have
the authority, exercisable either in advance of any actual or anticipited
Corporate Transaction or at the time of an actual Corporate Transaction and
exercisable at any time while the Award remains outstanding, to provide for the
full or partial automatic vesting of the Shares subject to the Award and the
release from restrictions on transfer and forfeiture rights of the Shares in
connection with a Corporate Transaction, on such terms and conditions as the
Board may specify. The Board also shall have the authority to condition the
vesting of the Shares upon the subsequent termination of the Continuous Service
of the Grantee within a specified period following the effective date of the
Corporate Transaction.

         17. Definitions. As used herein, the following definitions shall apply:

                  (a) "Applicable Laws" means the legal requirements applicable
to the issuance of Awards, if any, under applicable provisions of federal
securities laws, state corporate and securities laws, the Code, the rules of any
applicable stock exchange or national market system, and the rules of any
non-U.S. jurisdiction applicable to Awards granted to residents therein.

                                       5

<PAGE>

                  (b) "Assumed" means that pursuant to a Corporate Transaction
either (i) the Award is expressly affirmed by the Company or (ii) the
contractual obligations represented by the Award are expressly assumed (and not
simply by operation of law) by the successor entity or its Parent in connection
with the Corporate Transaction with appropriate adjustments to the number and
type of securities of the successor entity or its Parent subject to the Award
thereof which at least preserves the compensation element of the Award existing
at the time of the Corporate Transaction as determined in accordance with the
instruments evidencing the agreement to assume the Award.

                  (c) "Award" means the issuance of Restricted Shares hereunder.

                  (d) "Board" means the Board of Directors of the Company and
shall include any committee of the Board or Officer of the Company to which the
Board has delegated its authority under this Agreement.

                  (e) "Code" means the Internal Revenue Code of 1986, as
amended.

                  (f) "Common Stock" means the common stock of the Company.

                  (g) "Company" means Novellus Systems, Inc., a California
corporation.

                  (h) "Consultant" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.

                  (i) "Continuous Service" means that the provision of services
to the Company or a Related Entity in any capacity of Employee, Director or
Consultant, is not interrupted or terminated. In jurisdictions requiring notice
in advance of an effective termination as an Employee, Director or Consultant,
Continuous Service shall be deemed terminated upon the actual cessation of
providing services to the Company or a Related Entity notwithstanding any
required notice period that must be fulfilled before a termination as an
Employee, Director or Consultant can be effective under Applicable Laws.
Continuous Service shall not be considered interrupted in the case of (i) any
approved leave of absence, (ii) transfers among the Company, any Related Entity,
or any successor, in any capacity of Employee, Director or Consultant, or (iii)
any change in status as long as the individual remains in the service of the
Company or a Related Entity in any capacity of Employee, Director or Consultant
(except as otherwise provided in the Award Agreement). An approved leave of
absence shall include sick leave, military leave, or any other authorized
personal leave.

                  (j) "Corporate Transaction" means any of the following
transactions:

                           (i)      a merger or consolidation in which the
Company is not the surviving entity, except for a transaction the principal
purpose of which is to change the state in which the Company is incorporated;

                                       6

<PAGE>

                           (ii)     the sale, transfer or other disposition of
all or substantially all of the assets of the Company (including the capital
stock of the Company's subsidiary corporations);

                           (iii)    approval by the Company's shareholders of
any plan or proposal for the complete liquidation or dissolution of the Company;
or

                           (iv)     any reverse merger in which the Company is
the surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
are transferred to a person or persons different from those who held such
securities immediately prior to such merger.

                  (k) "Director" means a member of the Board or the board of
directors of any Related Entity.

                  (l) "Disability" shall have the same meaning as defined under
the long-term disability policy of the Company or the Related Entity to which
the Grantee provides services regardless of whether the Grantee is covered by
such policy. If the Company or the Related Entity to which the Grantee provides
service does not have a long-term disability plan in place, "Disability" means
that the Grantee is unable to carry out the responsibilities and functions of
the position held by the Grantee by reason of any medically determinable
physical or mental impairment for a period of not less than ninety (90)
consecutive days. The Grantee will not be considered to have incurred a
Disability unless he or she furnishes proof of such impairment sufficient to
satisfy the Board in its discretion.

                  (m) "Employee" means any person, including an Officer or
Director, who is in the employ of the Company or any Related Entity, subject to
the control and direction of the Company or any Related Entity as to both the
work to be performed and the manner and method of performance. The payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.

                  (n) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.

                  (o) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

                           (i)      If the Common Stock is listed on one or more
established stock exchanges or national market systems, including without
limitation The Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on the
principal exchange or system on which the Common Stock is listed (as determined
by the Board) on the date of determination (or, if no closing sales price or
closing bid was reported on that date, as applicable, on the last trading date
such closing sales price or closing bid was reported), as reported in The Wall
Street Journal or such other source as the Board deems reliable;

                           (ii)     If the Common Stock is regularly quoted on
an automated quotation system (including the OTC Bulletin Board) or by a
recognized securities dealer, its Fair Market Value shall be the closing sales
price for such stock as quoted on such system or by

                                       7

<PAGE>

such securities dealer on the date of determination, but if selling prices are
not reported, the Fair Market Value of a share of Common Stock shall be the mean
between the high bid and low asked prices for the Common Stock on the date of
determination (or, if no such prices were reported on that date, on the last
date such prices were reported), as reported in The Wall Street Journal or such
other source as the Board deems reliable; or

                           (iii)    In the absence of an established market for
the Common Stock of the type described in (i) and (ii), above, the Fair Market
Value thereof shall be determined by the Board in good faith.

                  (p) "Officer" means a person who is an officer of the Company
or a Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.

                  (q) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

                  (r) "Related Entity" means any Parent or Subsidiary of the
Company and any business, corporation, partnership, limited liability company or
other entity in which the Company or a Parent or a Subsidiary of the Company
holds a substantial ownership interest, directly or indirectly.

                  (s) "Share" means a share of the Common Stock.

                  (t) "Subsidiary" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.

                                END OF AGREEMENT

                                       8

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