Vice President, Sales Employment Agreement

EXHIBIT 10.40


[Novellus Letterhead]


June 27, 2003


Thomas M. St. Dennis 3168 Pellaro Ct. Pleasanton, CA 94566


Dear Thomas:


I am pleased to offer you the position of Executive Vice President, Sales & Marketing reporting to Richard S. Hill, Chairman of the Board and Chief Executive Officer.


Your starting salary will be $31,667.00 per month, which when annualized is $380,000.00. Novellus will also pay life insurance policy premiums in the amount of $75,000.00 per year for two years.


In addition to this, a Stock Option Grant of 150,000 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, which provides up to 100% of base salary contingent upon successful completion of company and personal performance objectives. This bonus will ...