Novellus Systems (NVLS)

DEFINITIONS

For the purpose of this Plan, the following terms shall have the meanings indicated, unless the context clearly indicates otherwise:

2.1 Account. “Account” means the bookkeeping account maintained on the books of the Company used solely to calculate the amount payable to each Participant or Beneficiary under this Plan and shall not constitute a separate fund of assets. Each Participant’s Account shall consist of the following sub-accounts: (1) a Retirement Account; (2) an In-Service Account; and (3) if applicable, a Grandfathered Account. Undistributed amounts credited to Participants under the Prior Plan, if any, shall be tracked separately and retained in each such Participant’s Grandfathered Account.

2.2 Accrual. “Accrual” means the amount credited to a Participant’s Account (or, if such amount should be negative, debited from the Account) on each Determination Date, which shall be based on the Valuation Funds chosen by the Participant as provided in Section 2.27, below and in a manner consistent with Section 4.3, below.

2.3 Beneficiary. “Beneficiary” means the person, persons or entity as designated by a Participant, entitled under Article 6 to receive any Plan benefits payable after the Participant’s death.

2.4 Board. “Board” means the Board of Directors of the Company.

2.5 Change in Control. A “Change in Control” shall occur if any of the following transactions occurs:

(a) 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;

(b) 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);

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

(d) 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.

Notwithstanding any provision herein to the contrary, no distributions under the Plan shall be triggered by any Change in Control that would not be deemed to constitute a “change in the ownership or effective control, or in the ownership of a substantial portion of the assets” as defined in Section 409A of the Code and its related Treasury regulations.

2.6 Claimant. “Claimant” shall have the meaning set forth in Section 8.1(b), below.

2.7 Code. “Code” means the Internal Revenue Code of 1986, as amended from time to time.

2.8 Committee. “Committee” means the administrative committee appointed by the Board to administer the Plan pursuant to Article 7. Notwithstanding any other provision of the Plan document, any member of the Committee or any other officer or employee of the Company who exercises discretion or authority on behalf of the Company shall not be a fiduciary of the Plan merely by virtue of his or her exercise of such discretion or authority. The Board (or its delegate) shall be responsible for appointing the members of the Committee. Because this Plan is a “top hat” arrangement, the Committee shall not be subject to the duties imposed by the provisions of Part 4 of Title I of ERISA.

2.9 Company. “Company” means Novellus Systems, Inc., a California corporation, and its successors in interest.

2.10 Compensation. “Compensation” means the base salary, bonus or incentive compensation, and/or Director Fees payable to a Participant with respect to services performed for the Company or its affiliates by the Participant. For purposes

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of this Plan, Compensation shall be calculated before reduction for any amounts deferred by the Participant pursuant to the Company’s tax qualified plans which may be maintained under Section 401(k) or Section 125 of the Code, or pursuant to this Plan or any other non-qualified plan which permits the voluntary deferral of compensation. Inclusion of any other form of compensation is subject to Committee approval.

2.11 Deferral Election. “Deferral Election” means a commitment made by a Participant to defer a portion of his or her Compensation, as set forth in Article 3. A Participant’s Deferral Election shall apply to each payment of his or her Compensation. Such designation shall be made in whole percentages and shall be made in the form set forth as Exhibit “A” hereto or in another substantially-equivalent form acceptable to the Committee. A Deferral Election shall include the Participant’s election regarding the form and timing of payments to be made from his or her Account. A Deferral Election shall remain in effect for the immediately succeeding Deferral Period unless revoked or modified in accordance with Section 5.1(b)(ii), below.

2.12 Deferral Period. “Deferral Period” means each calendar year.

2.13 Determination Date. “Determination Date” means each business day of the calendar year.

2.14 Director. “Director” means a member of the Board who is not an Employee.

2.15 Director Fees. “Director Fees” means any cash fees or remuneration paid to a Director by the Company from time to time.

2.16 Disability or Disabled. “Disability” or “Disabled” means (i) a Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) a Participant’s receipt, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, of income replacement benefits for a period of not less than three (3) months under a plan or arrangement covering employees of the Company.

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2.17 Employee. “Employee” means any “employee” of the Company within the meaning of Section 3121(d) of the Code who is determined by the Committee in its sole discretion to be a member of “a select group of highly compensated and management employees” of Company and its affiliates.

2.18 ERISA. “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

2.19 Grandfathered Account. “Grandfathered Account” means a Participant’s Account balance consisting of amounts credited and vested under the Prior Plan on or prior to December 31, 2004 and earnings and losses relating to the foregoing amounts (including earnings and losses accruing on or after January 1, 2005). Each Participant’s Grandfathered Account shall be accounted for separately within the Participant’s Account. It is intended that the Grandfathered Accounts will not be subject to the restrictions imposed by Section 409A of the Code. If applicable, a Participant’s Grandfathered Account will include separate sub-accounts consisting of a Grandfathered Retirement Account and a Grandfathered In-Service Account.

2.20 In-Service Account. “In-Service Account” means the sub-account established under a Participant’s Account into which the Participant elects to contribute deferred Compensation and from which, pursuant to Section 5.1(b), distributions are made.

2.21 Participant. “Participant” means any Employee or Director who is eligible, pursuant to Section 3.1, below, to participate in this Plan, and who has elected to defer Compensation under this Plan in accordance with Article 3, below. Any such Employee or Director shall remain a Participant in this Plan for the relevant Deferral Period(s) and until such time as all benefits payable under this Plan have been paid in accordance with the provisions hereof.

2.22 Plan. “Plan” means this “Novellus Systems, Inc. Executive Voluntary Deferred Compensation Plan,” as amended from time to time.

2.23 Prior Plan. “Prior Plan” means the “Executive Voluntary Deferred Compensation Plan” previously adopted by the Company effective as of October 1, 2001, as in effect through December 31, 2004.

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2.24 Retirement Account. “Retirement Account” means the sub-account established under a Participant’s Account into which the Participant elects to contribute deferred Compensation and from which, pursuant to Section 5.1(a), distributions are made.

2.25 Termination of Service or Termination. “Termination of Service” or “Termination” means a Participant’s (i) separation from service with the Company, (ii) refusal or failure to return to work within three (3) working days after the date requested by the Company, (iii) failure to return to work at the conclusion of a leave of absence; or (iv) in the case of a Director, termination of service as a Director of the Company. Notwithstanding the foregoing, an Employee will not be deemed to have experienced a Termination of Service while absent on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six (6) months, or if longer, the period during which the Employee’s right to reemployment is guaranteed by statute or contract. If the period of leave exceeds six (6) months, and the Employee’s right to reemployment is not guaranteed by statute or contract, the Employee will be deemed to have experienced a Termination of Service as of the first day immediately following the end of such six-month period. In no event shall any distribution under the Plan be triggered by a Termination of Service that does not constitute a “separation from service” within the meaning of Section 1.409A-1(h) of the Treasury regulations.

2.26 Unforeseeable Emergency. “Unforeseeable Emergency” shall mean an unforeseeable emergency as defined in Section 409A(a)(2)(B)(ii)(I) of the Code (as limited by Section 409A(a)(2)(B)(ii)(II) of the Code), the Treasury regulations thereunder, and any other published interpretive authority, as issued or amended from time to time.

2.27 Valuation Funds. “Valuation Funds” means one or more of the independently-established funds or indices that are identified and listed by the Committee. These Valuation Funds are used solely to calculate the Accrual that is credited to each Participant’s Account(s) in accordance with Article IV, below, and do not represent, nor should it be interpreted to convey, any beneficial interest on the part of the Participant in any asset or other property. The determination of the increase or decrease in the performance of each Valuation Fund shall be made by the Committee in its reasonable discretion. The Committee shall select the various Valuation Funds available to the Participants with respect to this Plan and shall set forth a list of these Valuation Funds attached hereto as Exhibit “B”, which may be amended from time to time in the sole discretion of the Committee.

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