EMPLOYMENT AGREEMENT Effective July 18, 2012

Exhibit 10.174

Ernest E. Maddock Employment Agreement

EMPLOYMENT AGREEMENT

Effective July 18, 2012

This Employment Agreement (the “Agreement”) is made and entered into between Ernest E. Maddock (the “Executive”) and Lam Research Corporation, a Delaware corporation (the “Company”).

R E C I T A L S

A. The Company and Executive desire to enter into this Agreement with respect to the Executive’s employment with the Company.

In consideration of the mutual covenants herein contained, and in consideration of the employment of Executive by the Company, the parties agree as follows:

1. Duties and Scope of Employment.

(a) Position. During the Employment Period (as defined in Section 2(a) below), the Executive shall serve as a Senior Vice President and in such capacity the Executive shall perform the duties and responsibilities as the Chief Executive Officer of the Company (the “CEO”) and Board of Directors of the Company (the “Board”) may, from time to time, reasonably assign to Executive, in all cases to be consistent with Executive’s offices and positions.

(b) Executive’s Obligations. Executive shall comply with all of the Company’s policies and procedures governing employment. During the Employment Period, the Executive shall devote his full business efforts and time to the Company. The foregoing, however, shall not preclude the Executive from engaging in such activities and services as do not interfere or conflict with his responsibilities to the Company.

2. Employment Period.

(a) Term. The Company shall employ the Executive for the period commencing on July 18, 2012, and ending on July 17, 2015 (such period, the “Employment Period”) on the terms and subject to the conditions set forth in this Agreement.

(b) Termination. This Agreement will terminate at the conclusion of the Employment Period unless the parties agree to extend it. The CEO will provide notice of the Company’s intent whether to renew or enter into a new employment agreement with the Executive twelve (12) months prior to the end of the Employment Period. If the CEO provides notice of the Company’s intent to renew or enter into a new employment agreement with the Executive, the Company and the Executive will enter into good faith negotiations. Neither (i) providing a notice of intent not to renew or enter into a new employment agreement nor (ii) the failure to renew or enter into a new employment agreement will be considered an Involuntary Termination as defined in Section 7(c). Nothing contained in this Agreement alters the “at will” nature of the Executive’s employment with the Company. In addition, this Agreement may be terminated prior to expiration of the Employment Period as follows:

(i) By the Company. The Company may terminate the Executive’s employment for Cause (as defined in Section 7(a) below), by giving the Executive thirty (30) days’ advance written notice, subject, however, to the cure provisions of such Section. The Company may terminate the Executive’s employment with the Company for any reason (other than due to the Executive’s death or Disability, which are addressed in Sections 2(c) and 2(d) below) by giving the Executive ninety (90) days’ advance notice in writing, although the Company may pay to the Executive the compensation Executive would have otherwise received during such period in lieu of such notice. Unless such termination by the Company is a termination for Cause or due to the Executive’s death or Disability, it shall be regarded as an Involuntary Termination of the Executive. Any waiver of notice shall be valid only if it is made in writing and expressly refers to the applicable notice requirement of this Section 2(b).

(ii) By the Executive. The Executive may terminate his employment with the Company by reason of Involuntary Termination (as defined in Section 7(c) below) by giving the Company thirty (30) days’ advance written notice, subject, however, to the cure provisions of such Section. The Executive may tender his Voluntary Resignation (as defined in this Agreement) by giving the Company ninety (90) days’ advance written notice, which period may be waived or reduced at the Company’s option, although the Company may choose to pay the Executive, in lieu of such notice period the amounts that would otherwise be due to the Executive during such period. Any waiver or reduction of notice shall be valid only if it is made in writing and expressly refers to the applicable notice requirement of this Section 2(b).

(c) Death. The Executive’s employment shall terminate immediately in the event of his death.

(d) Disability. The Executive’s employment shall terminate in the event of his Disability (as defined in Section 7(b) below).

(e) Priority of Rights and Obligations upon Termination. If any event leading to or permitting termination of this Agreement, or providing notice thereof, occurs at approximately the same time as any other termination event or during any termination notice period, and those events invoke different notice periods or different severance or other benefit arrangements, the deadlines, obligations, rights and benefits applicable to the termination event having the highest priority shall control. The priority of termination events (from highest to lowest priority) is as follows: (1) termination for Cause; (2) Voluntary Resignation; (3) Involuntary Termination; (4) Disability; and (5) death. For example, if Executive gives notice of his Voluntary Resignation and, before the 90 day notice period has expired, he is subject to an Involuntary Termination, only the rights and benefits available to him for Voluntary Resignation apply since the provisions governing Voluntary Resignation have a higher priority than those applicable to Involuntary Termination. Similarly, if the Executive has been subject to an Involuntary Termination and dies during the notice period, he shall have the rights and benefits available to his estate as one subject to an Involuntary Termination. Expiration of this Agreement prevails over all termination events.

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3. Compensation and Benefits.

(a) Base Compensation. During the term of this Agreement, the Company shall pay the Executive as compensation for services a base salary at the annual rate of $485,000. The Compensation Committee, at least annually, will review, and potentially adjust, such base salary on a prospective basis, reasonably taking into account Executive’s performance and prevailing compensation for executives at similar levels in similar sized companies in the industry. Such salary shall be paid periodically in accordance with normal Company payroll. The annual compensation specified in this Section 3(a) is referred to in this Agreement as “Base Compensation.”

(b) Variable Compensation. Executive shall be entitled to participate in any short-term or long-term variable compensation plans offered by the Company to its executive officers generally (collectively, such plans are referred to in this Agreement as the “Combined Plans” and which are currently the Annual Incentive Plan and the Long-Term Incentive Plan, which includes the Multi-Year Incentive Plan and the equity components of the Long-Term Incentive Plan), subject to the generally applicable terms and conditions of the plan in question and to the determination of the Compensation Committee or any committee administering such plan.

(c) Deferred Compensation. The Executive shall be entitled to participate in the Company’s Elective Deferred Compensation Plan pursuant to the terms thereof.

(d) Benefits. During the Employment Period, the Executive shall be eligible to participate in the benefit plans and compensation programs maintained by the Company of general applicability to other executive officers of the Company, including (without limitation) retirement plans, savings or profit-sharing plans, deferred compensation plans, supplemental retirement or excess-benefit plans, stock option, life, disability, health, accident and other insurance programs, paid vacations (but accruing at not less than three weeks per year), and similar plans or programs, subject in each case to the generally applicable terms and conditions of the plan or program in question and to the determination of the Compensation Committee or any committee administering such plan or program.

(e) Reimbursement of Business Expenses. The Company shall reimburse the Executive for all reasonable and necessary business expenses incurred by the Executive in the performance of his duties hereunder upon proper submission of expense reports in accordance with Company policies regarding such reimbursement.

4. Section 162(m). Executive and the Company agree to use reasonable good faith efforts, to the extent reasonably practicable and not materially adverse to Executive, to structure payment of all amounts of Executive’s compensation from the Company so as to avoid non-deductibility of any such amounts under Section 162(m) of the Internal Revenue Code (the “Code”) or any successor provision.

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5. Benefits Upon a Change in Control.

(a) If a Change in Control (as defined in this Agreement) occurs during the Employment Period, and an Involuntary Termination of Executive’s employment occurs either in contemplation of such Change in Control¹ or within twelve (12) months following a Change in Control², then:

(i) Within ten (10) days following the Termination Date, the Company shall pay Executive a lump sum equal to (A) twelve (12) months of Base Compensation (without giving effect to any salary reduction program then in effect), plus (B) an amount equal to the average of the short-term variable compensation plan (currently the Annual Incentive Plan, and for prior years the annual variable compensation plan called the “MBO”, and together with any future short-term variable compensation plan, collectively hereinafter referred to as the “Short Term Plan”) payments earned by the Executive over the last five (5) years in which the Executive was employed with the Company on December 31^st of such year (the “Five Year Average Amount”), plus (C) a pro-rata amount (based on the number of full months worked during the calendar year during which the Termination Date occurs) of the Five Year Average Amount.

(ii) If at the Termination Date, payment has not been made under the Short Term Plan that was in effect during the calendar year prior to the year in which the Termination Date occurs, the Company shall pay the Executive, not later than March 15^th of the year in which the Termination Date occurs, the full amount he would have earned under such prior-year plan (based on the performance results achieved under such plan), as if his employment had not been terminated.

(iii) If the Executive qualifies for participation in the Company’s Executive Retiree Medical Benefit Plan prior to the Termination Date, then the Executive will receive the benefits he qualifies for under the Executive Retiree Medical Benefit Plan or, if such plan has been terminated prior to the Termination Date, within ten (10) days following the Termination Date, the Company shall pay the Executive a lump sum amount (the “Medical Plan Payment”) equal to the present value of the benefits for which the Executive qualified prior to the termination of such plan. The present value of such benefits shall be determined actuarially based on the actual cost of replacing the benefits as of the Termination Date.³ If the Executive does not qualify for participation in the Executive Retiree Medical Benefit Plan prior to the Termination Date, within ten (10) days following the Termination Date, the Company shall pay in a lump sum any COBRA premiums the Executive would be required to pay for the COBRA benefits selected by Executive for twelve (12) months after the Executive’s Termination Date.

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(iv) The unvested portion(s) of any stock options/Restricted Stock Units (“RSUs”) that were granted to Executive prior to the Change in Control shall automatically be accelerated in full so as to become completely vested as of the Termination Date. Unless the grant was made prior to the effective date of this Agreement, the stock options shall remain exercisable for two years following the Termination Date unless they are earlier exercised or expire pursuant to their original terms or unless they are exchanged for cash in connection with any Change in Control. For options granted prior to the effective date of this Agreement, the grant’s award agreement shall control its exercisability⁴. The Company will issue the shares underlying the RSUs within ten (10) days of the Termination Date.

(b) In the event of a Change in Control, for any long-term cash-based variable compensation plan (currently the Multi-Year Incentive Plan, and together with any future long-term cash-based variable compensation plan, hereinafter the “Long Term Cash Plan”) awards outstanding (which currently would include two Long Term Cash Plan performance cycles) at the time of the Change in Control, performance cycles under such plans shall cease as of the date of the Change in Control. The Company shall pay Executive, subject to the payout dates and restrictions below, all accrued amounts as of the last full completed quarter as of the date of the Change in Control, under each performance cycle of such plan, plus the Remaining Target Amount for each performance cycle under each such plan (together, the “Payment Amounts”). The Remaining Target Amount shall equal, for each performance cycle under each plan, the target amount multiplied by the number of quarters in the performance cycle that end after the time of the Change in Control, divided by the total number of quarters in the full performance cycle. Payment shall be made at the times specified below, and pending payment, the Company shall hold such amount in a book account for the Executive.

(i) Change in Control, Involuntary Termination. In the case of a Change in Control where the Executive’s employment terminates due to an Involuntary Termination prior to twelve (12) months following the Change in Control or in contemplation of a Change in Control, the Payment Amounts shall be paid out to the Executive within ten (10) days following the Termination Date.

(ii) Change in Control, No Termination. In the case of a Change in Control where the Executive’s employment does not terminate within twelve (12) months following the Change in Control or in contemplation of a Change in Control, the Executive shall receive the Payment Amounts when it is ordinarily paid out. For avoidance of doubt, if there are multiple Long Term Cash Plan performance cycles, portions of the Payment Amounts may be paid in different years, each in accordance with the terms of the relevant performance cycle.

(c) No Change in Control benefits under Sections 5(a) or 5(b) will apply if the Change in Control or Involuntary Termination occurs after the Executive has (i) given notice of Voluntary Resignation or (ii) been given notice of termination for Cause by the Company, unless that notice of termination for Cause is subsequently withdrawn (in writing) by the Company and Executive’s employment does not terminate as a result of such notice.

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(d) If the Company is acquired by another entity in connection with a Change in Control and there is or will be no market for the Common Stock of the Company, the vesting of all Executive’s stock options/RSUs, granted prior to the Change in Control, will accelerate immediately prior to the Change in Control (and, for stock options, be immediately exercisable) if the acquiring company does not provide Executive with stock options/RSUs comparable to the unvested stock options/RSUs granted Executive by the Company, regardless of whether the Executive’s employment is terminated.

(e) These Section 5 benefits upon a Change in Control shall be the sole benefits that the Executive is entitled to under this Agreement (i.e., the Executive is not also entitled to any additional benefits provided in Section 6(b), below).

6. Severance Benefits other than in a Change in Control.

(a) Benefits; Miscellaneous. In the event of any termination of Executive’s employment at any time during the term of this Agreement, (1) the Company shall pay the Executive any unpaid Base Compensation due for periods prior to the Termination Date; (2) the Company shall pay the Executive all of the Executive’s accrued and unused vacation through the Termination Date; and (3) following submission of proper expense reports by the Executive (or his estate), the Company shall reimburse the Executive for all expenses reasonably and necessarily incurred by the Executive in connection with the business of the Company. These payments shall be made promptly at the Company’s next scheduled payroll date.

(b) In the event of a termination other than one described in Section 5, Executive shall be entitled to severance benefits that vary depending upon the reason for termination. Such benefits shall be as follows (and no others):

(i) Voluntary Resignation Severance Benefits.

(A) Base Compensation shall cease on the Termination Date. Executive shall not be entitled to any further payment pursuant to the Short Term Plan or the Long Term Cash Plan following termination.

(B) All medical and health benefits shall cease on the Termination Date, except as specified in any then existing Executive Retiree Medical Benefit Plan for which Executive qualifies. All Company 401(k) Plan benefits, Elective Deferred Compensation Plan benefits and other benefits not specifically addressed in this Agreement shall be treated in accordance with the terms of such plans and benefits.

(C) Stock options will cease to vest on the Termination Date and will be cancelled ninety (90) days after the Termination Date (unless they are exercised or expire pursuant to their terms before cancellation). RSUs will be cancelled on the Termination Date.

(ii) Involuntary Termination Severance Benefits.

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(A) Within ten (10) days following the Termination Date, the Company shall pay Executive a lump sum equal to (x) twelve (12) months of Base Compensation (without giving effect to any salary reduction program then in effect), plus (y) an amount equal to one half (50%) of the Five Year Average Amount (as defined in Section 5).

(B) At the time that the Company makes payments to other executive officers under the Short Term Plan that is in effect during the calendar year in which the Termination Date occurs, the Company shall pay the Executive a pro-rata portion of the amount he would have earned under such plan had his employment continued until the end of such calendar year, such pro-rata portion to be calculated based on the performance results achieved under such plan and the number of full months elapsed prior to the Termination Date.

(C) If at the Termination Date, payment has not been made under the Short Term Plan that was in effect during the calendar year prior to the year in which the Termination Date occurs, the Company shall pay the Executive, not later than March 15^th of the year in which the Termination Date occurs, the full amount he would have earned under such prior-year plan (based on the performance results achieved under such plan), as if his employment had not been terminated.

(D) If the Executive qualifies for participation in the Company’s Executive Retiree Medical Benefit Plan prior to the Termination Date, then the Executive will receive the benefits he qualifies for under the Executive Retiree Medical Benefit Plan, or if such plan has been terminated prior to the Termination Date, within ten (10) days following the Termination Date, the Company shall pay the Executive the Medical Plan Payment. If the Executive does not qualify for participation in the Executive Retiree Medical Benefit Plan prior to the Termination Date, within ten (10) days following the Termination Date, the Company shall pay in a lump sum any COBRA premiums the Executive would be required to pay for the COBRA benefits selected by Executive for twelve (12) months after the Executive’s Termination Date.

(E) For any stock options/RSUs granted to the Executive twelve (12) months or more before the Termination Date, a number of shares shall vest (and for stock options, become exercisable as of the Termination Date) such that the total number of shares vested on the Termination Date shall equal a pro-rata percentage of the total number of shares subject to such grant (based on the number of full months worked during the vesting schedule) ⁵. Unless the grant was made prior to the effective date of this Agreement, the stock options shall remain exercisable for two years following the Termination Date unless they are earlier exercised or expire pursuant to their original terms or unless they are exchanged for cash in connection with any Change in Control. For options granted prior to the effective date of this Agreement, the grant’s award agreement shall control its exercisability. The Company will issue the shares underlying the RSUs to the Executive within ten (10) days following the Termination Date. In addition, the Compensation Committee may, in its discretion, accelerate the vesting of additional stock options or RSUs held by the Executive.

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(F) Any Long Term Cash Plan awards, which are accrued as of the last full completed quarter prior to the Termination Date, shall be paid to the Executive within ten (10) days following the Termination Date.

(iii) Severance Benefits following a termination for Cause.

(A) Base Compensation shall cease on the Termination Date. Executive shall not be entitled to any further payment pursuant to the Short Term Plan or the Long Term Cash Plan following termination.

(B) All medical and health benefits shall cease on the Termination Date, except as specified in any then existing Executive Retiree Medical Benefit Plan for which Executive qualifies.

(C) Stock options will cease to vest on the Termination Date and will be cancelled thirty (30) days after the Termination Date (unless they are exercised or expire pursuant to their terms before cancellation). RSUs will be cancelled on the Termination Date.

(iv) Death Severance Benefits. Executive’s employment shall terminate immediately in the event of his death.

(A) At the time that the Company makes payments to other executive officers under the Short Term Plan that is in effect during the calendar year in which the Termination Date occurs, the Company shall pay the Executive’s estate a pro-rata portion of the amount he would have earned under such plan had his employment continued until the end of such calendar year, such pro-rata portion to be calculated based on the performance results achieved under such plan and the number of full months elapsed prior to the Termination Date.

(B) If at the Termination Date, payments have not been made under the Short Term Plan that was in effect during the calendar year prior to the year in which the Termination Date occurs, the Company shall pay the Executive’s estate, not later than March 15^th of the year in which the Termination Date occurs, the full amount he would have earned under such prior-year plan (based on the performance results achieved under such plan), as if his employment had not been terminated.

(C) If the Executive qualifies for participation in the Company’s Executive Retiree Medical Benefit Plan prior to the Termination Date, then the Executive’s eligible dependents will receive the benefits they qualify for under the Executive Retiree Medical Benefit Plan, or if such plan has been terminated prior to the Termination Date, within sixty (60) days following the Termination Date, the Company shall pay the eligible dependents the Medical Plan Payment. If the Executive does not qualify for participation in the Executive Retiree Medical Benefit Plan prior to the Termination Date, within sixty (60) days following the Termination Date, the Company shall pay in a lump sum any COBRA premiums the Executive’s estate would be required to pay for the COBRA benefits selected by Executive’s estate for Executive’s eligible dependents for twelve (12) months after the Executive’s Termination Date.

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(D) For any stock options/RSUs granted to the Executive before the Termination Date, a number of shares shall vest so that the greater of (x) 50% of the shares in each grant are immediately vested (and, for stock options, become exercisable) or (y) the total number of shares vested (and for stock options, become exercisable) on the Termination Date shall equal a pro-rata percentage of the total number of shares subject to such grant (based on the number of full months worked during the vesting schedule). Unless the grant was made prior to the effective date of this Agreement, the stock options shall remain exercisable for two years following the Termination Date unless they are earlier exercised or expire pursuant to their original terms, or unless they are exchanged for cash in connection with any Change in Control. For options granted prior to the effective date of this Agreement, the grant’s award agreement shall control its exercisability. The Company will issue the shares underlying the RSUs to the Executive’s estate within ten (10) days following the Termination Date. In addition, the Compensation Committee may, in its discretion, accelerate the vesting of additional stock options or RSUs held by the Executive.

(E) Any Long Term Cash Plan awards, which are accrued as of the last full completed quarter prior to the Termination Date, shall be paid to Executive’s estate within sixty (60) days following the Termination Date.

(v) Disability Severance Benefits.

(A) At the time that the Company makes payments to other executive officers under the Short Term Plan that is in effect during the calendar year in which the Termination Date occurs, the Company shall pay the Executive a pro-rata portion of the amount he would have earned under such plan had his employment continued until the end of such calendar year, such pro-rata portion to be calculated based on the performance results achieved under such plan and the number of full months elapsed prior to the Termination Date.

(B) If at the Termination Date, payments have not been made under the Short Term Plan that was in effect during the calendar year prior to the year in which the Termination Date occurs, the Company shall pay Executive, not later than March 15^th of the year in which the Termination Date occurs, the full amount he would have earned under such prior-year plan (based on the performance results achieved under such plan), as if his employment had not been terminated.

(C) If the Executive qualifies for participation in the Company’s Executive Retiree Medical Benefit Plan prior to the Termination Date, then the Executive will receive the benefits he qualifies for under the Executive Retiree Medical Benefit Plan or, if such plan has been terminated prior to the Termination Date, within sixty (60) days following the Termination Date, the Company shall pay the Executive the Medical Plan Payment. If the Executive does not qualify for participation in the Executive Retiree Medical Benefit Plan prior to the Termination Date, within sixty (60) days following the Termination Date, the Company shall pay in a lump sum any COBRA premiums the Executive would be required to pay for the COBRA benefits selected by the Executive for twelve (12) months after the Executive’s Termination Date.

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(D) For any stock options/RSUs granted to the Executive before the Termination Date, a number of shares shall vest so that the greater of (x) 50% of the shares in each grant are immediately vested (and, for stock options, become exercisable) or (y) the total number of shares vested (and for stock options, become exercisable) on the Termination Date shall equal a pro-rata percentage of the total number of shares subject to such grant (based on the number of full months worked during the vesting schedule). Unless the grant was made prior to the effective date of this Agreement, the stock options shall remain exercisable for two years following the Termination Date unless they are earlier exercised or expire pursuant to their original terms, or unless they are exchanged for cash in connection with any Change in Control. For options granted prior to the effective date of this Agreement, the grant’s award agreement shall control its exercisability. The Company will issue the shares underlying the RSUs to the Executive within ten (10) days following the Termination Date. In addition, the Compensation Committee may, in its discretion, accelerate the vesting of additional stock options or RSUs held by the Executive.

(E) Any Long Term Cash Plan awards which are accrued as of the last full completed quarter prior to the Termination Date, shall be paid to Executive within sixty (60) days following the Termination Date.

7. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

(a) Cause. “Cause” shall mean: (1) Executive’s willful and continued failure to perform the duties and responsibilities of his position after there has been delivered to Executive a written demand for performance from the Board which describes the basis for the Board’s belief that Executive has not substantially performed his duties and responsibilities and provides Executive with thirty (30) days to take corrective action; (2) Any act of personal dishonesty knowingly taken by Executive in connection with his responsibilities as an employee of the Company with the intention or reasonable expectation that such action may result in substantial financial enrichment of Executive; (3) Executive’s conviction of, or plea of guilty or nolo contendere to, a felony; (4) a willful and knowing act by the executive which constitutes gross misconduct; or (5) A willful breach of a material provision of this Agreement by the Executive. Termination for Cause shall not be deemed to have occurred unless, by the affirmative vote of all of the members of the Board (excluding the Executive and any person who reports to the Executive, if applicable), at a meeting called and held for that purpose (after reasonable notice to the Executive and his counsel and after allowing the Executive and his counsel to be heard before the Board), a resolution is adopted finding that in the good faith opinion of such Board members the Executive was guilty of conduct set forth in (1), (2), (3), (4) or (5) of this Section 7(a), specifying the particulars thereof.

(b) Disability. “Disability” shall mean that the Executive is unable to engage in any substantial gainful activity by reasons of any readily determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuing period of not less than twelve (12) months. A Disability must be certified by an approved Company physician.

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(c) Involuntary Termination. “Involuntary Termination” shall mean:

(i) in the context of a Change in Control, a material reduction of the Executive’s duties or responsibilities (other than for Cause or as a result of death or Disability); other than in the context of a Change in Control, service (x) in a capacity below that of a Senior Vice President of the Company or (y) in a capacity that reports to someone other than the CEO or President of the Company (other than for Cause or as a result of death or Disability);

(ii) a material reduction in the Executive’s Base Compensation and benefits package, other than a reduction in Base Compensation which is part of, and generally consistent with, a general reduction of salaries of all executive officers of the Company and of any party acquiring control of the Company in a Change in Control, or other than a change in Executive’s benefits package that continues to provide Executive with comparable benefits to those enjoyed prior to the change;

(iii) a material reduction by the Company in the Executive’s current Target Total Direct Compensation, other than: (A) any such reduction applicable to all executive officers of the Company and any party acquiring control of the Company in a Change in Control generally, or (B) unless in connection with a Change in Control, in which case this clause (B) shall not apply, any such reduction that is based on a good faith market review of executive compensation conditions and levels (for similar positions in comparable companies) conducted in accordance with the normal compensation evaluation process applicable to executive officers of the Company generally. For purposes of the foregoing, Target Total Direct Compensation means current annual Base Compensation (determined in the same manner as in Section 7(c)(ii)) plus current annual benefits plus current annual target amounts under the Combined Plans, and to the extent that Target Direct Compensation includes equity awards, the value of such equity shall be determined at the time of grant based on the total stock compensation expense (FAS 123R) associated with that award;

(iv) the relocation of the Company’s principal executive office to a location more than fifty (50) miles from its present location but only if the Executive is required to change his principal place of employment to such new location;

(v) any termination of the Executive’s employment by or at the request of the Company other than for Cause, Disability or death;

(vi) the failure of the Company to obtain the assumption of this Agreement by any successors contemplated in Section 8 below; or

(vii) any material breach by the Company of any material provision of this Agreement;

subject to the following: (A) None of the foregoing actions shall constitute Involuntary Termination if the Executive has agreed thereto. (B) The CEO providing notice of the Company’s intent not to enter into, renew or extend this Agreement pursuant to Section 2(b) hereof shall not be considered an Involuntary Termination (although any of the foregoing actions which occurs after the CEO provides notice of the Company’s intent not to enter into, renew or extend this Agreement may constitute an Involuntary Termination). (C) Except with respect to an event described in Section 7(c)(v), the foregoing actions shall constitute Involuntary Termination

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only if and to the extent that (x) within 90 days of the occurrence of the events giving rise to an Involuntary Termination, the Executive provides written notice to the Company setting forth in reasonable detail such facts which Executive believes constitute Involuntary Termination, (y) any circumstances constituting Involuntary Termination remain uncured for a period of thirty (30) days following the Company’s receipt of such written notice, and (z) the Termination Date occurs within one hundred and eighty (180) days following the initial existence of the event giving rise to an Involuntary Termination.

(d) Termination Date. “Termination Date” shall mean:

(i) In the case of a termination for Cause, the last day of the thirty (30) day notice period, unless the reason for such termination is cured by the Executive prior to the end of the thirty (30) day period;

(ii) In the case of a Company initiated Involuntary Termination (under Section 2(b)(i) of this Agreement), the last day of the ninety (90) day notice period required under such section, or such earlier date at which the Company waives notice and pays the Executive in lieu of such notice;

(iii) In the case of the Executive’s Voluntary Resignation or of an Involuntary Termination initiated by the Executive (each under Section 2(b)(ii) of this Agreement), the last day of the applicable notice period required under such section, or such earlier date at which the Company waives notice and pays the Executive in lieu of such notice;

(iv) In the case of Executive’s death, the date of such death; and

(v) In the case of Executive’s Disability, the date of such Disability.

Notwithstanding the foregoing, in the event of an Involuntary Termination occuring in contemplation of a Change in Control, if the Termination Date would otherwise have occurred prior to the Change in Control, the Termination Date shall take place on the date of the Change in Control. If more than one Termination Date may apply, then the priority provisions of Section 2(e) of this Agreement shall determine which Termination Date controls. The Company and the Executive shall take all steps necessary to ensure that any termination described in this Agreement constitutes a “separation from service” within the meaning of Section 409A of the Code, and notwithstanding anything to the contrary, the date on which such separation from service takes place shall be the Termination Date.

(e) Change in Control. “Change in Control” shall mean the occurrence of any of the following events:

(i) Any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, but excluding any person or group as such terms is used in Rule 13d-1(b) under the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13-d-3 under said Act), directly or indirectly, of securities of the Company representing forty percent (40%) or more of the total voting power represented by the Company’s then outstanding voting securities;

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(ii) A change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the effective date of this Agreement, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company);

(iii) The stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior hereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) 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 the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company’s assets (other than to a subsidiary or subsidiaries); or

(iv) Any other event as determined by the independent members of the Board, in the sole discretion of the independent members of the Board.

(f) Voluntary Resignation. “Voluntary Resignation” shall mean Executive’s termination of his employment at any time, for any reason, by the Executive, other than by reason of Involuntary Termination, death or Disability.

8. Successors.

(a) Company’s Successors. The Company shall require a successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) or to all or substantially all of the Company’s business and/or assets (each a “Successor Company”) to assume the Company’s obligations under this Agreement and agree expressly to perform such obligations in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any Successor Company which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law.

(b) Executive’s Successors. The terms of this Agreement and all rights of the Executive hereunder shall inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

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9. Notice.

(a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by Federal Express or a comparable air courier company. In the case of the Executive, notices sent by courier shall be addressed to him at the home address that he most recently communicated to the Company in writing. In the case of the Company, notices sent by courier shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Chief Legal Officer.

(b) Notice of Termination. Any termination by the Company for Cause or by the Executive as a result of a Voluntary Resignation or any Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with Section 9(a) of this Agreement. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the Termination Date.

10. Non-Compete; Non-Solicit.

(a) The parties hereto recognize that the Executive’s services are special and unique and that his level of compensation and the provisions herein for compensation upon Involuntary Termination are partly in consideration of and conditioned upon the Executive’s not competing with the Company, and that the covenant on his part not to compete and not to solicit as set forth in this Section 10 is essential to protect the business and goodwill of the Company.

(b) The Executive agrees that prior to the Termination Date, the Executive will not either directly or indirectly, whether as a director, officer, consultant, employee or advisor or in any other capacity (1) render any planning, marketing or other services respecting the creation, design, manufacture or sale of semiconductor manufacturing equipment and/or software to any business, agency, partnership or entity (“Restricted Business”) other than the Company, or (2) make or hold any investment in any Restricted Business in the United States other than the Company, whether such investment be by way of loan, purchase of stock or otherwise, provided that there shall be excluded from the foregoing the ownership of not more than 2% of the listed or traded stock of any publicly held corporation. For purposes of this Section 10, the term “Company” shall mean and include the Company, any subsidiary or affiliate of the Company, any Successor Company and any other corporation or entity of which the Executive may serve as a director, officer or employee at the request of the Company or any Successor Company.

(c) Prior to the Termination Date, and for the period extending six (6) months thereafter, the Executive will not directly induce or attempt to influence any employee of the Company to leave its employ and join any Restricted Business in or within 50 miles of Fremont, California.

(d) The Executive agrees that the Company would suffer an irreparable injury if he were to breach the covenants contained in subparagraphs (b) or (c) and that the Company would by reason of such breach or threatened breach be entitled to injunctive relief in a court of appropriate jurisdiction, and the Executive hereby stipulates to the entering of such injunctive relief prohibiting him from engaging in such breach.

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(e) If any of the restrictions contained in this Section 10 shall be deemed to be unenforceable by reason of the extent, duration or geographical scope or other provisions thereof, then the parties hereto contemplate that the court shall reduce such extent, duration, geographical scope or other provisions hereof (but only to the extent necessary to render such restrictions enforceable) and then enforce this Section 10 in its reduced form for all purposes in the manner contemplated hereby.

11. Existing Confidentiality and Non-Compete Agreements.

Executive represents and warrants (1) that prior to the date hereof he has provided the Company with true and complete copies of any and all written confidentiality and/or non-compete agreements to which Executive is a party as of the date hereof (together with a written description of any such oral agreements), and (2) to the best of Executive’s knowledge, full compliance with the terms of each such agreement will not materially interfere with Executive’s duties hereunder (except to the extent that Executive reasonably may determine to absent himself from certain Company meetings and communication during the first year of the Employment Period). The Executive further covenants that he will not willfully and knowingly fail to fully abide by the terms of any and all such agreements and will work in good faith with the Company to avoid any breach thereof.

12. Arbitration.

At the option of either party, any and all disputes or controversies whether of law or fact and of any nature whatsoever arising from or respecting this Agreement shall be decided by arbitration under the rules of the American Arbitration Association in accordance with the rules and regulations of that Association with the exception of any claim for temporary, preliminary or permanent injunctive relief arising from or respecting this Agreement which may be brought by the Company in any court of competent jurisdiction irrespective of Executive’s desire to arbitrate such a claim.

The arbitrator shall be selected as follows. In the event the Company and the Executive agree on one arbitrator, the arbitration shall be conducted by such arbitrator. If the parties cannot agree on an arbitrator, the Company and the Executive shall each select one independent, qualified arbitrator and the two arbitrators so selected shall select the third arbitrator. The Company reserves the right to object to any individual arbitrator who shall be employed by or affiliated with a competing organization.

Arbitration shall take place in San Jose, California, or any other location mutually agreeable to the parties. At the request of either party, arbitration proceedings will be conducted in the utmost secrecy; in such case all documents, testimony and records shall be received, heard and maintained by the arbitrators in secrecy under seal, available for the inspection only by the Company and the Executive and their respective attorneys and their respective experts who shall agree in advance and in writing to receive all such information confidentially and to maintain such information in secrecy unless and until such information shall become generally known.

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The arbitrator, who, if more than one, shall act by majority vote, shall have the power and authority to decree any and all relief of an equitable nature including, but not limited to, such relief as a temporary restraining order, a temporary and/or permanent injunction, and shall also have the power and authority to award damages, with or without an accounting and costs, provided, that punitive damages shall not be awarded, and provided, further, that the Executive shall be entitled to reimbursement for his reasonable attorney’s fees to the extent he prevails as to the material issues in such dispute. The reimbursement of attorney’s fees shall be made promptly following delivery of an invoice therefor. The decree or judgment of an award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

Reasonable notice of the time and place of arbitration shall be given to all persons, other than the parties, as shall be required by law, in which case such persons or those authorized representatives shall have the right to attend and/or participate in all the arbitration hearings in such a manner as the law shall require.

13. Excise Tax on Payments. Notwithstanding anything to the contrary contained herein, in the event that any payment by the Company to or for the benefit of the Executive, whether paid or payable, would be subject to the excise tax imposed by Section 4999 of the Code or any comparable federal, state, or local excise tax (such excise tax, together with any interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall receive either the full severance amount or a lesser amount that does not trigger an excise tax, whichever produces a greater after-tax benefit to the Executive, as determined by the Company.

14. Miscellaneous Provisions.

(a) No Duty to Mitigate. The Executive shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Executive may receive from any other source.

(b) Waiver. No provisions of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Executive and by an authorized officer of the Company (other than the Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(c) Whole Agreement; Amendment. This Agreement and the documents expressly referred to herein represent the entire agreement of the parties with respect to the matters set forth herein. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto. Nothing herein affects the continued enforceability of either the Company’s Employment, Confidential Information and Invention Assignment Agreement previously executed by the Executive, or the Executive’s Indemnification Agreement with the Company. Any benefit amounts referenced as payable to the Executive pursuant to this Agreement are the sole and exclusive amounts payable to the Executive for the category of benefit addressed by such amounts; provided, however, that this Agreement shall not limit any right of Executive to receive any payments or benefits under an

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employee benefit or employee compensation plan of the Company, initially adopted prior to or after the date hereof, which are expressly contingent thereunder upon the occurrence of a Change in Control (including, but not limited to, the acceleration of any rights or benefits thereunder). Notwithstanding the foregoing, in no event shall Executive be entitled to any payment or benefit under this Agreement which duplicates a payment or benefit received or receivable by Executive under any severance or similar plan or policy of Company, and in any such case Executive shall only be entitled to receive the greater of the two payments.

(d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the state of California, without regard to conflicts of law provisions thereof.

(e) Severability. If any provision of this Agreement is determined to be invalid or unenforceable, the Agreement shall remain in full force and effect as to the remaining provisions, and the parties shall replace the invalid or unenforceable provision with one which reflects the parties’ original intent in agreeing to the invalid/unenforceable one.

(f) No Assignment of Benefits. Except as otherwise provided herein, the rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment, attachment or other creditor’s process, and any action in violation of this subsection (f) shall be void.

(g) Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

(h) Section 409A of the Code. Notwithstanding anything herein to the contrary, if at the time of the Executive’s termination of employment with the Company, the Company has determined that the Executive is a “specified employee” as defined in Section 409A of the Code and any severance payments and benefits to Executive are considered a “deferral of compensation” under Section 409A of the Code (the “Deferred Payments”), such Deferred Payments that are otherwise payable within the first six months following the Termination Date will become payable on the first business day of the seventh month following the Executive’s Termination Date, or if earlier the date of the Executive’s death. In the event that payments under this Agreement are deferred pursuant to this Section 14(h), then such payments shall be paid at the time specified in this Section 14(h) without interest. The Company shall consult with the Executive in good faith regarding the implementation of the provisions of this Section 14(h) provided, that neither the Company nor any of its employees or representatives shall have any liability to the Executive with respect thereto. Any amount under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Payments for purposes of this Agreement. Any amounts scheduled for payment hereunder when they are ordinarily paid out or when they are made to other executive officers, will nonetheless be paid to Executive on or before March 15^th of the year following the year when the payment is no longer subject to a substantial risk of forfeiture. For purposes of Section 409A of the Code, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate

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payments, and references herein to the Executive’s termination of employment shall refer to Executive’s separation of services with the Company within the meaning of Section 409A of the Code. Notwithstanding anything to the contrary herein, except to the extent any expense, reimbursement or in-kind benefit provided pursuant to this Agreement does not constitute a “deferral of compensation” within the meaning of Section 409A of the Code: (x) the amount of expenses eligible for reimbursement or in-kind benefits provided to the Executive during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to the Executive in any other calendar year, (y) the reimbursements for expenses for which the Executive is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred, and (z) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.

(i) Assignment by Company. The Company may assign its rights under this Agreement to an affiliate, and an affiliate may assign its rights under this Agreement to another affiliate of the Company or to the Company, provided, however, that no assignment shall be made if the net worth of the assignee is less than the net worth of the Company at the time of assignment. In the case of any such assignment, the term “Company” when used in a section of this Agreement shall mean the corporation that actually employs the Executive.

(j) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

(k) Survival of Obligations. Except as otherwise described herein, and except to the extent that as of the Termination Date rights to payment hereunder have accrued, the obligations of Sections 7 through 14 shall survive termination of this Agreement. In the event that a binding agreement is reached that would result in a Change in Control during the Employment Period, Section 5 of this Agreement shall survive with regard to that Change in Control.

(l) Company Release. As a condition to the Company’s obligations pursuant to this Agreement, the Executive agrees to execute a release of claims against the Company (the “Release”), substantially in the form attached hereto as Exhibit A, by the sixtieth (60th) day following the Executive’s Termination Date. If the Company has not received an irrevocable Release by the sixtieth (60th) day following the Termination Date, the Company shall be under no obligation to make payments or provide benefits under this Agreement; provided such sixty (60) day period shall be tolled during the pendancy of any arbitration proceeding under this Agreement. In the event one or more of the provisions of the Release should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of the Release, and the Release shall be construed as if such invalid, illegal or unenforceable provision had never been contained therein.

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IN WITNESS WHEREOF, the parties have executed this Agreement.

LAM RESEARCH CORPORATION

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Ernest E. Maddock Employment Agreement

EXHIBIT A

COMPANY RELEASE

Ernest E. Maddock Employment Agreement

LAM RESEARCH CORPORATION RELEASE

This Release (“Release”) constitutes a binding agreement between you,             [EMP NAME]            , Lam Employee No.             [EE I.D.]            , and Lam Research Corporation (“Lam” or “the Company”). Please review the terms carefully. We advise you to consult with an attorney concerning its terms.

1. This Release is provided to Lam pursuant to an Employment Agreement (your “Agreement”) between you and Lam. You understand that if you choose not to sign this Release, as provided in your Agreement Lam has no obligation to make any payments or provide any benefits provided in your Agreement.

2. You understand that your obligations under the Confidential Information and Invention Assignment Agreement, or similarly titled agreement, you signed at the beginning of your employment with Lam are ongoing and binding and survive the termination of your employment with Lam, regardless of whether you sign this Release.

3. If you agree to this Release, you will be eligible to receive the payments and benefits provided in your Agreement. You must sign and return this Release, and it must become irrevocable (as discussed in Sections 4.E. and 8 below), within sixty (60) days of your Termination Date (as defined in your Agreement). You may, at your discretion, sign and return the Release sooner. You are hereby advised to consider the terms of this Release and consult with an attorney of your choice prior to executing this Release. Lam is under no obligation to pay any amounts or provide any benefits under your Agreement until such release is irrevocable. Lam will make such payments and provide such benefits under your Agreement as soon as practicable, in accordance with the terms of your Agreement and in accordance with IRC Section 409A and accompanying Treasury Regulations (although Lam makes no representation about any specific tax treatment applicable to you). Neither Lam nor the Executive shall have the right to accelerate or defer the delivery of any payments or provision of any benefits except as specifically permitted or required by Section 409A.

4. In exchange for and in consideration of the payments and benefits provided for in your Agreement, you agree to, and agree to abide by, the following terms:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known to him or her must have materially affected his or her settlement with the debtor.

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5. To accept this Release, please sign and date it below and provide it to the Company in the manner described in the notice provision of your Agreement. If your Release is not executed, returned and irrevocable within 60 days from the Termination Date (as defined in your Agreement), the offer of the payments and benefits described in your Agreement shall automatically expire and this offer shall be deemed revoked.

6. In the event that you breach any of your obligations under this Release or as otherwise imposed by law, Lam will be entitled to recover the payments and benefits paid under your Agreement and to obtain all other relief provided by law or equity. Lam’s rights and remedies arising hereunder are cumulative of any and all other rights or remedies Lam may have in the event of a breach of this Release by you.

7. By signing this Release, you acknowledge that you have had the opportunity to review this Release carefully with an attorney of your choice concerning its terms and effect, and that the waivers, settlement, and releases made herein are knowing, voluntary, informed, and consensual.

8. You understand that once you have signed this Release, you have an additional seven (7) days to revoke your acceptance by submitting a written notice of your revocation to the Company in the manner described in the notice provision of your Agreement . If you do not revoke your acceptance within seven (7) days of your acceptance, the Release will be deemed effective, binding and enforceable. Please note that this means your executed Release must be received by the Chief Legal Officer of the Company, within 53 days of Termination Date (as defined in your Agreement) or the Company shall be under no obligation to make the payments or provide the benefits under your Agreement.

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9. This Release shall be construed and enforceable in all respects pursuant to California law, notwithstanding conflict of laws considerations or the preference, policy or law of any other jurisdiction or forum. Any dispute or action arising from or related to this Release shall be brought in federal or California state court located in the County of Santa Clara, California, and in no other jurisdiction or venue. The invalidity or unenforceability of any provision(s) of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

I, THE UNDERSIGNED, HAVE BEEN ADVISED IN WRITING THAT I HAVE HAD AT LEAST TWENTY-ONE (21) DAYS TO CONSIDER THIS RELEASE AND TO CONSULT WITH AN ATTORNEY CONCERNING ITS TERMS AND EFFECT PRIOR TO EXECUTING THIS RELEASE.

I, THE UNDERSIGNED, HAVE READ THIS RELEASE, UNDERSTAND ITS TERMS, AND UNDERSTAND THAT I ENTER THIS RELEASE INTENDING TO AND DO WAIVE, SETTLE AND RELEASE ALL CLAIMS I HAVE OR MIGHT HAVE AGAINST LAM RESEARCH CORPORATION TO THE FULL EXTENT PERMITTED BY LAW. I SIGN THIS RELEASE VOLUNTARILY AND KNOWINGLY.

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