Kenneth L. Schroeder

AGREEMENT

     This Agreement (the “Agreement”) is entered into by and between KLA-Tencor Corporation (the “Company”) and Kenneth L. Schroeder (“Executive”) effective as of February 23, 2005 (the “Effective Date”).

Recitals:

     A. The Company desires to continue to retain the services of Executive as set forth in this Agreement and Executive desires to continue to provide services to the Company upon the terms and conditions set forth herein.

     B. The Company desires to ensure that Executive does not compete with and is available to continue to provide services to the Company as set forth herein.

Agreement:

     In consideration of the covenants and agreements contained herein, the parties agree as follows:

     1. Effectiveness of Agreement. This Agreement shall become effective upon the Effective Date and amends and restates in its entirety that first Amended Retention and Non-Competition Agreement dated April 29, 1998 (the “First Amended Agreement”) and amends and incorporates the Addendum to the Amended Retention and Non-Competition Agreement dated November 15, 2001. The Company and Executive agree that this Agreement shall govern the terms and conditions of Executive’s provision of services to the Company from and after the Effective Date.

     2. Term. This Agreement shall commence on the Effective Date and shall end on the date that all obligations hereunder have been fully discharged.

     3. Duties.

          a. Responsibilities. From and after the Effective Date until the earlier of the commencement of any Part-Time Employment Term (as defined in Section 7 of this Agreement) or termination of Executive’s full-time employment hereunder (the “Full-Time Employment Period”), the Company shall employ the Executive as Chief Executive Officer and President with such duties and responsibilities as are commensurate with such position. It is understood and agreed that Executive will be considered an employee of the Company for tax withholding and all other purposes for the duration of both the Full-Time Employment Period and the Part-Time Employment Term. Executive acknowledges that during the Part-Time Employment Term he shall not have the power to bind the Company.

 

<HR

 

 

 

If to the Company:

 

KLA-Tencor Corporation

 

 

160 Rio Robles

 

 

San Jose, CA 95134

 

 

Attn: General Counsel

 

 

 

If to Executive:

 

Kenneth L. Schroeder

 

 

at the last primary residential address known to the Company

     15. Arbitration. The parties hereto agree that any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be finally settled by binding arbitration to be held in Santa Clara County, California under the Employment Dispute Resolution Rules of the American Arbitration Association as then in effect (the “Rules”). The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration, and judgment may be entered on the decision of the arbitrator in any court having jurisdiction.

     The arbitrator shall apply California law to the merits of any dispute or claim, without reference to rules of conflicts of law, and the arbitration proceedings shall be governed by federal arbitration law and by the Rules, without reference to state arbitration law.

     The Company shall pay the costs and expenses of such arbitration, and each party shall pay its own counsel fees and expenses.

THE PARTIES HERETO HAVE READ AND UNDERSTAND THIS SECTION 15, WHICH DISCUSSES ARBITRATION. THE PARTIES HERETO UNDERSTAND THAT BY SIGNING THIS AGREEMENT, THEY AGREE TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EACH PARTY’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO EXECUTIVE’S RELATIONSHIP WITH THE COMPANY.

-14-

<HR

 

 

 

EXECUTIVE

 

KLA-TENCOR CORPORATION

 

 

 

/s/ Kenneth L. Schroeder

 

/s/ Stuart J. Nichols


 

 


 

Kenneth L. Schroeder

 

Stuart J. Nichols

 

 

Vice-President, General Counsel

-15-

<HR

 

 

 

 

 

KLA-Tencor Corporation

 

 

 

Dated:                     , 20___

 

By                                                                           

 

 

 

Dated:                     , 20___

 

                                                                                

 

 

Kenneth L. Schroeder

5