SEPARATION AGREEMENT

     This Separation Agreement (the "Agreement") is between KLA-Tencor
Corporation (the "Company"), and Graham J. Siddall ("Employee").

     WHEREAS, Employee was employed by the Company;

     WHEREAS, the Company and Employee have agreed that (i) Employee's full-time
employment relationship with the Company shall terminate as of the date set
forth herein, (ii) Employee shall release the Company from any claims arising
from or related to the full-time employment relationship, and (iii) Employee
shall be engaged as a part-time employee of the Company consistent with the
terms herein;

     NOW THEREFORE, in consideration of the mutual promises made herein and the
benefits provided pursuant to such promises the Company and Employee (the
"Parties") hereby agree as follows:

     A.   Resignation. Employee hereby resigns from his full-time employment
with the Company as of April 30, 1999 (the "Full-Time Employment Termination
Date").

          2.   Consideration. As consideration for Employee entering into this
Agreement and agreeing to provide ongoing services to the Company at the same
level of performance as if Employee were not resigning, the Company shall
provide the following to Employee:

               (a)  Payment of Salary. The Company shall continue to pay
Employee all salary, wages, accrued vacation and any and all other benefits due
to Employee through the Full-Time Employment Termination Date. From May 1, 1999
through June 30, 2001 Employee shall be a part-time employee of the Company
providing such services as the parties mutually agree upon (the "Part-Time
Period").

               (b)  Part-Time Period Benefits.During the Part-Time Period,
Employee shall receive his full salary, and shall be eligible to participate in
the Company's 401(k) Plan (without Company match), the Executive Deferred
Savings Plan and the Company's medical, disability and life insurance plans for
so long as Employee does not work for a non-Competitor. "Full salary" shall be
deemed to be that amount paid to Employee prior to the 10% reduction instituted
by the Company during fiscal 1999.

               (c)  Bonus Payments. During the Part-Time Period Employee shall
be eligible to receive bonuses as determined by the Board of Directors. The
Company shall have the obligation to pay any and all bonuses referred to in this
Agreement only at the same time as bonuses are normally paid to senior
management of the Company and contingent in each case upon the Company's payment
of bonuses to senior officers of the Company in such






fiscal year. Employee shall be entitled to receive a full bonus for each of the
Company's fiscal years ended June 30, 1999 and June 30, 2000 and for 83% of a
full bonus for the fiscal year ended June 30, 2001. The bonus amount shall be
determined using a combination of individual and Company objectives and assuming
that Employee has achieved 100% of his individual bonus objectives in
distinction to Company objectives which shall be based upon actual Company
performance for such fiscal year. Bonuses shall only be payable so long as
Employee does not work for a non-Competitor.

               (d)  Stock Option Vesting. During the Part-Time Period,
Employee's stock options granted on or before April 30, 1997 shall continue to
vest as set forth in the applicable stock option agreements pursuant to which
options were granted. Upon termination of the Part-Time Period, Employee shall
be entitled to exercise those vested options pursuant to the terms of the
applicable stock option agreements.

               (e)  No Other Benefits. Except as other specifically provided
herein, Employee agrees that all employee benefits shall cease as of the
Full-Time Employment Termination Date.

               (f)  Non-competition; Non-Solicitation. Payment of all benefits
hereunder, including the continued vesting of stock options, shall be contingent
on Employee not working for a "Competitor" of the Company. For purposes of this
Agreement, a "Competitor" shall include ADE, Applied Materials, Bio-Rad,
Electroglas, Estek , FEI, Hermes Microvision, Hitachi, Holon, Horiba, Inspex,
IVS, JEOL, Lasertec, Leica, Nanometrics, NEC, Nikon, n&k Technology, OSI, Park
Scientific, PDF Solutions, QC Optics, Rudolph Technologies, Schlumberger, Sopra,
Technical Instruments, Therma-Wave, TKK, TSK, Topcon, Topometrix, Toshiba,
Veeco, Wyko and Zygo. Further, payment of all benefits hereunder also be
contingent on Employee not soliciting for hire any employees of the Company for
a period of two years from the Full-Time Employment Termination Date.

          3.   Release of Claims. Employee agrees that the foregoing
consideration represents settlement in full of all outstanding obligations owed
to Employee by the Company. Employee, on behalf of Employee and his heirs,
executors and assigns, hereby fully and forever releases the Company and its
officers, directors, employees, investors, stockholders, administrators,
predecessor, subsidiary and successor corporations, and assigns, of and from any
claim, duty, obligation or cause of action relating to any matters of any kind,
whether presently known or unknown, suspected or unsuspected, that any of them
may possess arising from any omissions, acts or facts that have occurred up
until and including the effective date of this Agreement including, without
limitation,

               (a)  any and all claims relating to or arising from Employee's
employment relationship with the Company and the termination of that
relationship;




               (b)  any and all claims relating to, or arising from, Employee's
right to purchase, or actual purchase of shares of stock of the Company;

               (c)  any and all claims for wrongful discharge of employment;
breach of contract, both express and implied; breach of a covenant of good faith
and fair dealing, both express and implied; negligent or intentional infliction
of emotional distress; negligent or intentional misrepresentation; negligent or
intentional interference with contract or prospective economic advantage; and
defamation;

               (d)  any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, and the California
Fair Employment and Housing Act;

               (e)  any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination;

               (f)  ANY RIGHTS HE MAY HAVE UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967 ("ADEA"). EMPLOYEE FURTHER ACKNOWLEDGES THAT HE HAS BEEN
ADVISED BY THIS WRITING THAT (I) HE SHOULD CONSULT WITH AN ATTORNEY PRIOR TO
EXECUTING THIS AGREEMENT; (II) HE HAS AT LEAST TWENTY-ONE (21) DAYS WITHIN WHICH
TO CONSIDER THIS AGREEMENT; (III) HE HAS AT LEAST SEVEN (7) DAYS FOLLOWING THE
EXECUTION OF THIS AGREEMENT BY THE PARTIES TO REVOKE THE AGREEMENT; AND (IV)
THIS AGREEMENT SHALL NOT BE EFFECTIVE UNTIL THE REVOCATION PERIOD HAS EXPIRED;
AND

               (g)  any and all claims for attorneys' fees and costs.

The Company and Employee agree that the release set forth in this section shall
be and remain in effect in all respects as a complete general release as to the
matters released. This release does not extend to any obligations incurred under
this Agreement.

          4.   Tax Consequences. The Company makes no representations or
warranties with respect to the tax consequences of the payment of any sums to
Employee under the terms of this Agreement. Employee agrees and understands that
he or she is responsible for payment, if any, of local, state and/or federal
taxes on the sums paid hereunder by the Company and any penalties or assessments
thereon.

          5.   No Admission of Liability. No action taken by the Parties hereto,
or either of them, either previously or in connection with this Agreement shall
be deemed or construed to




be (a) an admission of the truth or falsity of any claims heretofore made or (b)
an acknowledgment or admission by either party of any fault or liability
whatsoever to the other party or to any third party.

          6.   Costs. The Parties shall each bear their own costs, expert fees,
attorneys' fees and other fees incurred in connection with this Agreement.

          7.   Arbitration and Equitable Relief.

               (a)  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 settled by arbitration to be held in Santa Clara County,
California, in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association (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. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction.

               (b)  The arbitrator shall apply California law to the merits of
any dispute or claim, without reference to rules of conflict of law. The
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. The parties hereto hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in California for any action or proceeding arising from or relating to
this Agreement and/or relating to any arbitration in which the parties are
participants.

               (c)  The Company and Employee shall each pay one-half of the
costs and expenses of such arbitration, and shall separately pay its counsel
fees and expenses.

               (d)  THE PARTIES HERETO HAVE READ AND UNDERSTAND SECTION 8, WHICH
DISCUSSES ARBITRATION. THE PARTIES HERETO UNDERSTAND THAT BY SIGNING THIS
AGREEMENT, THEY AGREE TO SUBMIT ANY FUTURE 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 THEIR
RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO
ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO,
THE FOLLOWING CLAIMS:




                    (i)   ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF
EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT
OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR
PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION;

                    (ii)  ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE
OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL
RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR
LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR
CODE SECTION 201, et seq; AND

                    (iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND
REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

          8.   Authority. The Company represents and warrants that the
undersigned has the authority to act on behalf of the Company and to bind the
Company and all who may claim through it to the terms and conditions of this
Agreement. Employee represents and warrants that he has the capacity to act on
his own behalf and on behalf of all who might claim through Employee to bind
them to the terms and conditions of this Agreement.

          9.   No Representations. Each party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.

          10.  Severability. In the event that any provision hereof becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.

          11.  Entire Agreement. This Agreement represents the entire agreement
and understanding between the Company and Employee concerning Employee's
separation from the Company, and supersedes and replaces any and all prior
agreements and understandings concerning Employee's relationship with the
Company and compensation from the Company.




          12.  No Oral Modification. This Agreement may only be amended in
writing signed by Employee and the Chief Executive Officer or Chairman of the
Board of the Company.

          13.  Effective Date. This Agreement is effective seven days after it
has been signed by both parties.

          14.  Counterparts. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

          15.  Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

               (a)  They have read this Agreement;

               (a)  They have been represented in the preparation, negotiation,
and execution of this Agreement by legal counsel of their own choice or that
they have voluntarily declined to seek such counsel;

               (a)  They understand the terms and consequences of this Agreement
and of the releases it contains;

               (a)  They are fully aware of the legal and binding effect of this
Agreement.


KLA-TENCOR CORPORATION                     EMPLOYEE


By: /s/ Kenneth Levy                       By: /s/ Graham J. Siddall
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