Company:

KLA-Tencor Corporation, a Delaware corporation, 160 Rio Robles, San Jose, CA 95134

Executive:

Lawrence A. Gross

Dates:

The date on which this agreement was originally executed was September 8, 2006. This Executive Employment Terms agreement is amended and restated as of the date hereof solely to delete the home address of Executive for purposes of filing this agreement as an exhibit to the Company’s Form 10-K. All other terms remain in full force and effect as of the original date.

Position:

Executive will be a board-elected officer and will serve in an interim role as Executive Vice President-Legal, reporting to the Chief Executive Officer. Such election will occur at the earliest convenient time for the board of directors of Company (“Board”) and is subject to Board approval. Executive’s responsibilities will be to (1) advise and assist Company and the Board with respect to (a) the pending internal stock option investigation and related matters including governmental proceedings and shareholder actions, (b) acquisitions, restructurings and other major transactions, (c) corporate governance including regular attendance by Executive at meetings of the Board and its committees (other than executive sessions and special committee meetings), and (d) other matters reasonably requested consistent with Executive’s skills and experience; and (2) manage Company’s legal affairs and legal function including supervisory and fiscal authority for all in-house legal personnel and all outside counsel. Executive will devote substantially all of his business time and energy to Company, provided that Executive may make passive investments, manage personal investments, serve on civic or charitable boards or committees, teach at educational institutions, accept speaking engagements, and continue to serve on the board of a small private company in an unrelated business. Executive will spend three to four days per week (on average) in California or other business locations. Executive may, if appropriate and with Company’s assistance, establish a temporary residence in California and register with the State Bar of California as Registered In-House Counsel (in which case that will be part of Executive’s official title).

Term:

Executive’s employment with Company will start as of September 11, 2006 (“start date”) and will continue until February 28, 2007, provided that either party may terminate Executive’s employment at any time for any reason. If Company terminates Executive’s employment (other than for willful misconduct) before November 30, 2006, Company will immediately pay to Executive the balance of his salary for the period up through November 30, 2006. If Company terminates Executive’s employment (other than for willful misconduct) after November 30, 2006 and before February 28, 2007, Company will immediately pay to Executive the balance of his salary for the period up through February 28, 2007.

Compensation:

Company will pay Executive a one time signing bonus of $77,000 on the start date.

Company will pay Executive salary at the rate of $125,000 per month in accordance with Company’s usual payroll schedule. Executive will not participate in any bonus plan or any equity plan.

Benefits:

In lieu of group medical coverage, Company will reimburse Executive for the cost of his existing Cobra coverage (currently $1,275 per month), which will be included in expense reports. Executive will be entitled to paid vacation time for previously scheduled vacations (Thanksgiving week, Christmas week and New Year’s week).

Assistant:

Company will employ a full-time legal assistant selected by Executive to provide assistance to Executive in carrying out his responsibilities for Company and with the expectation that Executive’s legal assistant will often travel with him.

Expenses:

Company will pay or reimburse (1) airfare and all normal business expenses reasonably incurred by Executive (and his legal assistant) in the course of carrying out his responsibilities for Company in accordance with Company’s usual reimbursement practices, including bar registration fees, membership dues and similar professional expenses (2) airfare and all other travel expenses reasonably incurred by Executive to travel between Pennsylvania (or other family destination) and California (or other business destination), including travel expenses to visit Company before the start date, (3) airfare and all other travel expenses reasonably incurred by Executive’s wife for one roundtrip to California per month (on average) and (4) all temporary living expenses in California reasonably incurred by Executive including hotel or housing costs, automobile and other transportation costs, and related services such as for cleaning, maintenance and health club membership. Company will provide a corporate credit card to Executive (and his legal assistant).

Other:

Company will indemnify Executive, to the fullest extent permitted by applicable law, against all legal fees and other expenses reasonably incurred by Executive in connection with any claim, action, investigation, proceeding or dispute in which Executive may become involved, as a party, witness or otherwise, by reason of Executive being or having been an officer or employee of or legal counsel to Company. Company will promptly enter into a comprehensive indemnification agreement with Executive, dated as of the start date. Executive will be covered, during the term of his employment and for at least six years thereafter, by officer and director liability insurance, paid for by Company, in the same amounts and on the same terms as for Company’s other officers and directors. Executive may retain counsel of his choice to advise him as to his

role as office and employee of and legal counsel to Company, and/or any claim, action, investigation, proceeding or dispute involving such role and/or this agreement, and all legal fees and other expenses reasonably incurred by Executive for such purpose will be paid or reimbursed by Company on an after-tax basis. While any such claim, action, investigation, proceeding or dispute is pending, Company will not withhold any payment or benefit due to Executive, except for the specific portion thereof that is the subject of a bona fide, good faith dispute.

This agreement together with the indemnification agreement referred to above sets forth the entire understanding between the parties with respect to the subject matter hereof and cannot be changed except in writing signed by Executive and by Company’s Chief Executive Officer or Chief Operating Officer. This agreement is binding on Company and its successors and assigns and may be enforced by Executive and his heirs, estate, executors, administrators, beneficiaries, and legal personal representatives. The respective rights and obligations of the parties under this agreement will survive any termination of Executive’s employment to the extent necessary to preserve the intention of such rights and obligations.