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                                                                   Exhibit 10.35
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                              EMPLOYMENT AGREEMENT

         Integrated Measurement Systems, Inc. (Company), whose address is 9525
S.W. Gemini Drive, Beaverton, Oregon 97005, and Keith L. Barnes (Executive),
enter this agreement, effective March 25, 1998.

         Executive is an experienced manager of Company's business, and Company
believes Executive's continued employment by Company enhances shareholder value
and will contribute to Company's future success.

         The parties agree as follows:

1.       Employment.

         1.1. Length. Executive's employment with Company will continue until
ended as this Agreement provides.

         1.2. Full Time. Executive will work full time. Executive will devote
his good faith efforts in support of Company's operations and goals, during the
entire term of this Agreement. While Executive's employment by Company under
this Agreement continues, Executive will not engage in any other employment
without Company's advanced written consent. Company consents to service on
boards and commissions, both commercial and public, to the extent that service
does not interfere with Executive's commitments and obligations to Company.

         1.3. Executive's Duties. Executive will serve in the Position shown on
Exhibit A, and in that position will assume such duties and perform such tasks
as Company from time to time requires.

2.       Compensation Plan.

         2.1. Salary. Company will pay Executive initially at the rate per year
shown as the Base Salary on Exhibit A, payable in equal increments on Company's
standard payroll schedules. Executive's compensation will be reviewed on an
annual basis, as with other executives of the Company.

         2.2. Bonus. Company will pay Executive an annual bonus of up to the
amount shown on Exhibit A as "Annual Bonus", which will be disbursed quarterly
in accordance with the conditions established in the Company's approved annual
bonus plan, as applicable to the Executive.

         2.3. Stock. Executive has been or may in the future be granted rights
to purchase stock or stock options in IMS on the exercise and vesting schedules
and terms and conditions shown in the grant documents. These are referred to as
"options" herein.

         2.4. Other compensation. Company will also provide medical insurance,
life insurance, disability insurance, 401(k) plan, vacation time, sick leave,
and other fringe benefits in accordance with Company's then-existing policies
applicable generally to senior executives.

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         2.5. Other Benefits. Any other benefits particularly applicable to
Executive are shown on Exhibit A.

3.       Term and Termination.

         3.1. At Will, Conditions. Executive is hired for employment at will,
subject to the agreements described here.

         3.2. Termination by Company. Company may terminate Executive's
employment with or without cause. A termination is effective as of the date
specified in the Notice of termination.

         3.3. Cause. For the purposes of this Agreement, termination is "with
cause" if the Executive's employment is terminated because Executive is
convicted of a crime involving the company's business; or has misappropriated
Company monies or assets; or has committed fraud; or has been grossly negligent
in or willfully fails to accomplish the performance of his duties; and if the
Company has given Executive five days' Notice of the allegations with an
opportunity to respond and provide evidence refuting them within that period.

         3.4. Effect of Voluntary Resignation or With Cause Termination. If
Executive resigns voluntarily, or is properly terminated for cause, pay and
benefits will cease as of the effective date of the resignation or termination.
Executive will also forfeit any entitlement to the rights on change in control
described in Section 4. Executive will use good faith efforts to provide Company
as much notice as possible of any such resignation.

         3.5. Compensation on Termination Without Cause by Company. If Executive
is terminated without cause, however, Company will give Executive severance
benefits as follows.

              3.5.1. Compensation Earned through Termination Date. On
termination by Company without cause, Company will pay Executive's Base Salary,
any commissions, and any bonuses, all as earned through the termination date,
and a buyout of all accumulated but unused vacation and sick leave time, to be
paid within thirty days of termination.

              3.5.2. Base Pay. On termination by Company without cause, Company
will in addition pay Executive's Base Salary and benefits for the Severance
Period defined in Exhibit A. Payment of the Executive's Base Salary shall be
made on Company's standard payroll schedules from the date of termination, as if
the Executive had not been terminated.

              3.5.3. Options. As of the date of termination. Company will
accelerate the exercise schedule of those options held by Executive that would
have vested during the Severance Period, or alternatively, pay Executive the
in-the-money value of those options, calculated according to the fair market
value of the stock those options represent as of the termination date.

         3.6  Commitment concerning Competition. While Company continues to pay
Executive's base salary during Executive's employment or after termination,
unless Company consents in writing, Executive will not consult for, be employed
by, serve on the board of, or otherwise take other than a passive investor role
in, any company that is in the business of

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integrated circuit verification, characterization, or virtual test; nor will
Executive encourage, influence, or assist any employee or former employee of the
Company in securing other employment with a competitor so defined.

      3.7. Offset. To the extent permissible under applicable law, without
prejudice to other remedies, Company may offset any amounts Executive owes
Company against any amounts (net of taxes and other deductions) due employee
upon termination or thereafter.

4.    Change in Control Agreements.

      4.1. "Control Change." A "Control Change" is the sale of substantially all
Company's assets to, or acquisition of a majority of Company's voting stock or
entry into a voting or common control agreement covering a majority of the
company's voting stock by, an entity (or a set of entities under effective
common control) in which those controlling the acquiring entity or entities are
not the same as those who have majority ownership and effective control of
Company before the sale or acquisition.

      4.2. "Control Change Window." The Control Change Window begins sixty days
before the LOT Date, and ends one year after the date of closing of the control
change.

      4.3. "LOI Date." The "LOI Date" is the date a letter of intent, term
sheet, or other similar document is first executed by the Company or one or more
of its Shareholders and by anyone acting on behalf of an entity (or collection
of entities under common control) who acquires substantially all the Company's
assets or majority control of the Company's stock, that evidences an agreement
in principle to pursue a course of action that is intended to result in a
Control Change.

      4.4. Acceleration of Options on Control Change. Company shall accelerate
the exercise date of all stock options held by Executive so that they become
fully exercisable upon a Control Change.

      4.5. Termination During Control Change Window. If Executive is terminated
without cause before a Control Change takes place, but within a Control Change
Window, then Company shall accelerate the exercise date of all Executive's
options, both those that would have become vested during the Severance Period
("Severance Options") and those that would have become vested after the
Severance Period ("Future Options"), so that all become fully exercisable
immediately prior to the termination date. If as of the employment termination
date, it is not yet known whether a Control Change will occur, Company may
accelerate or not accelerate the exercise date of all Executive's Future
Options, at its choice, by Notice to Executive. If no Notice is given, the
Future Options are not accelerated.

           4.5.1. Usual Effect of Non-Acceleration. If the Company elects not to
accelerate Future Options as of the employment termination date, then the
vesting and expiration dates for all Future Options are modified as follows. As
of the employment termination date, the vesting conditions are changed, so that
the Future Options will become vested upon a Control Change. The expiration date
of the Future Options is changed, so that they expire either: 1) Sixty days
following the termination date, if the employment termination does not occur
during a

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Control Change Window; or 2) ninety days following a Control Change, if the
employment termination occurs during a Control Change Window.

            4.5.2. Special Effect of Non-Acceleration in Purchase Transactions.
If the Company elects not to accelerate the Future Options, and it later becomes
apparent that the termination was within a Control Change Window with respect to
a transaction that cannot be accounted for through pooling accounting for
reasons independent of any employment agreement issued by the Company, then on
the date the transaction embodying the Control Change closes, the Company shall
pay Executive the in-the-money value of all options held by Executive on the
termination date and not subsequently exercised. That value shall be measured as
of the date of closing of the Control Change or as of the date of employment
termination, whichever value is greater.

            4.5.3. Computation of In-The-Money Value. The "in-the-money value"
means, with respect to each share of stock represented by the options, the
difference between the exercise price for that option and the fair market value
as of the measurement date. For purposes of this calculation, options as to
which there is no in-the-money value, or as to which the in-the-money value is
negative, shall not be included in the calculation of the amount due.

5.     Confidentiality.

       5.1. Confidentiality. Executive will keep Company's data confidential. In
doing so, Executive will not disclose Company's data directly or indirectly to
any person, other than an employee of Company or a person to whom disclosure is
reasonably necessary or appropriate to further Company's business, either during
or after Executive's employment.

       5.2. Company Data. Company's data consists of any trade secret or
proprietary or confidential information of Company or of any Company affiliate.
Company data includes, but is not limited to, records, files, memoranda,
reports, price lists, software, customer lists, personnel information, designs
and inventions whether or not patentable or copyrightable, drawings, sketches,
documents, equipment, know-how and negative know-how, and the like relating to
Company's business which Executive uses, prepares, or comes in contact with
during the course of his work for Company. Any information known generally to
the public or any information of a type not otherwise generally considered
confidential by persons engaged in the same business will not be treated as
confidential.

       5.3. Third Party Data. Executive will also keep third party data
confidential as required by Company obligations to the third party, for at least
as long as is required for Company data, but longer if required by any agreement
Company enters into with the third party.

       5.4. Return on Termination. Executive will return all Company data and
third party data held by Executive, on termination of Executive's employment or
upon any earlier request.

6.     Inventions.

       6.1. Definitions. "Inventions" means new ideas, improvements, or
discoveries, whether or not patentable or copyrightable, as well as other newly
discovered or newly applied information or concepts. An Invention is a "Covered
Invention" if it relates to Company's actual

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or anticipated business; or was developed in any part using Company resources
(time, supplies, facilities, or data); or if it results from or is suggested by
a task assigned to, or work performed for Company by, Executive. As used in this
Section 6, "Company" includes Company's sister corporations or subsidiaries and
Company's clients, consultants, and contractors.

     6.2.  Assignment. All Executive's right, title and interest to any Covered
Inventions that Executive makes or conceives while employed by Company, belong
to Company. This Agreement operates as a prospective assignment of all those
rights to Company.

     6.3.  Obligation survives. The provisions of this Section 6 shall survive
termination of this Agreement.

7.   Other Matters.

     7.1.  Notice. Notice to Executive shall be sent to Executive's most recent
address shown in Company's personnel records. Notice to Company shall be sent to
Company's headquarters address, marked attention: Chief Financial Officer.
Either party may change its address by Notice. Notice shall be effective when
the person to whom it is sent actually gets it, if sent by any method that
leaves a paper or electronic record in the hands of the recipient. If sent
certified or registered mail, postage prepaid, return receipt requested, to the
proper address this section defines, notice shall be considered effective
whether or not actually received on the date the return receipt shows the notice
was accepted, refused, or returned undeliverable.

     7.2.  Severability. Each clause of this agreement is severable. If any
clause is ruled void or unenforceable, the balance of the agreement shall
nonetheless remain in effect.

     7.3.  Non-Waiver. A waiver of one or more breaches of any clause of this
agreement shall not act to waive any other breach, whether of the same or
different clauses.

     7.4.  Assignment. This Agreement shall be binding upon and inure to the
benefit of Company, its successors and assigns and shall be binding upon and
inure to the benefit of Executive, and Executive's administrators, executors,
legatees, and heirs. This Agreement shall not be assigned by Executive.

     7.5.  Governing Law. This agreement is entered in, and is governed by, the
laws of the state of Oregon.

     7.6.  Jurisdiction, Service, Injunctive Relief. Jurisdiction over disputes
arising under this Agreement rests exclusively in the state or federal courts
located in Multnomali County, Oregon, and each party consents to that
jurisdiction. Each party consents to service of process through the method
prescribed for notice. As violation of the non-competition or non-solicitation
obligations of this agreement, or those related to rights in intellectual
property, would result in damage to Company that could not be cured by an award
of money alone, Company shall be entitled to injunctive relief in cases where a
violation of those obligations is shown.

     7.7.  Attorneys' Fees. The prevailing party in any suit, action,
arbitration, or appeal filed or held concerning this agreement shall be entitled
to reasonable attorneys' fees and the actual, reasonably necessary costs of the
proceeding, as determined by the court.


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     7.8. Integration. This agreement supersedes all prior employment agreements
between the parties, written or oral, provided that the parties preserve to the
Executive the commitments made by IMS in Executive's employment agreement dated
May 10, 1995, with respect to the Executive's stock options for stock of Cadence
Design Systems, Inc. This Agreement also modifies any stock option agreements
executed between IMS and Executive before the date of this Agreement or while
this Agreement remains in force, with respect to the exercisability and
expiration provisions described in this Agreement. This agreement may be
modified only in writing signed by the original parties hereto, or by their
successors or superiors in office.

Keith L. Barnes                             Integrated Measurement Systems, Inc.

Sign: /s/ Keith L. Barnes                   By: /s/ C. Scott Gibson
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Date: May 5, 1998                           Print: C. Scott Gibson
      ---------------------                        -----------------------------
                                            Title: Chair-Compensation Committee
                                                   -----------------------------
                                            Date:  May 5, 1998
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                            Unanimous Consent of the
                            Compensation Committee of
                      Integrated Measurement Systems, Inc.


                                  June 1, 2000

     The Compensation Committee of the Board of Directors of Integrated
Measurement Systems hereby takes the following actions by unanimous written
consent, effective as of June 1, 2000.

1.   RESOLVED, that the Compensation Committee hereby directs that Mr. Hall's
     and Mr. Barnes' employment agreement be modified so that the text
     underlined here be added where shown to paragraph 4.4 of each such
     agreement:

     4.4    Acceleration of Options on Control Change or Merger. Company shall
            accelerate the exercise date of all stock options held by Executive
            so that they become fully exercisable upon a Control Change, or upon
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            termination in conjunction with a merger or combination of the
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            company where the termination occurs as part of the plan of merger
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            or combination, or occurs in furtherance of leadership
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            reorganization caused by the merger or combination.
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2.   RESOLVED, that the committee recognizes the change in service status of Shu
     Ju Wang from employee to consultant, and acknowledges that her options, as
     a result of that change in status, shall change from incentive stock
     options to nonqualified stock options, and otherwise continue to vest on
     their original terms.

     Milton Smith            C. Scott Gibson, Chair            Thomas Franz

     /s/ Milton Smith        /s/ C. Scott Gibson          /s/ Thomas Franz
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