<PAGE>   1



                                                                    EXHIBIT 10.1

                                   AGREEMENT

         This Agreement, made as of the 17th day of July, 1997 by and between
TOLLGRADE COMMUNICATIONS, INC., a Pennsylvania corporation (the "Corporation")
and TIMOTHY O'BRIEN, an individual residing in the Commonwealth of Pennsylvania
and an employee of the Corporation (the "Executive").

                                  WITNESSETH:

         WHEREAS, the Board of Directors of the Corporation has determined that
it is in the best interests of the Corporation to enter into this Agreement
with the Executive to provide for compensation of the Executive upon
termination of employment under certain circumstances relating to a change in
control of the Corporation; and

         WHEREAS, the Executive desires to obtain such benefits in the event
the Executive's employment is terminated under the circumstances provided
herein.

         NOW, THEREFORE, in consideration of the covenants and premises
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:

         1. DEFINITION OF TERMS. The following terms when used in this
Agreement shall have the meaning hereafter set forth:

         "ANNUAL SALARY ADJUSTMENT PERCENTAGE" shall mean the mean average
         percentage increase in base salary for all elected officers of the
         Corporation during the two full calendar years immediately preceding
         the time to which such percentage is being applied; provided however,
         that if after a Change-in-Control, as hereinafter defined, there
         should be a significant change in the number of elected officers of
         the Corporation or in the manner in which they are compensated, then
         the foregoing definition shall be changed by substituting for the
         phrase "elected officers of the Corporation" the phrase "persons then
         performing the functions formerly performed by the elected officers of
         the Corporation."

         "CAUSE FOR TERMINATION" shall mean:

         (a)      the deliberate and intentional failure by the Executive to
                  devote substantially his entire business time and best
                  efforts to the performance of his duties (other than any such
                  failure resulting from the Executive's incapacity due to
                  physical or mental illness or disability) after a demand for
                  substantial performance is delivered to the Executive by the
                  Board of Directors which specifically identifies the manner
                  in which the Board of Directors believes that the Executive
                  has not substantially performed his duties,

           or

         (b) wilfully engaging by the Executive in conduct which constitutes a
             fraud against the Corporation or a material breach of this
             Agreement,


                                       18
<PAGE>   2



           or

         (c) the Executive's conviction of any crime which constitutes a
felony.

         For purposes of this definition, no act, or failure to act, on the
         Executive's part shall be considered "deliberate and intentional" or
         "willfully" unless done, or omitted to be done, by the Executive not
         in good faith and without reasonable belief that his action or
         omission was in the best interests of the Corporation.

         "CHANGE-IN-CONTROL" shall mean the determination (which may be made
         effective as of a particular date specified by the Board of Directors
         of the Corporation) by the Board of Directors of the Corporation, made
         by a majority vote that a change in control has occurred, or is about
         to occur. Such a change shall not include, however, a restructuring,
         reorganization, merger, or other change in capitalization in which the
         Persons who own an interest in the Corporation on the date hereof (the
         "Current Owners")(or any individual or entity which receives from a
         Current Owner an interest in the Corporation through will or the laws
         of descent and distribution) maintain more than a sixty-five percent
         (65%) interest in the resultant entity. Regardless of the Board's vote
         or whether or not the Board votes, a Change-in-Control will be deemed
         to have occurred as of the first day any one (1) or more of the
         following subparagraphs shall have been satisfied:

         (a) Any Person (other than the Person in control of the Corporation as
             of the date of this Agreement, or other than a trustee or other
             fiduciary holding securities under an employee benefit plan of the
             Corporation, or a corporation owned directly or indirectly by the
             stockholders of the Corporation in substantially the same
             proportions as their ownership of stock of the Corporation),
             becomes the beneficial owner, directly or indirectly, of
             securities of the Corporation representing more than thirty five
             percent (35%) of the combined voting power of the Corporation's
             then outstanding securities; or

         (b) The stockholders of the Corporation approve:

           (i)    A plan of complete liquidation of the Corporation;

           (ii)   An agreement for the sale or disposition of all or
                  substantially all of the Corporation's assets; or

           (iii)  A merger, consolidation, or reorganization of the Corporation
                  with or involving any other corporation, other than a merger,
                  consolidation, or reorganization that would result in the
                  voting securities of the Corporation outstanding immediately
                  prior thereto continuing to represent (either by remaining
                  outstanding or by being converted into voting securities of
                  the surviving entity) at least sixty-five percent (65%) of
                  the combined voting power of the voting securities of the
                  Corporation (or such surviving entity) outstanding
                  immediately after such merger, consolidation, or
                  reorganization.

         However, in no event shall a Change in Control be deemed to have
         occurred, with respect to the Executive, if the Executive is part of a
         purchasing group which consummates the Change-in-Control transaction.
         The Executive shall be deemed "part of the purchasing group" for
         purposes


                                       19
<PAGE>   3



         of the preceding sentence if the Executive is an equity participant or
         has agreed to become an equity participant in the purchasing company
         or group (except for (i) passive ownership of less than five percent
         (5%) of the voting securities of the purchasing company; or (ii)
         ownership of equity participation in the purchasing company or group
         which is otherwise deemed not to be significant, as determined prior
         to the Change-in-Control by a majority of the non-employee continuing
         Directors of the Board of Directors of the Corporation).

         "DATE OF TERMINATION" shall mean:

         (a) if the Executive's employment is terminated for Disability, the
             date that a Notice of Termination is given to the Executive;

         (b) if the Executive terminates due to his death or Retirement, the
             date of death or Retirement, respectively;

         (c) if the Executive decides to terminate employment upon Good Reason
             for Termination, the date following such decision specified by the
             Corporation after it has been notified of the Executive's decision
             to terminate employment; or

         (d) if the Executive's employment is terminated for any other reason,
             the date on which such termination becomes effective pursuant to a
             Notice of Termination.

         "DISABILITY" shall mean such incapacity due to physical or mental
         illness or injury as causes the Executive to be unable to perform his
         duties with the Corporation during 180 consecutive days.

         "GOOD REASON FOR TERMINATION" shall mean the occurrence of:

         (a) without the Executive's express written consent, the assignment to
             the Executive of any duties materially and substantially
             inconsistent with his positions, duties, responsibilities and
             status with the Corporation immediately prior to a
             Change-in-Control, or a material change in his reporting
             responsibilities, titles or offices as in effect immediately prior
             to a Change-in-Control, or any removal of the Executive from or
             any failure to re-elect the Executive to any of such positions,
             except in connection with the termination of the Executive's
             employment due to Cause for Termination, Disability or Retirement
             (as hereinafter defined) or as a result of the Executive's death;

         (b) (i) a reduction by the Corporation prior to a Change-in-Control in
             the Executive's base salary unless such reduction is the result of
             the Board of Directors of the Corporation determining that the
             Executive has not adequately discharged his duties;

             (ii) a reduction by the Corporation after a Change-in-Control in
             the Executive's base salary as in effect immediately prior to any
             Change-in-Control or a failure by the Corporation after a
             Change-in-Control to increase the Executive's base salary by the
             Annual Salary Adjustment Percentage;

         (c) a failure by the Corporation to continue to provide incentive
             compensation comparable



                                       20
<PAGE>   4



             to  that provided by the Corporation immediately prior to any
             Change-in-Control;

         (d) a failure by the Corporation after a Change-in-Control to continue
             in effect any benefit or compensation plan, stock option plan,
             pension plan, life insurance plan, health and accident plan or
             disability plan in which the Executive is participating
             immediately prior thereto (provided, however, that there shall not
             be deemed to be any such failure if the Corporation substitutes
             for the discontinued plan, a plan providing the Executive with
             substantially similar benefits) or the taking of any action by the
             Corporation which would adversely affect the Executive's
             participation in or materially reduce the Executive's benefits
             under any of such plans or deprive the Executive of any material
             fringe benefit enjoyed by the Executive immediately prior to a
             Change-in-Control (provided, however, that any act or failure to
             act by the Corporation that is on a plan- wide basis, i.e., it
             similarly affects all employees of the Corporation or all
             employees eligible to participate in any such plan, as the case
             may be, shall not constitute Good Reason for Termination);

         (e) the failure of the Corporation to obtain the assumption of this
             Agreement by any successor as contemplated in SECTION 10(C)
             hereof;

         (f) any purported termination of the employment of the Executive by
             the Corporation which is not (i) due to the Executive's
             Disability, Retirement (as hereinafter defined) or Cause for
             Termination, or (ii) effected as a Notice of Termination, as
             defined herein; or

         (g) the Corporation's requiring the Executive to be based anywhere
             other than the Corporation's executive offices at which the
             Executive has his principal office immediately prior to a
             Change-in-Control or executive offices located within 50 miles of
             the location of the Corporation's executive offices immediately
             prior to a Change-in-Control, except for required travel on the
             Corporation's business to an extent substantially consistent with
             the Executive's present business travel obligations.

         "NOTICE OF TERMINATION" shall mean a written statement which sets
         forth the specific reason for termination and, if such is claimed to
         be a Cause for Termination or Good Reason for Termination, in
         reasonable detail the facts and circumstances which indicate that such
         is Cause for Termination or Good Reason for Termination.

         "OPTIONS" shall mean any stock options issued pursuant to any present
         or future stock option plan of the Corporation.

         "PERSON" shall have the meaning ascribed to such term in Section
         3(a)(9) of the Securities Exchange Act of 1934, as in effect on the
         date hereof and used in Sections 13(d) and 14(d) thereof, including a
         "group" as defined in Section 13(d) thereof.

         "RETIREMENT" shall mean the termination of the Executive's employment
         after age 65 or in accordance with any mandatory retirement
         arrangement with respect to an earlier age agreed to by the Executive.

         "STOCK APPRECIATION RIGHT" shall mean any stock appreciation rights
         issued pursuant to any



                                       21
<PAGE>   5



         stock option plan of the Corporation or any future stock appreciation
         rights plan.

         2. TERMS OF EMPLOYMENT. The Executive acknowledges that this Agreement
does not constitute an employment contract and that the Executive's employment
relationship with the Corporation is at-will and not for any particular period.
Rather, this Agreement is only intended to set forth certain liquidated damages
to be paid in the event of termination of the Executive upon the terms and
conditions specified herein.

         3. TERM OF AGREEMENT. The initial term of this Agreement shall be for
a period of four (4) years. Upon expiration of the initial term, the Company
shall, in its sole discretion, determine whether this Agreement shall be
renewed upon such terms it deems advisable.

         4. PAYMENTS FOLLOWING TERMINATION OF EMPLOYMENT UPON A CHANGE-IN-
CONTROL.

         (a) If the Executive's employment with the Corporation shall be
             terminated:

           (i)    due to the Executive's death,

           (ii)   by the Executive other than the Executive's having terminated
                  for Good Reason for Termination following a
                  Change-in-Control, or

           (iii)  by the Corporation due to Cause for Termination or for
                  Disability or Retirement,

           then the Corporation shall have no obligations to the Executive
           other than to pay the Executive any unpaid portion of base salary
           due until the Date of Termination and any other sums due in
           accordance with the then various policies, practices and benefit
           plans of the Corporation.

         (b) If the Executive's employment with the Corporation shall have
             terminated during the period commencing six months prior to the
             date of a Change-in-Control and ending on the third anniversary of
             a Change-in-Control other than in the circumstances described in
             subsection (a) above, then the Corporation shall pay on or before
             the fifth day following the Date of Termination (or if the Date of
             Termination preceded the date of the Change-in-Control, on or
             before the fifth day following the date of the Change-in-Control),
             to the Executive the following sums:

           (i)    in cash any unpaid portion of the Executive's full base
                  salary for the period from the last period for which the
                  Executive was paid to the Date of Termination, or the date of
                  the Change-in-Control, as the case may be; and

           (ii)   an amount in cash as liquidated damages for lost future
                  renumeration equal to the product obtained by multiplying

                  (A)      the lesser of

                                (1)      two, or

                                       22


<PAGE>   6



                           (2)      a number equal to the number of calendar
                                    months remaining from the Date of
                                    Termination to the date on which the
                                    Executive is 65 years of age (or, if
                                    earlier, the age agreed to by the Executive
                                    pursuant to any prior arrangement) divided
                                    by twelve, or

                           (3)      a number equal to the greater of (i) one
                                    (1.0) and (ii) thirty six (36) less the
                                    number of completed months commencing after
                                    the date of the Change-in-Control during
                                    which the Executive was employed by the
                                    Corporation and did not have Good Reason
                                    for Termination times (iii) one-twelfth
                                    (1/12)

                                    times

                  (B)      the sum of

                            (1)      the greater of

                                    (i)     the Executive's annual base salary
                                            for the year in effect on the Date
                                            of Termination (provided that in
                                            the case of Termination for Good
                                            Reason by the Executive the date
                                            immediately preceding the date of
                                            the earliest event which gave rise
                                            to the Termination for Good Reason
                                            by the Executive shall be used
                                            instead of the Date of Termination)

                                    or

                                    (ii)    the Executive's annual base salary
                                            for the year in effect on the date
                                            of the Change-in-Control;

                           plus

                            (2)      the greater of

                                    (i)     the average annual cash award
                                            received by the Executive as
                                            incentive compensation or bonus for
                                            one calendar year immediately
                                            preceding the Date of Termination
                                            (provided that in the case of
                                            Termination for Good Reason by the
                                            Executive the date immediately
                                            preceding the date of the event
                                            which gave rise to the Termination
                                            for Good Reason by the Executive
                                            shall be used instead of the Date
                                            of Termination)

                                    or

                                    (ii)    the average annual cash award
                                            received by the Executive as
                                            incentive compensation or bonus for
                                            one calendar year immediately
                                            preceding the date of the
                                            Change-in-Control.

         5.  OUTPLACEMENT SERVICES. If the Executive's employment with the
Corporation


                                       23
<PAGE>   7



should terminate under circumstances as to entitle the Executive to receive
payment hereunder, the Corporation shall reimburse the Executive for any
reasonable fees or other costs incurred by the Executive during the two (2)
years following the Date of Termination in retaining executive placement
agencies, up to a maximum dollar amount not to exceed fifteen percent (15%) of
the Executive's base salary at the time of such termination. Such reimbursement
shall be made within five (5) days following the Executive's presentment of
bills or other evidence of the costs incurred with executive placement
agencies.

         6. TAX IMPLICATIONS. If any payment due to the Executive pursuant to
this Agreement result in a tax being imposed on the Executive pursuant to
Section 4999 of the Internal Revenue Code of 1954, as amended, or any successor
provision ("Section 4999"), then the Corporation shall, at the Executive's
option, either (i) reduce the total payments payable to the Executive to the
maximum amount payable without incurring the Section 4999 tax, or (ii) pay to
the Executive the total amount payable, with the understanding that Section
4999 tax will be due on that total amount.

         7. BENEFITS. If the Executive's employment with the Corporation should
terminate under circumstances as to entitle the Executive to receive payment
hereunder, the Executive shall also be deemed, for purposes of medical
insurance, pension and other benefits of the Corporation, to have remained in
the continuous employment of the Corporation for the two (2) year period
following the Date of Termination and shall be entitled to all of the medical
insurance, pension or other benefits provided by the Corporation as if the
Executive had so remained in the employment of the Corporation. If, for any
reason, whether by law or provisions of the Corporation's employee medical
insurance, pension or other benefit plans, or otherwise any benefits which the
Executive would be entitled to under this SECTION 6 cannot be paid pursuant to
such employee benefit plans, then the Corporation contractually agrees to pay
the Executive the difference between the benefits which the Executive would
have received in accordance with this Section if the relevant employee medical
insurance, pension or other benefit plan could have paid such benefit and the
amount of benefits, if any, actually paid by such employee medical insurance,
pension or other benefit plan. The Corporation shall not be required to fund
its obligation to pay the foregoing difference.

         8. OTHER EMPLOYMENT. In the event of termination under the
circumstances contemplated in SECTION 4(B) hereunder, the Executive shall have
no duty to seek any other employment after termination of his employment with
the Corporation and the Corporation hereby waives and agrees not to raise or
use any defense based upon the position that the Executive had a duty to
mitigate or reduce the amounts due him hereunder by seeking other employment
whether suitable or unsuitable and should the Executive obtain other
employment, then the only effect of such on the obligations of the Corporation
shall be that the Corporation shall be entitled to credit against any payments
that would otherwise be made pursuant to SECTION 7 hereof, any comparable
payments to which the executive is entitled under the employee benefit plans
maintained by the Executive's other employer or employers in connection with
services to such employer or employers after termination of this employment
with the Corporation.

         9. STOCK APPRECIATION RIGHTS AND OPTIONS. If the Executive's
employment should terminate under circumstances as to entitle the Executive to
receive payment hereunder, then with respect to any standing Stock Appreciation
Rights and/or Options which did not immediately become exercisable upon the
occurrence of a Change-in-Control, such Stock Appreciation Right or Option
shall be automatically vested and remain outstanding in accordance with its
terms and be exercisable



                                       24
<PAGE>   8



thereafter until the stated expiration date of such Stock Appreciation Right or
Option.

         10. MISCELLANEOUS.

         (a) This Agreement shall be construed under the laws of the
             Commonwealth of Pennsylvania.

         (b) This Agreement constitutes the entire understanding of the parties
             hereto with respect to the subject matter hereof and may only be
             amended or modified by written agreement signed by the parties
             hereto.

         (c) The Corporation will require any successor (whether direct or
             indirect, by purchase, merger, consolidation or otherwise) to all
             or substantially all of the business and/or assets of the
             Corporation, by agreement in form and substance satisfactory to
             the Executive, to expressly assume and agree to perform this
             Agreement in the same manner required of the Corporation and to
             perform it as if no such succession had taken place. As used in
             this Agreement, "Corporation" shall mean the Corporation as
             hereinbefore defined and any successor to its business and/or
             assets as aforesaid which executes and delivers the agreement
             provided for in this subsection (c) or which otherwise becomes
             bound by all of the terms and provisions of this Agreement by
             operation of law.

         (d) This Agreement shall inure to the benefit of and be enforceable by
             the Executive and the Corporation and their respective legal
             representatives, executors, administrators, successors, heirs,
             distributees, devisees and legatees. If the Executive should die
             while any amounts would still be payable to him hereunder if he
             had continued to live, all such amounts, unless otherwise provided
             herein, shall be paid in accordance with the terms of this
             Agreement to his devisee, legatee or other designee or, if there
             be no such designee, to his estate.

         (e) Any notice or other communication provided for in this Agreement
             shall be in writing and, unless otherwise expressly stated herein,
             shall be deemed to have been duly given if mailed by United States
             registered mail, return receipt requested, postage prepaid,
             addressed in the case of the Executive to his office at the
             Corporation with a copy to his residence and in the case of the
             Corporation to its principal executive offices, attention to the
             Chief Executive Officer.

         (f) No provision of this Agreement may be modified, waived or
             discharged unless such waiver, modification or discharge is agreed
             to in writing signed by the Executive and approved by resolution
             of the Board of Directors of the Corporation. No waiver by either
             party hereto at any time of any breach by the other party hereto
             of, or compliance with, any condition or provision of this
             Agreement to be performed by such other party shall be deemed a
             waiver of similar or dissimilar provisions or conditions at the
             same or at any prior or subsequent time. No agreements or
             representations, oral or otherwise, express or implied, with
             respect to the subject matter hereof have been made by either
             party which are not set forth expressly in this Agreement.

         (g) The invalidity or unenforceability of any provisions of this
             Agreement shall not affect the validity or unenforceability of any
             other provision of this Agreement, which shall


                                       25
<PAGE>   9



             remain in full force and effect. If any provision hereof shall be
             deemed invalid or unenforceable, either in whole or in part, this
             Agreement shall be deemed amended to delete or modify, as
             necessary, the offending provision and to alter the bounds thereof
             in order to render it valid and enforceable.

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

         (i) If litigation should be brought to enforce, interpret or challenge
             any provision contained herein, the prevailing party shall be
             entitled to its reasonable attorney's fees and disbursements and
             other costs incurred in such litigation and, if a money judgment
             be rendered in favor of the Executive, to interest on any such
             money judgment obtained calculated at the prime rate of interest
             in effect from time to time at Mellon Bank, N.A., from the date
             that the payment should have been made or damages incurred under
             this Agreement.

         IN WITNESS WHEREOF, this Agreement has been executed on the date first
above written.

ATTEST:                                          TOLLGRADE COMMUNICATIONS, INC.

 /s/ Sara M. Antol                               By: /s/ Christian L. Allison
---------------------                               ---------------------------
WITNESS:

 /s/ Sara M. Antol                                  /s/ Timothy O'Brien
---------------------                            ------------------------------
                                                 TIMOTHY O'BRIEN


                                       26
<PAGE>   10



SCHEDULE TO EXHIBIT 10.1

Change in Control Agreement entered into between the Company and Joe O'Brien
dated July 17, 1997 which was substantially identical to that filed as Exhibit
10.1.



                                       27