Exhibit 10.1

October 31, 2005



Roger W. Blethen
95 Main Street
Dover, Massachusetts  02030


Re:  Separation Agreement
     --------------------

Dear Roger:

     This letter, upon your signature, will constitute the Agreement between you
and LTX Corporation ("LTX") on the terms of your separation from employment with
LTX (the "Agreement").

     Your employment with LTX will terminate effective October 31, 2005. LTX
will continue to pay your current base salary and continue your current benefits
through such date. On October 31, 2005, you will receive your earned salary and
accrued, unused vacation pay through your termination date. You have received or
will receive, by separate cover, information regarding your rights to health
insurance continuation and your retirement benefits. To the extent that you have
such rights, nothing in this Agreement will impair those rights.

     The Board of Directors understands that the end of your service as Chief
Executive Officer does not affect your continued services as a director of LTX
or your continued service as non-executive Chairman of the Board.

<PAGE>


The terms of the Agreement are as follows:

1. You hereby resign as the Chief Executive Officer of LTX effective October 31,
2005. You agree that during the period commencing on November 1, 2005 and ending
on February 1, 2010 (the "Salary Continuation Period"), you shall assist in the
transition of your job responsibilities to a new Chief Executive Officer and
perform such other consulting duties as may be reasonably requested by the Chief
Executive Officer or the Board of Directors (the "transition assistance"). The
transition assistance shall not exceed the equivalent of three days per month.
LTX will use its reasonable best efforts to request such assistance at times and
places compatible with your other post-employment activities, and will reimburse
you for reasonably necessary and documented travel, food and lodging expenses
incurred in connection with such assistance as determined by the Company. You
shall be eligible for option grants to directors during the period that you
serve as a director on the same basis as other non-employee outside directors.
In the event you are a director on November 1, 2007, you shall be eligible for
director's fees on the same basis as other directors, but you shall not be
eligible for director's fees for service as a director between November 1, 2005
and November 1, 2007.

2. Although you are not otherwise entitled to it, in consideration of your
acceptance of this Agreement and your transition assistance hereunder, LTX will
provide to you:

     (a) Twenty-seven (27) months of your current base salary (less applicable
payroll tax deductions and withholdings), which will be payable to you as
follows: (i) no payments during the 6-month period beginning November 1, 2005
and ending April 30, 2006; (ii) on May 1, 2006 a lump sum payment equal to six
(6) months of your current base salary; (iii) for the nine (9) month period
commencing on May 1, 2006 and ending on January 31, 2007, equal monthly payments
at your current base rate; and (iv) for the three (3) year period commencing on
February 1, 2007 and ending on January 31, 2010, equal monthly payments at
one-third (1/3) your current base rate.

     (b) Continued payment of LTX's share of medical and dental insurance
coverage (subject to your paying that which current employees contribute) during
the Salary Continuation Period.

     (c) Continued coverage under your present individual term life insurance
policy with LTX; provided that: (i) you will be responsible for the monthly
premium payments for the first six (6) months of the Salary Continuation Period;
and (ii) LTX will pay the monthly premiums for the remainder of the Salary
Continuation Period.

     (d) Continued coverage under your split dollar life insurance policy # ULNE
000924, for the first six (6) months of the Salary Continuation Period, provided
that: (i) you will be responsible for the monthly premium payments during this
six (6) month period; and (ii) LTX will pay you $39,000 on May 1, 2006,
representing the cost of conversion of your split dollar life insurance policy
to an individual plan.

<PAGE>


     (e) Continued vesting and exercisability of your outstanding stock options
during the Salary Continuation Period and for a period of three (3) months
thereafter, unless in the case of any such option it has terminated or expired
earlier by its terms; provided that during such extended period for exercise of
any such option, the option shall have a per share exercise price that is equal
to the greater of (i) the exercise price provided for in the terms of the
option, or (ii) the fair market value of LTX stock on October 31, 2005.

     (f) A payment of $100,000 (less applicable payroll tax deductions) on
February 1, 2007.

     (g) Transfer of your current car lease into your name, provided that: (i)
you will be solely responsible for rendering lease payments to the lessor for
the first six (6) months of the Salary Continuation Period; and (ii) LTX will be
solely responsible for rendering lease payments to the lessor thereafter.

     (h) On May 1, 2006, payment of an amount equal to (i) the total of the
monthly premiums for your individual term life and split dollar life insurance
policies for the first six (6) months of the Salary Continuation Period; and
(ii) the total cost of the monthly lease payments for your current car lease
through the first six (6) months of the Salary Continuation Period.

3. In the event your service as a director terminates as a result of your
retirement as a Director, such cessation of service will be considered the
"retirement of a Director who was not an employee of the Company", whichunder
the 2001 stock plan would allow you to exercise your options under said stock
plan within two years after the date of retirement, unless the option terminated
or expired earlier by its terms. Notwithstanding Section 2(e), you will continue
to vest and may exercise your outstanding stock options for so long as you serve
as a director, unless in the case of any such option it has terminated or
expired earlier by its terms; provided that during such period for exercise of
any such option, the option shall have a per share exercise price that is equal
to the greater of (i) the exercise price provided for in the terms of the
option, or (ii) the fair market value of LTX stock on October 31, 2005.

4. As of the effective date of your termination of employment you will have
returned to LTX any information that you have about LTX or any of its customer
lists, customer business needs or procedures, trade secrets, and product
marketing, including but not limited to reports, memoranda, or other copies,
extracts or summaries of such items, except as reasonably necessary to enable
you to provide the transition assistance or as you would otherwise possess in
your continuing capacity as a director of LTX. You will also have returned all
other property of LTX, including but not limited to, keys, files, equipment,
computer hardware and software, cellular phones and other handheld devices
except as approved by the Chief Executive Officer or the Board of Directors in
order to enable you to provide the transition assistance or serve as a director
of LTX.

<PAGE>


5. You agree to cooperate fully with LTX in the defense or prosecution of any
claims or actions which already have been brought, are currently pending, or
which may be brought in the future against or on behalf of LTX, whether before a
state or federal court, any state or federal government agency, or a mediator or
arbitrator. Your full cooperation in connection with such claims or actions
shall include, but not be limited to, being available to meet with counsel to
prepare its claims or defenses, to prepare for trial or discovery or an
administrative hearing or a mediation or arbitration and to act as a witness
when requested by LTX at reasonable times designated by LTX. You agree that you
will notify LTX promptly in the event that you are served with a subpoena or in
the event that you are asked to provide a third party with information
concerning any actual or potential complaint or claim against LTX. LTX agrees to
reimburse you for reasonably necessary and documented travel, food and lodging
expenses for your cooperation.

6. In consideration of the enhanced separation benefits that you will receive,
you fully, irrevocably and unconditionally waive and release any and all claims
of every kind and nature that exist as of the time you execute this Agreement
and that you have or might have against LTX and its predecessors, subsidiaries,
and related entities, and their respective officers, directors, shareholders,
agents, attorneys, employees, successors, or assigns (each in their individual
and corporate capacities), including any claims arising from or related to your
employment with LTX and/or the termination of your employment with LTX and/or
arising from or related to your status as an officer, director or shareholder of
LTX.

     These released claims include, but are not limited to, all employment
discrimination claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C.
ss. 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C. ss.
12101 et seq., the Age Discrimination in Employment Act, 29 U.S.C. ss. 621 et
seq., and the Massachusetts Fair Employment Practices Act, M.G.L. c.151B, ss. 1
et seq., all as amended, all claims arising out of the Fair Credit Reporting
Act, 15 U.S.C. ss. 1681 et seq., the Family and Medical Leave Act, 29 U.S.C. ss.
2601 et seq., the Employee Retirement Income Security Act of 1974 ("ERISA"), 29
U.S.C. ss. 1001 et seq., the Massachusetts Civil Rights Act, M.G.L. c.12, ss.ss.
11H and 11I, the Massachusetts Equal Rights Act, M.G.L. c.93, ss. 102 and M.G.L.
c.214, ss. 1C, the Massachusetts Labor and Industries Act, M.G.L. c.149, ss. 1
et seq., the Massachusetts Privacy Act, M.G.L. c.214, ss. 1B and the
Massachusetts Maternity Leave Act, M.G.L. c.149, ss. 105(d), all as amended, all
common law claims including, but not limited to, actions in defamation,
intentional infliction of emotional distress, misrepresentation, fraud, wrongful
discharge and breach of contract, all claims to any non-vested ownership
interest in the Company, contractual or otherwise, including, but not limited
to, claims to stock or stock options, and any claim or damage arising out of
your employment with and/or separation from the Company (including a claim for
retaliation) under any common law theory or any federal, state or local statute
or ordinance not expressly referenced above.

     Your release of claims does not, however, include the following:

a.   claims for worker's compensation benefits;

<PAGE>


b.   claims for unemployment insurance benefits;
c.   claims for already-vested benefits under LTX's benefit plans (including any
     vested rights under non-qualified deferred compensation plans); or
d.   claims that arise after you accept this Agreement.

     Nothing in this Agreement shall be construed to affect the Equal Employment
Opportunity Commission's ("Commission") or state fair employment practices
agency's independent right and responsibility to enforce the law. You
understand, however, that, while this Agreement does not affect your right to
file a charge or participate in an investigation or proceeding conducted by the
Commission, you may not be entitled to recover monetary damages in connection
with any Commission proceeding concerning matters covered by this Agreement.

     You agree to execute the Release attached to this letter as Attachment A on
and not before October 31, 2005, your last day of employment. You understand
that your failure to execute Attachment A on October 31, 2005 and/or your
execution of Attachment A prior to October 31, 2005 shall render this Agreement
null and void, and in that case, you shall not be entitled to receive any of the
payments and consideration described in this Agreement.

     LTX agrees to fully, irrevocably and unconditionally waive and release you
from any and all claims arising out of acts or omissions by you where such acts
or omissions were undertaken or not undertaken in a manner you reasonably
believed to be in or not opposed to the best interests of LTX.

7. As a condition of payment to you of the consideration described in this
Agreement, you agree to the following:

     You will not, unless required or otherwise permitted by law, disclose to
others any information regarding LTX Corporation or any of its customer's
practices, procedures, trade secrets, customer lists or product marketing. In
order to allow LTX to protect its interests in confidentiality, if served with a
subpoena, discovery request or other similar legal instrument that could lead to
a court order compelling disclosure of Confidential Information, you shall with
three (3) business days of the receipt thereof, notify LTX, unless that would
not permit sufficient time in which to allow LTX to assert any interest in
prohibiting disclosure of the terms or negotiations concerning this Agreement,
in which case you shall give notice to LTX as soon as possible, but in any
event, before actual disclosure.

     You will not engage in any unethical or improper conduct which might impair
LTX's business, interfere with its customer relationships or disrupt its
employee relations. Without limitation of the foregoing, you will not make any
false, negative, disparaging or derogatory remarks about LTX or any of its
directors, officers, agents or employees or about LTX's business affairs or
financial condition to anyone, including but not limited to, media outlets,
industry groups, financial institutions, and current or former directors,
officers, employees, agents or representatives of LTX.

<PAGE>


     These provisions are in addition to any existing legal obligation you owe
to LTX with respect to these matters and any prior agreements regarding
protection of confidential information and assignment of inventions.

     During the period beginning on the date hereof and concluding at the end of
the Salary Continuation Period (the "Non-Competition Period"), you covenant and
agree that you shall not, directly or indirectly, engage in, enter into or
participate in the design, development, production, manufacturing, sale or
distribution of semiconductor test products, or applications or other services
in any way related thereto, or in any business or commercial activity anywhere
in the world which does or is reasonably likely to compete with or adversely
affect the business of LTX as it has been conducted at any time during the one
year period prior to the date of this Agreement or as it is now expected to be
conducted or as it is in fact conducted during the Non-Competition Period, in
each case either as an individual for his own account, or as investor, lender,
consultant, independent contractor, partner or a joint venturer, or as an
officer, director, independent contractor or holder of any equity interest
(except for ownership of less than one percent of any class of securities which
are listed for trading on any securities exchange or which are traded in the
over-the-counter market and except for ownership of any class of securities of
LTX), or as an employee, agent or salesman for any person, firm, partnership or
corporation. Without limitation of the foregoing, you agree that during the
Non-Competition Period you will not directly or indirectly work for or provide
services as an employee, consultant, advisor or otherwise, for Teradyne, Inc.,
Credence Systems Corporation, Agilent Inc. (or its semiconductor test business),
Advantest Corporation or Yokogawa Inc.

     You will not, whether directly or indirectly, alone or in association with
others, during the Non-Competition Period, recruit or otherwise solicit or
induce any employee or independent contractor of LTX or any of its subsidiaries
to terminate his or her employment, or otherwise cease his or her relationship,
with LTX or any of its subsidiaries.

     You will not, whether directly or indirectly, alone or in association with
others, during the Non-Competition Period, solicit, divert or take away, or
attempt to solicit, divert or take away, or permit any organization directly or
indirectly controlled by you to solicit, divert or take away, or attempt to
solicit, divert or take away, the business or patronage of any of the clients,
customers or accounts, or prospective clients, customers or accounts, of LTX,
which were contacted, solicited or served by LTX at any time during the term of
your employment with LTX.

8. In connection with the payments and consideration provided to you pursuant to
this Agreement, LTX shall withhold and remit to the tax authorities the amounts
required under applicable law, and you shall be responsible for all applicable
taxes with respect to such payments and consideration under applicable law. You
acknowledge that you are not relying upon the advice or representation of LTX
with respect to the tax treatment of any of the payments set forth in paragraph
2 of this Agreement.

<PAGE>


9. LTX confirms that it shall indemnify you in accordance with the By-laws of
the Company and you shall continue to be covered by the Company's Directors' and
Officers' liability insurance policy as set forth therein.

10. LTX shall reimburse you for your reasonable attorneys' fees in negotiating
this agreement up to a maximum of $12,500.

11. This Agreement, including Attachment A, shall be binding upon the parties
and may not be modified in any manner, except by an instrument in writing of
concurrent or subsequent date signed by duly authorized representatives of the
parties hereto. This Agreement, including Attachment A, is binding upon and
shall inure to the benefit of the parties and their respective agents, assigns,
heirs, executors, successors and administrators. In the event of your death
during the Salary Continuation Period, (i) your designated beneficiary or
beneficiaries shall continue to receive the salary continuation, payments
referenced in Section 2 above, and if not yet paid, the payment referenced in
Section 2(f) above; and (ii) your designated beneficiary or beneficiaries'
rights under any LTX stock plan shall be determined under and in accordance with
the terms of such stock plan. If you do not designate a beneficiary, or if no
designated beneficiary survives you, all amounts and benefits due hereunder
shall be paid, as and when payable, to your spouse, if she survives you, and
otherwise to your estate.

12. No delay or omission by LTX or you in exercising any right under this
Agreement or Attachment A shall operate as a waiver of that or any other right.
A waiver or consent given by LTX or you on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.

13. Should any provision of this Agreement or Attachment A be declared or be
determined by any court of competent jurisdiction to be illegal or invalid, the
validity of the remaining parts, terms or provisions shall not be affected
thereby and said illegal or invalid part, term or provision shall be deemed not
to be a part of this Agreement and/or Attachment A.

14. To the extent permitted by law, you understand and agree that as a condition
for payment to you of the separation benefits herein described, the terms and
contents of this Agreement and Attachment A, and the contents of the
negotiations and discussions resulting in this Agreement and Attachment A, shall
be maintained as confidential by you and your agents and representatives and
shall not be disclosed except to the extent required by federal or state law or
as otherwise agreed to in writing by LTX.

15. You understand and agree that this Agreement, including Attachment A, is a
severance and separation agreement and does not constitute an admission of
liability or wrongdoing on the part of LTX.

16. You acknowledge that you have been given at least twenty-one (21) days to
consider this Agreement, including Attachment A, and that LTX advised you to
consult with an attorney of your own choosing prior to signing this Agreement.
You understand that you may revoke this Agreement for a period of seven (7) days
after you sign it by notifying Stephen M. Jennings in writing, and this
Agreement shall not be effective or enforceable until the expiration of this
seven (7) day revocation period. You understand and agree that by entering into
this Agreement, you are waiving any and all rights or claims you might have
under the Age Discrimination in Employment Act, as amendment by the Older
Workers Benefits Protection Act, and that you have received consideration beyond
that to which you were previously entitled.

<PAGE>


17. You affirm that no other promises or agreements of any kind have been made
to or with you by any person or entity whatsoever to cause you to sign this
Agreement, including Attachment A, and that you fully understand the meaning and
intent of this Agreement and Attachment A. You state and represent that you have
had an opportunity to fully discuss and review the terms of this Agreement,
including Attachment A, with an attorney. You further state and represent that
you have carefully read this Agreement, including Attachment A, understand the
contents herein, freely and voluntarily assent to all of the terms and
conditions hereof, and sign your name of your own free act.

18. This Agreement, including Attachment A, shall be interpreted and construed
by the laws of the Commonwealth of Massachusetts, without regard to conflict of
laws provisions. You hereby irrevocably submit to and acknowledge and recognize
the jurisdiction of the courts of the Commonwealth of Massachusetts, or if
appropriate, a federal court located in Massachusetts (which courts, for
purposes of this letter agreement, are the only courts of competent
jurisdiction), over any suit, action or other proceeding arising out of, under
or in connection with this Agreement or the subject matter hereof.

19. This Agreement, including Attachment A, contains and constitutes the entire
understanding and agreement between the parties hereto with respect to your
severance benefits and the settlement of claims against LTX and cancels all
previous oral and written negotiations, agreements, commitments, writings in
connection therewith.

To accept this Agreement, date and sign below where indicated and return the
Agreement to me. (An extra copy is enclosed for your records.) If you have any
questions regarding the above, please contact me.

<PAGE>


LTX Corporation and I wish you every success in the future.

Sincerely,

LTX Corporation


/s/ Stephen M. Jennings
-----------------------
Stephen M. Jennings, Director
Chairman of the Compensation Committee

BY SIGNING BELOW, I ACKNOWLEDGE THAT I HAVE READ THIS AGREEMENT, I UNDERSTAND
ITS TERMS, I HAVE HAD THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF MY CHOICE
BEFORE SIGNING, AND I ACCEPT THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.

/s/Roger W. Blethen                                           10/31/2005
-------------------                                         --------------
Roger W. Blethen                                            Date

<PAGE>


                             Attachment A - Release
                             ----------------------


In consideration of the enhanced separation benefits described in the Agreement
dated October 31, 2005 to which this Attachment A (the "Release") is attached,
you fully, irrevocably and unconditionally waive and release any and all claims
of every kind and nature that exist as of the time you execute this Agreement
and that you have or might have against LTX and its predecessors, subsidiaries,
and related entities, and their respective officers, directors, shareholders,
agents, attorneys, employees, successors, or assigns (each in their individual
and corporate capacities), including any claims arising from or related to your
employment with LTX and/or the termination of your employment with LTX and/or
arising from or related to your status as an officer, director or shareholder of
LTX.

These released claims include, but are not limited to, all employment
discrimination claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C.
ss. 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C. ss.
12101 et seq., the Age Discrimination in Employment Act, 29 U.S.C. ss. 621 et
seq., and the Massachusetts Fair Employment Practices Act, M.G.L. c.151B, ss. 1
et seq., all as amended, all claims arising out of the Fair Credit Reporting
Act, 15 U.S.C. ss. 1681 et seq., the Family and Medical Leave Act, 29 U.S.C. ss.
2601 et seq., the Employee Retirement Income Security Act of 1974 ("ERISA"), 29
U.S.C. ss. 1001 et seq., the Massachusetts Civil Rights Act, M.G.L. c.12, ss.ss.
11H and 11I, the Massachusetts Equal Rights Act, M.G.L. c.93, ss. 102 and M.G.L.
c.214, ss. 1C, the Massachusetts Labor and Industries Act, M.G.L. c.149, ss. 1
et seq., the Massachusetts Privacy Act, M.G.L. c.214, ss. 1B and the
Massachusetts Maternity Leave Act, M.G.L. c.149, ss. 105(d), all as amended, all
common law claims including, but not limited to, actions in defamation,
intentional infliction of emotional distress, misrepresentation, fraud, wrongful
discharge and breach of contract, all claims to any non-vested ownership
interest in the Company, contractual or otherwise, including, but not limited
to, claims to stock or stock options, and any claim or damage arising out of
your employment with and/or separation from the Company (including a claim for
retaliation) under any common law theory or any federal, state or local statute
or ordinance not expressly referenced above.

Your release of claims does not, however, include the following:
     a.   claims for worker's compensation benefits;
     b.   claims for unemployment insurance benefits;
     c.   claims for already-vested benefits under LTX's benefit plans
          (including any vested rights under non-qualified deferred compensation
          plans); or
     d.   claims that arise after you accept this Agreement.

Nothing in this Release shall be construed to affect the Equal Employment
Opportunity Commission's ("Commission") or state fair employment practices
agency's independent right and responsibility to enforce the law. You
understand, however, that, while this Release does not affect your right to file
a charge or participate in an investigation or proceeding conducted by the
Commission, you may not be entitled to recover monetary damages in connection
with any Commission proceeding concerning matters covered by this Agreement.

<PAGE>


You acknowledge that you have been given twenty-one (21) days to consider both
this Release and the Agreement to which the Release is attached and that LTX
advised you to consult with an attorney of your own choosing prior to signing
the Agreement and the Release. Once you sign this Release, you will have seven
days to revoke your acceptance of it, which you may do by submitting to a
written statement of revocation to Stephen M. Jennings, Director at LTX
Corporation. If the seven-day period passes without your revocation, this
Release will become final and binding.


I hereby provide this Release as of the current date and acknowledge that the
execution of this Release is in further consideration of the payments and
benefits provided and which I have received or will receive under the Agreement
to which this Release is attached, to which I acknowledge I would not be
entitled to receive if I did not sign this Release.

/s/Roger W. Blethen                                  Date: October 31, 2005
-------------------
Roger W. Blethen