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                                                                    EXHIBIT 10.1


                             KLA-TENCOR CORPORATION

             AMENDED AND RESTATED 1997 EMPLOYEE STOCK PURCHASE PLAN

                 (Amended and Restated as of November 17, 1998)

     The following constitute the provisions of the 1997 Employee Stock Purchase
Plan, as amended, (the "Plan") of KLA-Tencor Corporation (the "Company").
Certain definitions of terms used in the Plan are provided in Section 2 below.

1.   PURPOSE

     The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock of the
Company through accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Code. The provisions of the Plan shall, accordingly, be
construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code. The Plan will also be extended to
employees of foreign subsidiaries subject to adjustments, in the sole discretion
of the Board of Directors, to take into account the requirements of the local
laws associated with the particular subsidiary. These local requirements may not
provide the same favorable tax consequences as are available to participants in
the United States.

2.   DEFINITIONS

     (a)  "BOARD" shall mean the Board of Directors of the Company.

     (b)  "CODE" shall mean the Internal Revenue Code of 1986, as amended.

     (c)  "COMMON STOCK" shall mean the Common Stock, $.001 par value, of the
          Company.

     (d)  "COMPANY" shall mean KLA-Tencor Corporation, a Delaware corporation.

     (e)  "COMPENSATION" Compensation shall mean all amounts includable as
"wages" subject to tax under section 3101(a) of the Code without applying the
dollar limitation of Section 3121(a) of the Code. Accordingly, Compensation
shall include, without limitation, salaries, commissions, bonuses and overtime.
Compensation shall not include reimbursements of expenses, allowances, or any
amount deemed received without the actual transfer of cash or any Company
contributions or payments to any trust, fund, or plan to provide retirement,
pension, profit sharing, health, welfare, death, insurance or similar benefits
to or on behalf of such Participant or any other payments not specifically
referenced above, except to the extent that the inclusion of any such item with
respect to all Participants on a nondiscriminatory basis is specifically
approved by the Board.

     (f)  "CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Company, provided that such

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leave is for a period of not more than 90 days or re-employment upon the
expiration of such leave is guaranteed by contract or statute.

     (g)  "DESIGNATED SUBSIDIARIES" shall mean the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.

     (h)  "EMPLOYEE" shall mean any person, including an officer, who is
customarily employed for at least 20 hours per week and more than five months in
a calendar year by the Company or one of its Designated Subsidiaries.

     (i)  "ENROLLMENT DATE" shall mean the first day of each Offering Period.

     (j)  "EXERCISE DATE" shall mean each December 31 and June 30 of each
Offering Period of the Plan.

     (k)  "EXERCISE PERIOD" shall mean a period commencing on January 1 and
terminating on the following June 30 or commencing on July 1 and terminating on
the following December 31.

     (l)  "OFFERING PERIOD" shall mean a period of twenty-four (24) months
commencing on January 1 and July 1 of each year during which an option granted
pursuant to the Plan may be exercised.

     (m)  "PLAN" shall mean this 1997 Employee Stock Purchase Plan.

     (n)  "SUBSIDIARY" shall mean a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.

3.   ELIGIBILITY

     (a)  Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan, subject to
limitations imposed by Section 423(b) of the Code or other applicable local law.

     (b)  Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own stock and/or
hold outstanding options to purchase stock possessing five percent or more of
the total combined voting power or value of all classes of stock of the Company
or of any Subsidiary, or (ii) which permits such Employee's rights to purchase
stock under all employee stock purchase plans of the Company and its
Subsidiaries to accrue at a rate which exceeds US$25,000 of fair market value of
such stock (determined at the time such option is granted) for each calendar
year in which such option is outstanding at any time.

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4.   OFFERING PERIODS

     The Plan shall be implemented by consecutive Offering Periods with a new
Offering Period commencing on January 1 and July 1 of each year, commencing
January 1, 1998, or as otherwise determined by the Board, and continuing
thereafter until terminated in accordance with Section 19 hereof. The Board
shall have the power to change the duration of Offering Periods with respect to
future offerings without stockholder approval if such change is announced at
least 15 days prior to the scheduled beginning of the first Offering Period to
be affected.

5.   PARTICIPATION

     (a)  An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions on the form
provided by the Company and filing it with the Company's payroll office prior to
the applicable Enrollment Date, unless a later time for filing the subscription
agreement is set by the Board for all eligible Employees with respect to a given
Offering Period. An eligible Employee may participate in an Offering Period only
if, as of the Enrollment Date of such Offering Period, such Employee is not
participating in any prior Offering Period which is continuing at the time of
such proposed enrollment.

     (b)  Payroll deductions for a participant shall commence on the first
payroll date following the Enrollment Date and shall end on the last payroll
date in the Offering Period to which such authorization is applicable, unless
sooner terminated by the participant as provided in Section 10.

6.   PAYROLL DEDUCTIONS

     (a)  At the time a participant files his subscription agreement, he shall
elect to have payroll deductions made on each pay date during the Offering
Period in an amount not exceeding 10% of the Compensation which he receives on
each pay date during the Offering Period, and the aggregate of such payroll
deductions during the Offering Period shall not exceed 10% of his aggregate
Compensation during said Offering Period.

     (b)  All payroll deductions made by a participant shall be credited to his
account under the Plan. A participant may not make any additional payments into
such account.

     (c)  A participant may discontinue his participation in the Plan as
provided in Section 10, may lower the rate of his payroll deductions effective
immediately or may increase (but not above 10%) the rate of his payroll
deductions effective as of the first date of the next Exercise Period within
such Offering Period by completing or filing with the Company a new
authorization for payroll deductions.

     (d)  Notwithstanding the foregoing, to the extent necessary to comply with
section 423(b)(8) of the Code and Section 3(b) herein, a participant's payroll
deductions may be decreased to zero percent at such time during any Exercise
Period which is scheduled to end during the current calendar year. Payroll
deductions shall recommence at the rate provided in such participant's
subscription agreement at the beginning of the first Exercise Period which is
scheduled to end in the following calendar year, unless terminated by the
participant as provided in Section 10.

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7.   GRANT OF OPTION

     (a)  On the Enrollment Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option to purchase on
each Exercise Date during such Offering Period (at the per share option price)
up to a number of shares of the Company's Common Stock determined by dividing
such Employee's payroll deductions accumulated during such Exercise Period by
85% of the fair market value of a share of the Company's Common Stock on the
Enrollment Date or on the Exercise Date, whichever is lower, provided that the
number of shares subject to the option shall not exceed 200% of the number of
shares determined by dividing 10% of the Employee's Compensation over the
Offering Period (determined as of the Enrollment Date) by 85% of the fair market
value of a share of the Company's Common Stock on the Enrollment Date, subject
to the limitations set forth in Sections 3(b) and 12 hereof. Fair market value
of a share of the Company's Common Stock shall be determined as provided in
Section 7(b) herein.

     (b)  The option price per share of the shares offered in a given Offering
Period shall be the lower of: (i) 85% of the fair market value of a share of the
Common Stock of the Company on the Enrollment Date; or (ii) 85% of the fair
market value of a share of the Common Stock of the Company on the applicable
Exercise Date. The fair market value of the Company's Common Stock on a given
date shall be determined by the Board in its discretion; provided, however, that
where there is a public market for the Common Stock, the fair market value per
share shall be the closing price of the Common Stock for such date, as reported
by Nasdaq National Market. If a closing price is not available for an Enrollment
Date or an Exercise Date, the fair market value of a share of the Common Stock
of the Company on such date shall be the fair market value of a share of the
Common Stock of the Company on the last business day prior to such date.

8.   EXERCISE OF OPTION

     Unless a participant withdraws from the Plan as provided in Section 10, his
option for the purchase of shares will be exercised automatically on each
Exercise Date of the Offering Period, and the maximum number of full shares
subject to his option will be purchased for him at the applicable option price
with the accumulated payroll deductions in his account. During his lifetime, a
participant's option to purchase shares hereunder is exercisable only by him.
Any amount remaining in the participant's account after an Exercise Date shall
be held in the account until the next Exercise Date in such Offering Period,
unless the Offering Period has been over-subscribed or has terminated with such
Exercise Date, in which event such amount shall be refunded to the participant.

9.   DELIVERY

     As promptly as practicable after each Exercise Date, the Company shall
arrange the delivery to each participant, as appropriate, of a certificate
representing the shares purchased upon exercise of his option.

10.  WITHDRAWAL; TERMINATION OF EMPLOYMENT

     (a)  A participant may withdraw all but not less than all of the payroll
deductions credited to his account under the Plan at any time by giving written
notice to the Company. All of the

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participant's payroll deductions credited to his account will be paid to him
promptly after receipt of his notice of withdrawal and his participation in the
Plan will be automatically terminated, and no further payroll deductions for the
purchase of shares will be made. Payroll deductions will not resume on behalf of
a participant who has withdrawn from the Plan unless written notice is delivered
to the Company within the open enrollment period preceding the commencement of
an Exercise Period directing the Company to resume payroll deductions.

     (b)  Upon termination of the participant's Continuous Status as an Employee
prior to the Exercise Date of an Offering Period for any reason, including
retirement or death, the payroll deductions credited to the participant's
account will be returned to the participant or, in the case of death, to the
person or persons entitled thereto under Section 14, and such participant's
option will be automatically terminated.

     (c)  If an Employee fails to maintain Continuous Status as an Employee for
at least 20 hours per week during an Offering Period in which the Employee is a
participant, he will be deemed to have elected to withdraw from the Plan and the
payroll deductions credited to his account will be returned to him and his
option terminated.

     (d)  A participant's withdrawal from an Offering Period will not have any
effect upon his eligibility to participate in a succeeding Offering Period or in
any similar plan which may hereafter be adopted by the Company.

11.  INTEREST

     No interest shall accrue on the payroll deductions of a participant in the
Plan.

12.  STOCK

     (a)  Subject to adjustment as provided in Section 18, the maximum aggregate
number of shares of the Company's Common Stock which shall be made available for
sale under the Plan shall be 1,200,000, increased on the first day of each
fiscal year of the Company beginning on and after July 1, 1999 by a number of
shares of the Company's Common Stock equal to the lesser of (i) 2,000,000
shares, or (ii) the number of shares which the Company estimates (based on the
previous 12-month period) it will be required to issue under the Plan during the
forthcoming fiscal year. Subject to adjustment as provided in Section 18, shares
issuable under the Plan shall consist of authorized but unissued or reacquired
shares of the Company's Common Stock or any combination thereof. If on a given
Exercise Date the number of shares with respect to which options are to be
exercised exceeds the number of shares then available, the Company shall make a
pro rata allocation of the shares remaining available for option grant in as
uniform a manner as shall be practicable and as it shall determine to be
equitable. In such event, the Company shall give written notice of such
reduction of the number of shares subject to the option to each Employee
affected thereby and shall similarly reduce the rate of payroll deductions, if
necessary.

     (b)  The participant will have no interest or voting right in shares
covered by his option until such option has been exercised.

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     (c)  Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.

13.  ADMINISTRATION

     The Plan shall be administered by the Board of Directors of the Company or
a committee appointed by the Board. The Board may delegate routine matters to
management. The administration, interpretation or application of the Plan by the
Board or its committee shall be final, conclusive and binding upon all
participants. Members of the Board who are eligible Employees are permitted to
participate in the Plan, provided that:

     (a)  Members of the Board who are eligible to participate in the Plan may
not vote on any matter affecting the administration of the Plan or the grant of
any option pursuant to the Plan.

     (b)  If a committee is established to administer the Plan, no member of the
Board who is eligible to participate in the Plan may be a member of the
committee.

14.  DESIGNATION OF BENEFICIARY

     (a)  A participant may file a written designation of a beneficiary who is
to receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of the
Offering Period but prior to delivery to him of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to the exercise of the option.

     (b)  Such designation of beneficiary may be changed by the participant at
any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

15.  TRANSFERABILITY

     Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive shares under the
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
(other than by will, the laws of descent and distribution or as provided in
Section 14 hereof) by the participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that the Company may
treat such act as an election to withdraw funds in accordance with Section 10.

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16.  USE OF FUNDS

     All payroll deductions received or held by the Company under the Plan may
be used by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such payroll deductions.

17.  REPORTS

     Individual accounts will be maintained for each participant in the Plan.
Statements of account will be given to participating Employees semi-annually
promptly following each Exercise Date, which statements will set forth the
amounts of payroll deductions, the per share purchase price, the number of
shares purchased and the remaining cash balance, if any.

18.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

     Subject to any required action by the stockholders of the Company, the
number of shares of Common Stock covered by each option under the Plan which has
not yet been exercised (including the increase set forth in Section 12 hereof)
and the number of shares of Common Stock which have been authorized for issuance
under the Plan but have not yet been placed under option (collectively, the
"Reserves"), as well as the price per share of Common Stock covered by each
option under the Plan which has not yet been exercised, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split or the payment of a stock dividend (but only
on the Common Stock) or any other increase or decrease in the number of shares
of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration".
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock subject to an option.

     In the event of the proposed dissolution or liquidation of the Company, the
Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another entity, the Board, in its sole
discretion, may provide that (i) each option under the Plan shall be assumed,
(ii) an equivalent option shall be substituted by such successor entity or a
parent or subsidiary of such successor entity, or in lieu of such assumption or
substitution, that the participant shall have the right to exercise the option,
including shares as to which the option would not otherwise be exercisable, or
(iii) the Plan shall terminate and a shortened Exercise Period may take place or
a participant's contributions returned. If the Board makes an option fully
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Board shall notify the participant that the option shall be
fully exercisable for a period of 30 days from the date of such notice, and the
option will terminate upon the expiration of such period.

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     The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per share
of Common Stock covered by each outstanding option, if the Company effects one
or more reorganizations, recapitalizations, rights offerings or other increases
or decreases of the shares of its outstanding Common Stock, and if the Company
is being consolidated with or merged into any other corporation.

19.  AMENDMENT OR TERMINATION

     The Board of Directors of the Company may at any time terminate or amend
the Plan. No such termination can affect options previously granted, nor may an
amendment make any change in any option theretofore granted which adversely
affects the rights of any participant, nor may an amendment be made without
prior approval of the stockholders of the Company if such amendment is required
by law or otherwise to be approved by the stockholders.

     Amendments to the Code which impact the Plan shall be automatically
implemented without further action by the Board unless such amendments require
independent action by either the Board or the stockholders.

     In the event the Board determines that the ongoing operation of the Plan
may result in unfavorable financial accounting consequences, the Board may in
any manner it determines, in its sole discretion, and, to the extent necessary
or desirable, modify or amend the Plan to reduce or eliminate such accounting
consequence including, but not limited to altering the Purchase Price for any
Offering Period including an Offering Period underway at the time of the change
in Purchase Price. Such modifications or amendments shall not require
stockholder approval or the consent of any Plan participants.

20.  NOTICES

     All notices or other communications by a participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.

21.  STOCKHOLDER APPROVAL

     Continuance of the Plan shall be subject to approval by the stockholders of
the Company within 12 months before or after the date the Plan is adopted. If
such stockholder approval is obtained at a duly held stockholders meeting, it
may be obtained by the affirmative vote of the holders of a majority of the
outstanding shares of the Company present or represented and entitled to vote
thereon, which approval shall be:

     (a)  (i)  solicited substantially in accordance with Section 14(a) of the
Securities Exchange Act of 1934, as amended (the "Act") and the rules and
regulations promulgated thereunder, or

          (ii) solicited after the Company has furnished in writing to the
holders entitled to vote substantially the same information concerning the Plan
as that which would be required by the

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rules and regulations in effect under Section 14(a) of the Act at the time such
information is furnished; and

     (b)  obtained at or prior to the first annual meeting of stockholders held
subsequent to the first registration of Common Stock under Section 12 of the
Act.

In the case of approval by written consent, it must be obtained by the unanimous
written consent of all stockholders of the Company.

22.  CONDITIONS UPON ISSUANCE OF SHARES

     Shares shall not be issued with respect to an option unless the exercise of
such option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

     As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.

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