SEVERANCE AND CONSULTING AGREEMENT

Exhibit 10.42

SEVERANCE AND CONSULTING AGREEMENT

JOHN KISPERT

This Severance and Consulting Agreement (“Agreement”) is entered into between KLA-Tencor Corporation (“Company”) and John Kispert (“Kispert” or “Participant”) together (the “Parties”) on the latest date signed by the Parties below.

1. The Parties have agreed that Kispert’s employment with the Company will end effective January 1, 2009 (“Termination Date”). Kispert will work until his Termination Date, unless otherwise advised by the Company, although nothing herein affects Kispert’s status as an at-will employee between now and his Termination Date.

2. Kispert will receive his final paycheck reflecting (i) all earned and unpaid salary, (ii) unreimbursed business expenses required to be reimbursed to Kispert in accordance with the Company’s business expense reimbursement policy, and (iii) pay for accrued but unused vacation that the Company is legally obligated to pay Kispert.

3. Kispert will also receive distributions due pursuant to the terms of the “KLA-Tencor Executive Deferred Savings Plan as amended and restated effective January 1, 2008” and Paragraph B(4) below.

4. Kispert’s coverage under the Company group health plans will end on January 1, 2009. However, Kispert will have the opportunity to exercise his option to continue this benefit under COBRA after that date. Kispert will be provided a benefits packet from ADP containing information on his COBRA rights and conversion to a direct pay plan. Kispert may call ADP directly at 1-866-998-8877, and ask for the COBRA unit if he has any questions about COBRA conversion. Additionally, Kispert agrees to keep the Company informed of any address changes in case the Company need to mail Kispert future W-2’s and/or other correspondence.

1. Because Kispert’s employment is being terminated by the Company other than for Cause as defined in the KLA -Tencor Corporation Executive Severance Plan (the “Plan”), incorporated herein, and provided he signs and does not revoke the release, he is entitled to benefits and obligations under the Plan, as modified herein, which include but are not limited to the following:

a. An amount equal to the Participant’s Severance Multiple multiplied by the Participant’s Base Salary, payable in equal installments over the Severance Period and in accordance with the Company’s normal payroll policies;

b. The Participant’s Prorated Annual Incentive as defined in the Plan.

c. Accelerated vesting with respect to the Participant’s then outstanding unvested equity awards with the Participant to receive additional vesting credit to be calculated based on the ratio of the number of months (with such number rounded up to include any fractional months) from the date of grant of any such awards to the Termination Date and the number of months (with such number rounded up to include any fractional months) in the total original vesting period of any such awards; notwithstanding the provisions in the applicable award agreements for the restricted stock units to the contrary, this Agreement serves as a modification (consistent with the transitional relief under IRS Notice 2007-86) of those award agreements to require that the shares underlying any of Kispert’s accelerated restricted stock units shall be paid at his Termination Date, subject to Section 4 below.

d. With respect to any of the Participant’s then outstanding options or stock appreciation rights shall have an extended post-termination exercise period equal to the earlier of (A) twelve (12) months from the date of termination, or (B) the original term of such.

2. The Company will also provide the following additional benefits in exchange for a release:

a. The Company will enter into a consulting agreement in Section C of this Agreement, below, with Kispert (the consideration for the consulting agreement is specified in Section C, below); and

b. Provided Kispert does not breach and successfully completes the two (2) year term of the consulting agreement, the Company will waive the mitigation provision of Section 4(g) of the Plan

3. Kispert hereby acknowledges and agrees that he will experience a termination of Service Provider status under the terms of the 2004 Equity Incentive Plan on the date of termination of employment as an Employee (as such term is defined under the 2004 Equity Incentive Plan) with the Company.

4. Kispert also hereby acknowledges and agrees that he will experience a “separation from service” (within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended “Section 409A”) on the Termination Date. In the event Kispert is a “specified employee” (within the meaning of Section 409A) as of the date of termination, as determined in the sole discretion of the Company, and if the following delay is required under Section 409A, the payments contemplated in Sections 1(a), 1(b), and 1(c) hereof that would otherwise have been due within the first six (6) months following Termination Date shall be paid in a lump sum (or for shares, in a single payment) one (1) day following the last day of the sixth (6 ^th ) complete calendar month following Kispert’s separation from service, or upon Kispert’s death, if earlier, and any remaining installments following such date shall be made in accordance with the original payment schedule. Kispert further acknowledges and agrees that his service as a consultant under the terms of the consulting agreement below shall not be taken into account for any purposes under the 2004 Equity Incentive Plan.

5. As a condition of receiving benefits under the Plan and in consideration of additional benefits, Kispert, on behalf of his heirs, spouse and assigns, hereby releases the Company and its past and present officers, directors, employees, attorneys, shareholders, insurers and legal successors, and all related entities and subsidiaries and their past and present officers, directors, employees, attorneys, shareholders, insurers and legal successors (collectively, the “Released Parties”) from any and all claims, liabilities, demands, and causes of action, whether known or unknown, which Kispert has, may have, or claims to have against the Company including but not limited to any claims based upon or arising out of Kispert’s employment or the termination of his employment with the Company heretofore occurring, which include, but are not limited to, any claims of wrongful termination, breach of contract, fraud, relating to the actual or right to purchase shares of Company stock, infliction of emotional distress, defamation, negligence, retaliation, or any claims of age, race, sex, disability, sexual orientation, religious, national origin or other discrimination or harassment under federal, state or local laws prohibiting such discrimination. Kispert expressly agrees and consents to the termination of his employment in exchange for the additional severance benefits outlined herein. Accordingly, the release agreement will take effect upon his signature. The only exceptions are any claims Kispert may have for unemployment, workers compensation, or as provided under Section 10(d) of this Section, and any right Kispert may have as a vested beneficiary under the Company pension plan.

Kispert agrees he has read section 1542 of the California Civil Code, which states:

A general release does not extend to claims which the creditor does not know or suspect to exist in his for her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

Kispert hereby waives any right or benefit that he has under section 1542, or any equivalent statute of another State, to the full extent that he may lawfully waive such rights with respect to this release agreement, and Kispert acknowledges that it is his intention to release all known or unknown claims that he has or may have against the Parties released above.

6. Kispert understands and agrees that breach of his consulting agreement, including breach of my fiduciary duty not to compete with the Company during the term of the consulting agreement or terminating such consulting agreement prior to the end of its two (2) year term shall constitute a material breach of this Agreement. In such case, the Company will owe Kispert no further benefits under this Agreement and the Plan.

7. Kispert agrees that for a period of two (2) years from the commencement date of this Agreement, Kispert shall not, at any time during the Severance Period, directly or indirectly solicit any individuals to leave the Company’s employ for any reason or interfere in any other manner with the employment relationships at the time existing between the Company and its current or prospective employees.

8. Kispert understands that the terms of the Employee Proprietary Information and Inventions Agreement that he signed when he joined the Company remains in force. Notwithstanding those obligations, Kispert will maintain the confidentiality of all Company’s confidential and proprietary information and comply with the terms and conditions of my Employee Proprietary Information and Inventions Agreement