Executive Succession Agreement

This Executive Succession Agreement (the "Agreement"), dated November 5, 2004, is between CREDENCE SYSTEMS CORPORATION (the "Company") and GRAHAM J. SIDDALL ("Executive").

I. POSITION AND RESPONSIBILITIES

A. Term and Positions. Executive shall remain employed with the Company until December 31, 2007 (the "Term"). Until January 1, 2005, Executive shall continue serving in the capacity of Chief Executive Officer on a full-time basis. Effective January 1, 2005, Executive shall cease serving as Chief Executive Officer but shall remain employed with the Company in the position of Executive Chairman on a part-time basis. If Executive resigns as Chairman of the Company's Board of Directors and resigns from his membership on the Board of Directors during the Term, or if Executive is required to resign or otherwise removed from the Board during the Term, he shall remain employed by the Company for the remainder of the Term, with the responsibilities set forth in Exhibit A to this Agreement.

B. Duties. Executive shall perform such duties and responsibilities as are normally related to his assigned positions in accordance with the standards of the industry and any additional duties now or hereafter assigned to Executive by the Company and its Board of Directors. Executive shall abide by the rules, regulations, and practices as adopted or modified from time to time in the Company's sole discretion.

C. Other Activities. Except upon the prior written consent of the Company, Executive will not, during the Term, (i) accept any other employment, or (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that might interfere with Executive's duties and responsibilities hereunder or create a conflict of interest with the Company.

D. No Conflict. Executive represents and warrants that his execution of this Agreement, his employment with the Company, and the performance of his proposed duties under this Agreement shall not violate any obligations he may have to any other employer, person or entity, including any obligations with respect to proprietary or confidential information of any other person or entity.

II. COMPENSATION AND BENEFITS

A. Base Salary. In consideration of the services to be rendered under this Agreement, the Company shall pay Executive an annual base salary of Four Hundred and Thirty-Six Thousand Dollars ($436,000) ("Base Salary"). The Base Salary shall be paid in accordance with the Company's regularly established payroll practice.

B. Bonus. For fiscal years 2005, Executive shall be eligible for an annual target incentive bonus equal to One Hundred Percent (100%) of his then-current Base Salary ("Target Bonus"). During fiscal year 2005, Executive shall receive the percentage of his Target Bonus that equals the percentage of Target Bonus earned by the Company's Chief Executive Officer for the year, subject to a minimum payment of Fifty Percent (50%) of his Target Bonus. After the end of fiscal year 2005, Executive shall cease to be eligible for any bonus compensation.

C. Merger Success Bonus. Executive shall be eligible to receive a one-time lump-sum bonus of Four Hundred and Fifty Thousand Dollars ($450,000), which shall be payable in cash or restricted stock at the Company's election on May 28, 2005 ("Closing Date") (the "Merger Success Bonus"). Except as specifically provided herein, Executive must remain employed with the Company on the scheduled payment date in order to be entitled to this bonus payment.

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