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                                                                   EXHIBIT 10.49


                                                               EXECUTION VERSION

                      SECOND AMENDMENT TO CREDIT AGREEMENT

        THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of May 14, 1999, is entered into by and among:

                (1) SILICON VALLEY GROUP, INC., a Delaware corporation
        ("Borrower");

                (2) Each of the financial institutions listed in Schedule I to
        the Credit Agreement referred to in Recital A below (collectively, the
        "Lenders"); and

                (3) ABN AMRO BANK N.V., acting through its San Francisco
        Representative Office, as agent for Lenders (in such capacity, "Agent").


                                    RECITALS

        A. Borrower, the Lenders and Agent are parties to a Credit Agreement
dated as of June 30, 1998, as amended by a First Amendment to Credit Agreement
dated as of October 23, 1998 (as so amended, the "Credit Agreement").

        B. Borrower has requested the Lenders and Agent to amend the Credit
Agreement in certain respects.

        C. The Lenders and Agent are willing so to amend the Credit Agreement
upon the terms and subject to the conditions set forth below.


                                    AGREEMENT

        NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, the Lenders and Agent hereby agree as follows:

        1. DEFINITIONS, INTERPRETATION. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the Credit Agreement, as amended by
this Amendment. The rules of construction set forth in Section I of the Credit
Agreement shall, to the extent not inconsistent with the terms of this
Amendment, apply to this Amendment and are hereby incorporated by reference.

        2. AMENDMENTS TO CREDIT AGREEMENT. Subject to the satisfaction of the
conditions set forth in Paragraph 4 below, the Credit Agreement is hereby
amended as follows:

               (a)    Paragraph 1.01 is amended as follows:



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                        (i) The definition of "Adjusted Net Income" set forth
                therein is amended to read in its entirety as follows:

                             "Adjusted Net Income" shall mean, with respect to
                      Borrower for any period, the sum, determined on a
                      consolidated basis in accordance with GAAP where
                      applicable, of:

                                        (a) The net income or net loss of
                                Borrower and its Subsidiaries for such period
                                after provision for income taxes;

                                                   plus

                                        (b) To the extent deducted in
                                calculating such net income or net loss for such
                                period under clause (a) above, all
                                non-recurring, non-cash charges taken by
                                Borrower and its Subsidiaries during such period
                                in connection with acquisitions permitted by
                                Subparagraph 5.02(d) (including charges for the
                                write-off of in-process research and development
                                costs relating to such acquisitions); provided,
                                however, that the sum of all such charges so
                                added to net income or net loss in calculating
                                the Adjusted Net Income of Borrower during the
                                period from the date of this Agreement through
                                the Maturity Date shall not at any time exceed
                                the Acquisition Charge Cap at such time;

                                                   plus

                                        (c) To the extent deducted in
                                calculating such net income or net loss for such
                                period under clause (a) above, all
                                Watkins-Johnson Charges taken by Borrower and
                                its Subsidiaries during such period; provided,
                                however, that the sum of all such charges so
                                added to net income or net loss in calculating
                                the Adjusted Net Income of Borrower during the
                                period from the date of this Agreement through
                                the Maturity Date shall not at any time exceed
                                Fifteen Million Dollars ($15,000,000).

                        (ii) The definition of "EBITDA" set forth therein is
                amended to read in its entirety as follows:

                             "EBITDA" shall mean, with respect to Borrower for
                      any period, the sum, determined on a consolidated basis in
                      accordance with GAAP, of the following:

                                        (a) The net income or net loss of
                                Borrower for such period before provision for
                                income taxes;

                                                  plus

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                                    (b) To the extent deducted in calculating
                             such net income or net loss for such period under
                             clause (a) above, the sum of (i) all Interest
                             Expenses of Borrower and its Subsidiaries
                             accruing during such period and (ii) all
                             depreciation and amortization expenses of Borrower
                             and its Subsidiaries accruing during such period;

                                                  minus

                                    (c) To the extent added in calculating such
                             net income or net loss for such period under clause
                             (a) above, all interest income of Borrower and its
                             Subsidiaries accruing during such period;

                                                  plus

                                    (d) To the extent deducted in calculating
                             such net income or net loss for such period under
                             clause (a) above, all non-recurring, non-cash
                             charges taken by Borrower and its Subsidiaries
                             during such period in connection with acquisitions
                             permitted by Subparagraph 5.02(d) (including
                             charges for the write-off of in-process research
                             and development costs relating to such
                             acquisitions); provided, however, that the sum of
                             all such charges so added to net income or net loss
                             in calculating the EBITDA of Borrower during the
                             period from the date of this Agreement through the
                             Maturity Date shall not at any time exceed the
                             Acquisition Charge Cap at such time;

                                                   plus

                                    (e) For the purposes of calculating the
                             Fixed Charge Coverage Ratio of Borrower for any
                             period only, to the extent deducted in calculating
                             such net income or net loss for such period under
                             clause (a) above, all Watkins-Johnson Charges taken
                             by Borrower and its Subsidiaries during such
                             period; provided, however, that the sum of all such
                             charges so added to net income or net loss in
                             calculating the EBITDA of Borrower during the
                             period from the date of this Agreement through the
                             Maturity Date shall not at any time exceed Fifteen
                             Million Dollars ($15,000,000).

                      (iii) The definition of "Fixed Charge Coverage Ratio" set
               forth therein is amended by changing the proviso at the end
               thereof to read in its entirety as follows:

                      Provided, however, that, in calculating Borrower's Fixed
                      Charge Coverage Ratio for the consecutive two-quarter
                      period ending on October 1, 1999 



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                and the consecutive three-quarter period ending on December 31,
                1999, the amounts to be used in clauses (a)(i), (a)(ii), (b)(i)
                and (b)(ii) shall be the actual respective amounts for such
                periods annualized.

                      (iv) A new definition of "Senior Debt/EBITDA", to read in
               its entirety as follows, is added thereto in the appropriate
               alphabetical order:

                             "Senior Debt/EBITDA Ratio" shall mean, with respect
                      to Borrower for any period, the ratio, determined on a
                      consolidated basis in accordance with GAAP, of:

                                        (a) Borrower's Senior Indebtedness on
                                the last day of such period;

                                                         to

                                        (b) Borrower's EBITDA for such period.

                      (v) The definition of "Tangible Net Worth" set forth
               therein is amended to read in its entirety as follows:

                             "Tangible Net Worth" shall mean, with respect to
                      Borrower at any time, the remainder at such time,
                      determined on a consolidated basis in accordance with
                      GAAP, of:

                                        (a) The sum of (i)the total assets of
                                Borrower and its Subsidiaries at such time plus
                                (ii) the after tax effect of the lesser of (A)
                                the sum of all Watkins-Johnson Charges taken by
                                Borrower and its Subsidiaries prior to such time
                                and (B) Fifteen Million Dollars ($15,000,000);

                                                        minus

                                        (b) The sum (without limitation and
                                without duplication of deductions) of (i) the
                                total liabilities of Borrower and its
                                Subsidiaries, (ii) all reserves established by
                                Borrower and its Subsidiaries for anticipated
                                losses and expenses (to the extent not deducted
                                in calculating total assets in clause (a)
                                above), and (iii) all intangible assets of
                                Borrower and its Subsidiaries (to the extent
                                included in calculating total assets in clause
                                (a) above), including, without limitation,
                                goodwill (including any amounts, however
                                designated on the balance sheet, representing
                                the cost of acquisition of businesses and
                                investments in excess of underlying tangible
                                assets), trademarks, trademark rights, trade
                                name rights, copyrights, patents, patent rights,
                                licenses, unamortized debt 



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                              discount, marketing expenses, organizational
                              expenses, non-compete agreements and deferred
                              research and development.

                        (vi) New definitions of "Watkins-Johnson Acquisition"
                and "Watkins-Johnson Charges", to read in their entirety as
                follows, are added thereto in the appropriate alphabetical
                order:

                             "Watkins-Johnson Acquisition" shall mean the
                      acquisition of certain assets and liabilities of the
                      Watkins-Johnson Semiconductor Equipment Group, a division
                      of Watkins-Johnson Company.

                             "Watkins-Johnson Charges" shall mean, with respect
                      to any period, all non-recurring charges taken by Borrower
                      and its Subsidiaries during such period in connection with
                      the Watkins-Johnson Acquisition (including charges for the
                      write-off of in-process research and development costs,
                      consolidation, relocation and other charges relating to
                      such acquisition).

               (b) Subparagraph 5.02(b) is amended by changing the reference to
        "clause (xi) of Subparagraph 5.02(a)" set forth in clause (xiv) thereof
        to "clause (xii) of Subparagraph 5.02(a)".

               (c) Subparagraph 5.03(b) is hereby amended to read in its
        entirety as follows:

                      (b) Fixed Charge Coverage Ratio. Borrower shall not permit
               its Fixed Charge Coverage Ratio for any period set forth below to
               be less than the ratio set forth opposite such period below:

                      The consecutive two -quarter
                             period beginning on April
                             3, 1999 and ending on
                             October 1, 1999                     2.00;

                      The consecutive three-quarter
                             period beginning on April
                             3, 1999 and ending on
                             December 31, 1999                   2.50;

                      The consecutive four-quarter
                             period beginning on April
                             3, 1999 and ending on
                             March 31, 2000                      3.00;

                      Each consecutive four-quarter
                             period ending on the
                             last day of each quarter


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                             thereafter                          3.50.

               (d) Subparagraph 5.03(d) is hereby amended to read in its
entirety as follows:

                        (d) Tangible Net Worth. Borrower shall not permit its
                Tangible Net Worth on the last day of any fiscal quarter (such
                date to be referred to in this Subparagraph 5.03(d) as a
                "determination date") which occurs on or after March 31, 1999
                (such date to be referred to in this Subparagraph 5.03(d) as the
                "base date") to be less than the sum on such determination date
                of the following:

                                (i) Five Hundred Thirteen Million Three Hundred
                        Thousand Dollars ($513,300,000);

                                              plus

                                (ii) Eighty percent (80%) of the sum of:

                                        (A) The sum of Borrower's consolidated
                                quarterly net income (ignoring any quarterly
                                losses) for each fiscal quarter after the base
                                date through and including the fiscal quarter
                                ending on the determination date; and

                                        (B) The after tax effect of the lesser
                                of (A) the sum of all Watkins-Johnson Charges
                                taken by Borrower and its Subsidiaries for each
                                fiscal quarter after the base date through and
                                including the fiscal quarter ending on the
                                determination date, and (B) Fifteen Million
                                Dollars ($15,000,000);

                                              plus

                                (iii) Seventy-five percent (75%) of the Net
                        Proceeds of all Equity Securities issued by Borrower and
                        its Subsidiaries (to Persons other than Borrower or its
                        Subsidiaries) during the period commencing on the base
                        date and ending on the determination date;

                                             plus

                                (iv) Seventy-five percent (75%) of the principal
                        amount of all debt securities of Borrower and its
                        Subsidiaries converted into Equity Securities of
                        Borrower and its Subsidiaries during the period
                        commencing on the base date and ending on the
                        determination date.

                                             minus

                                (v) The lesser of (A) the aggregate amount paid
                        by Borrower (including reasonable expenses incurred in
                        connection therewith) to repurchase up to one million
                        shares of its common stock during the period 



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                        commencing on the base date and ending on the
                        determination date and (B) $10,000,000.

               (e) Subparagraph 5.03(e) is hereby amended to read in its
       entirety as follows:

                     (e) Profitability.

                             (i) For the quarter ending April 2, 1999, Borrower
                      shall not permit its Adjusted Net Income to be a loss
                      exceeding $19,000,000.

                             (ii) During the period October 3, 1998 - April 2,
                      1999, Borrower shall not permit the sum of its quarterly
                      losses based upon its Adjusted Net Income for each quarter
                      (excluding any quarterly profits) to exceed $26,000,000.

                             (iii) Borrower shall not permit its Adjusted Net
                      Income for the consecutive three-quarter period beginning
                      on April 3, 1999 and ending on December 31, 1999 to be a
                      loss.

                             (iv) Thereafter, Borrower shall not permit (A) its
                      Adjusted Net Income for any quarter to be a loss exceeding
                      $10,000,000, (B) its Adjusted Net Income to be a loss in
                      more than two quarters in any consecutive four-quarter
                      period (commencing with the consecutive four-quarter
                      period ending on March 31, 2000) or (C) its Adjusted Net
                      Income for any consecutive four-quarter period (commencing
                      with the consecutive four-quarter period ending on March
                      31, 2000) to be a loss.

        3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Agent and the Lenders that the following are true and correct on the
date of this Amendment and that, after giving effect to the amendments set forth
in Paragraph 2 above, the following will be true and correct on the Effective
Date (as defined below):

               (a) The representations and warranties of Borrower and its
        Subsidiaries set forth in Paragraph 4.01 of the Credit Agreement and in
        the other Credit Documents are true and correct in all material
        respects;

               (b) No Default has occurred and is continuing; and

               (c) Each of the Credit Documents is in full force and effect.

(Without limiting the scope of the term "Credit Documents," Borrower expressly
acknowledges in making the representations and warranties set forth in this
Paragraph 3 that, on and after the date hereof, such term includes this
Amendment.)

        4. EFFECTIVE DATE. The amendments effected by Paragraph 2 above shall
become effective on May 14, 1999 (the "Effective Date"), subject to receipt by
Agent and the Lenders on 



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or prior to the Effective Date of the following, each in form and substance
satisfactory to Agent, the Lenders and their respective counsel:

                (a) This Amendment duly executed by Borrower, the Required
        Lenders and Agent;

                (b) A Certificate of the Secretary of Borrower, dated the
        Effective Date, certifying that the Restated Certificate of
        Incorporation and Bylaws of Borrower, in the form delivered to Agent on
        the Closing Date, are in full force and effect and have not been
        amended, supplemented, revoked or repealed since such date;

               (c) A nonrefundable amendment fee equal to 0.150% of each
        Lender's Commitment, to be paid to each Lender that executes this
        Amendment on or before May 14, 1999; and

               (d) Such other evidence as Agent or any Lender may reasonably
        request to establish the accuracy and completeness of the
        representations and warranties and the compliance with the terms and
        conditions contained in this Amendment and the other Credit Documents.

        5. EFFECT OF THIS AMENDMENT. On and after the Effective Date, each
reference in the Credit Agreement and the other Credit Documents to the Credit
Agreement shall mean the Credit Agreement as amended hereby. Except as
specifically amended above, (a) the Credit Agreement and the other Credit
Documents shall remain in full force and effect and are hereby ratified and
confirmed and (b) the execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Lenders or Agent, nor constitute a waiver of any
provision of the Credit Agreement or any other Credit Document.


        6. MISCELLANEOUS.

                (a) Counterparts. This Amendment may be executed in any number
        of identical counterparts, any set of which signed by all the parties
        hereto shall be deemed to constitute a complete, executed original for
        all purposes.

                (b) Headings. Headings in this Amendment are for convenience of
        reference only and are not part of the substance hereof.

                (c) Governing Law. This Amendment shall be governed by and
        construed in accordance with the laws of the State of California without
        reference to conflicts of law rules.


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        IN WITNESS WHEREOF, Borrower, Agent and the Lenders have caused this
Amendment to be executed as of the day and year first above written.

BORROWER:                           SILICON VALLEY GROUP, INC.


                                    By:                         
                                       -----------------------------------------
                                         Name:                  
                                              ----------------------------------
                                         Title:                 
                                               ---------------------------------


AGENT:                              ABN AMRO BANK, N.V.


                                    By:                         
                                       -----------------------------------------
                                         Name:                  
                                              ----------------------------------
                                         Title:                 
                                               ---------------------------------


                                    By:                         
                                       -----------------------------------------
                                         Name:                  
                                              ----------------------------------
                                         Title:                 
                                               ---------------------------------


LENDERS:                            ABN AMRO BANK, N.V.


                                    By:                         
                                       -----------------------------------------
                                         Name:                  
                                              ----------------------------------
                                         Title:                 
                                               ---------------------------------


                                    By:                         
                                       -----------------------------------------
                                         Name:                  
                                              ----------------------------------
                                         Title:                 
                                               ---------------------------------


                                    COMERICA BANK-CALIFORNIA


                                    By:                         
                                       -----------------------------------------
                                         Name:                  
                                              ----------------------------------
                                         Title:                 
                                               ---------------------------------



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                                    FLEET NATIONAL BANK


                                    By:                         
                                       -----------------------------------------
                                         Name:                  
                                              ----------------------------------
                                         Title:                 
                                               ---------------------------------


                                    KEYBANK NATIONAL ASSOCIATION



                                    By:                         
                                       -----------------------------------------
                                         Name:                  
                                              ----------------------------------
                                         Title:                 
                                               ---------------------------------


                                    WELLS FARGO BANK, N.A.


                                    By:                         
                                       -----------------------------------------
                                         Name:                  
                                              ----------------------------------
                                         Title:                 
                                               ---------------------------------



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