AMENDMENT
                                       TO
                                 LOAN AGREEMENT

     This  Amendment to Loan  Agreement is entered into as of July 24, 1998 (the
"Amendment") by and between SILICON VALLEY BANK ("Agent") as Servicing Agent and
a Bank and BANK OF HAWAII  ("BoH");  SVB and BofH are  referred to  individually
herein  as  "Bank",  and  collectively  as the  "Banks")  and  CREDENCE  SYSTEMS
CORPORATION,  a Delaware  corporation  ("Credence"),  Credence  Korea,  a Korean
corporation,  and Credence Systems K.K., a Japanese corporation  (individually a
"Borrower" and collectively, the "Borrowers").

RECITALS

         Borrower and Bank are parties to that certain Loan  Agreement  dated as
of July 26, 1996, and amended by that certain  Amendment to Loan Agreement dated
as of July 25, 1997 (the "Agreement"). The parties desire to amend the Agreement
in accordance with the terms of this Amendment.

NOW, THEREFORE, the parties agree as follows:

         1.       The following definitions in Section 1. 1  are amended to read
as follows:

                  "Committed Line" means Forty Million Dollars ($40,000,000).

                  "Maturity Date" means July 23, 1999.

         2. The reference in the definition of Permitted  Indebtedness  item (c)
in Section 1. 1 to "Ten Million Dollars ($10,000,000)" is hereby amended to read
"Twenty Million Dollars ($20,000,000)".

         3. The reference in the definition of Permitted Investments item (c) in
Section 1. 1 is hereby deleted in its entirety and replaced by the following:

                  "(c) Any investments, including but not limited to investments
made in connection  with  acquisitions,  or the  repurchase of stock,  where the
consideration  paid by Borrower or any Subsidiary  consists of Borrower's equity
securities and cash, and the aggregate amount of cash paid after the date hereof
does not exceed Forty Million Dollars ($40,000,000)."

         4. The following new definitions are added to Section 1. 1:

                  "Borrowing Base" means an amount equal to eighty percent (80%)
of Eligible  Accounts,  as determined by Bank with  reference to the most recent
Borrowing Base Certificate delivered by Borrower.

                  "Eligible  Accounts"  means those  Accounts  that arise in the
ordinary  course of  Borrower's  business  that  comply  with all of  Borrower's
representations and warranties to Bank set forth in Section 5.4; provided,  that
standards of  eligibility  may be fixed and revised from time to time by Bank in
Bank's  reasonable  judgment  and  upon  notification  thereof  to  Borrower  in
accordance  with the  provisions  hereof.  Unless  otherwise  agreed to by Bank,
Eligible Accounts shall not include the following:

                  (a)  Accounts that the account debtor has failed to pay within
ninety (90) days of invoice date;

                  (b)  Accounts  with respect to an account  debtor, twenty-five
percent  (25%) of whose  Accounts  the  account  debtor has failed to pay within
ninety (90) days of invoice date;

                  (c)  Accounts  with  respect to which the account debtor is an
officer, employee, or agent of Borrower;

                                       1
<PAGE>

                  (d)  Accounts  with  respect  to which  goods  are  placed  on
consignment,  guaranteed sale, sale or return, sale on approval,  bill and hold,
or other  terms by reason of which the  payment  by the  account  debtor  may be
conditional;

                  (e) Accounts  with respect to which the  account  debtor is an
Affiliate of Borrower;

                  (f) Accounts with respect to which the account debtor does not
have its principal  place of business in the United States,  except for Eligible
Foreign Accounts;

                  (g) Accounts  with respect to which the account  debtor is the
United  States or any  department,  agency,  or  instrumentality  of the  United
States;

                  (h) Accounts  with respect to which  Borrower is liable to the
account  debtor for goods sold or services  rendered  by the  account  debtor to
Borrower,  but only to the extent of fifty percent (50%) of any amounts owing to
the account debtor against amounts owed to Borrower;

                  (i)  Accounts  with  respect to an account  debtor,  including
Subsidiaries  and  Affiliates,   whose  total  obligations  to  Borrower  exceed
twenty-five percent (25%) of all Accounts, to the extent such obligations exceed
the aforementioned percentage;

                  (j) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank believes,  in
its sole  discretion,  that  there may be a basis for  dispute  (but only to the
extent of the  amount  subject to such  dispute or claim),  or is subject to any
Insolvency Proceeding, or becomes insolvent, or goes out of business; and

                  (k)  Accounts  the   collection   of  which  Bank   reasonably
determines to be doubtful.

                  "Eligible  Foreign  Accounts"  means  Accounts with respect to
which the account  debtor does not have its  principal  place of business in the
United  States and that (i) are supported by one or more letters of credit in an
amount and of a tenor,  and issued by a  financial  institution,  acceptable  to
Bank, or (ii) that Bank approves on a case-by-case basis.

         5. Section 2. 1 (a) is hereby deleted in its entirety and replaced with
the following:

                  "(a) Advances. Subject to and upon the terms and conditions of
this Agreement, each Bank severally will make Advances to Borrowers as set forth
herein.  BofH shall make all of the Advances  requested  by Borrower  made in an
Optional  Currency;  provided  that the  aggregate  outstanding  Advances  in an
Optional  Currency  shall not exceed Five  Million  Dollars  ($5,000,000).  Upon
BofH's funding of such Optional Currency Advances, SVB shall fund all subsequent
requests for Advances by Borrower up to an amount equal to the total outstanding
Optional  Currency  Advances.  Thereafter,  or in the  event  that  there are no
requests for  Optional  Currency  Advances,  each Bank  severally  will make its
Percentage  Share of Advances in United  States  Dollars such that the aggregate
amount of each Bank's Advances under this Agreement shall not exceed such Bank's
Percentage  Share of the Committed Line minus the face amount of all outstanding
Letters  of Credit  (including  undrawn  and drawn but  unreimbursed  Letters of
Credit)  and  minus  the  reserve,  if any,  taken  under  Section  2. 1. 1 (d).
Notwithstanding the preceding  sentence,  if the aggregate amount of outstanding
Advances  made by each Bank plus  Letters of Credit  plus the  reserve,  if any,
taken  under  Section  2. 1. 1 (d)  exceed  $20,000,000,  then  Banks  will make
Advances to Borrower in an aggregate  amount not to exceed (i) the lesser of the
Committed Line or the Borrowing Base plus one hundred percent (100%) of Accounts
that are supported by one or more letters of credit in an amount and of a tenor,
and issued by a financial institution,  acceptable to Bank. Subject to the terms
and conditions of this Agreement,  amounts borrowed pursuant to this Section 2.1
may be repaid and reborrowed at any time during the term of this Agreement."

                                       2
<PAGE>

         6.  The  references  in  Sections  2. 1 (c) and 2. 1 (d) to "200  basis
points" are hereby amended to read "150 basis points".

         7.  The first  sentence in  Section 2. 1. 1 (c) is  hereby deleted  and
replaced with the following:

             "The maximum  aggregate  obligation at any one time for undrawn and
drawn  but  unreimbursed  Letters  of Credit  shall  be Twenty  Million  Dollars
($20,000,000)."

         8.  Section 2.2 is hereby deleted in its entirety and replaced with the
following:

             "2.2  Overadvances.  If, at  any  time  or   for any reason  that a
Borrowing  Base  Certificate  is  required  under  Section  5.3,  the sum of (i)
Advances  owed  by  Borrower  to  Banks  pursuant  to  Section  2. 1 (a) of this
Agreement plus (ii) the face amount of Letters of Credit issued under Section 2.
1.1 (including undrawn and drawn but unreimbursed  Letters of Credit) plus (iii)
the reserve, if any, taken under Section 2.1.1(d), is greater than the lesser of
the Committed  Line or the Borrowing  Base,  Borrower shall  immediately  pay to
Servicing  Agent,  in cash, the amount of such excess,  for payment to the Banks
according  to  their  respective  Percentage  Shares.  If at any time or for any
reason, the Equivalent Amount of Outstanding  Optional Currency Advances exceeds
Five Million Dollars  ($5,000,000),  Borrowers shall immediately pay to BofH the
amount of such excess."

         9.  The following  new  paragraph is hereby added at the end of Section
5.3:

             "In the event that  outstanding  Advances  under the Committed Line
exceed Twenty  Million  Dollar ($20,000,000), then  within twenty (20)days after
the last day of each  month, Borrower  shall  deliver to  Bank a  Borrowing Base
Certificate signed by a Responsible Officer in substantially the form of Exhibit
D hereto,  together  with  aged  listings of  accounts  receivable and  accounts
payable."

         10. The attached  Exhibit D hereby added and  incorporated by reference
into the Agreement.

         11. Section 5.9 is hereby deleted in its entirety and replaced with the
following:

             "5.9     Tangible Net Worth.  Maintain, on a consolidated basis, as
of the last day  of each  fiscal quarter, a Tangible Net Worth of  not less than
One Hundred Seventy-Five Million Dollars ($175,000,000)."

         12. The following new Section 5.12 shall be added:

             "5.12 Bona Fide Eligible Accounts.  The Eligible Accounts are  bona
fide existing  obligations.  The property giving rise to such Eligible  Accounts
has been  delivered to the account  debtor or to the account  debtor's agent for
immediate  shipment  to and  unconditional  acceptance  by the  account  debtor.
Borrower has not received notice of actual or imminent Insolvency  Proceeding of
any account  debtor that is included in any  Borrowing  Base  Certificate  as an
Eligible Account."

         13. Section 6.6 is hereby deleted in its entirety and replaced with the
following:

             "6.6  Distributions.   Pay   any   dividends  or   make  any  other
distribution  or payment on account of or in  redemption,  or  retirement of any
capital stock, except for so long as an Event of Default has not occurred and is
not continuing (and would not exist immediately after such payment)."

                                       3
<PAGE>

         14. On the  signature  page of the  Agreement  the reference to Silicon
Valley Bank's Maximum Commitment Amount:  $10,000,000 (50%) is hereby amended to
read $15,000,000 (37.5%).

         15. On the  signature  page of the  Agreement  the reference to Bank of
Hawaii's Maximum Commitment Amount:  $10,000,000 (50%) is hereby amended to read
$25,000,000 (62.5%).

          16. As a condition to the effectiveness of this Amendment, Banks shall
receive a fee of Seventy-Five Thousand Dollars ($75,000),  payable upon the date
hereof,  plus all Bank Expenses  incurred in connection  with the preparation of
this Amendment.

         17. As a condition to the  effectiveness of this Amendment,  Bank shall
have received, in substance satisfactory to Bank, the following:

                  (a)  resolutions by the  Borrowers  authorizing the  execution
and delivery of this Amendment;

                  (b)  Negative Pledge on Borrower's assets; and

                  (c)  such  other  documents,  and  completion  of  such  other
matters, as Bank may reasonably deem necessary or appropriate.

         18. Unless otherwise  defined,  all capitalized terms in this Amendment
shall be as defined in the Agreement.  Except as amended,  the Agreement remains
in full force and effect.

         19.  Borrower  represents  and warrants  that the  Representations  and
Warranties  contained  in the  Agreement  are true and correct as of the date of
this Amendment, and that no Event of Default has occurred and is continuing.

                                       4
<PAGE>

         20. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original,  but all of which together  shall  constitute
one instrument.

         IN WITNESS WHEREOF,  the undersigned have executed this Amendment as of
the first date above written.


                                   CREDENCE SYSTEMS CORPORATION

                              By:  /s/  DENNIS P. WOLF
                                  ---------------------------
                           Title:  Chief Financial Officer


                                   CREDENCE KOREA

                              By:  /s/  WILMER R. BOTTOMS
                                  ---------------------------
                           Title:  Chairman


                                   CREDENCE SYSTEMS K.K.

                              By:  /s/  WILMER R. BOTTOMS
                                  ---------------------------
                           Title:  Chairman


                                   SILICON VALLEY BANK

                              By:  /s/  DIANE THOMPSON
                                  ---------------------------
                           Title:  Vice President, Officer


                                   BANK OF HAWAII

                              By:  /s/  DAVID WARD
                                  ---------------------------
                           Title:  Corporate Banking Officer




                                      5