December 8, 1998




Dr. Wilmer R. Bottoms
3101 Alexis Drive
Palo Alto, CA 94301

Dear Bill:

          This  letter  agreement  is to confirm the  agreement  between you and
Credence  Systems  Corporation  (the  "Company")  regarding your separation from
employment with the Company and each of its subsidiaries.

          1.   Your employment  with the Company  terminated on December 8, 1998
               (the "Departure  Date").  Although you are not otherwise entitled
               to receive any further  compensation from the Company,  after the
               effective date of this letter  agreement the Company will pay you
               severance equal to your current base salary,  less all applicable
               withholdings,  for a period of one year  beginning on December 8,
               1998 and ending on December 7, 1999,  payable in accordance  with
               the Company's  standard payment policy. In the alternative,  upon
               your  request,  you  may  receive  a lump  sum  payment  of  such
               severance.

          2.   On December 31, 1998, you were paid $12,273.59,  which represents
               all of your  accrued but unused  vacation  through the  Departure
               Date and on December 18, 1998,  you were paid  $14,115.32,  which
               included all of your salary earned  through the  Departure  Date.
               The Company also provided you with all employee benefits through,
               but not after, the Departure Date.  Thereafter,  the Company will
               pay COBRA premiums on your behalf for one year from the Departure
               Date, to continue medical, dental and vision benefits for you and
               your  spouse.  Following  this  period,  you  may  continue  your
               insurance coverage pursuant to COBRA at your own expense.

          3.   You agree that prior to the execution of this letter you were not
               entitled  to  receive  any  further  monetary  payments  from the
               Company,  and that the only  payments and  benefits  that you are
               entitled  to  receive  from the  Company  in the future are those
               specified in this letter.

          4.   In consideration for receiving the severance  payments  described
               above,  you waive and  release  and  promise  never to assert any
               claims or causes of action, whether or not now known, against the
               Company or its predecessors,  successors, subsidiaries, officers,
               directors,  agents,  employees  and assigns,  with respect to any
               matter,  including but not limited to, any matter  arising out of
               or  connected  with  your  employment  with  the  Company  or the
               termination of that  employment,  including  without  limitation,
               claims of wrongful  discharge,  emotional  distress,  defamation,
               fraud,  breach of contract,  breach of the covenant of good faith
               and fair  dealing,  any claims of  discrimination  or  harassment
               based on sex, age, race,  national  origin,  disability or on any
               other basis,  under Title VII of the Civil Rights Act of 1964, as
               amended,  the California Fair Employment and Housing Act, the Age
               Discrimination  in  Employment  Act  of  1967,  as  amended,  the
               Americans  with   Disabilities   Act,  and  all  other  laws  and
               regulations   relating   to   employment.   Notwithstanding   the
               foregoing,  you shall be entitled to your indemnification  rights
               from   the   Company   under   the   Company's   Certificate   of
               Incorporation,  Bylaws and Indemnification Agreement entered into
               by you.

          5.   Other  than as set  forth in the last  sentence  of  paragraph  4
               above,  you  expressly  waive and  release any and all rights and
               benefits  under  Section  1542 of the Civil  Code of the State of
               California (or any analogous law of any other state), which reads
               as follows:  "A general  release  does not extend to claims which
               the  creditor  does not know or  suspect to exist in his favor at
               the time of executing the release,  which,  if known by him, must
               have materially affected his settlement with the debtor."

          6.   Nothing  contained in this letter shall  constitute or be treated
               as an  admission  by you  or the  Company  of  liability,  of any
               wrongdoing, or of any violation of law.

          7.   At  all  times  in the  future,  you  will  remain  bound  by the
               Company's Proprietary  Information and Invention Agreement signed
               by you.

          8.   As of the Departure Date, the status of your outstanding  options
               to purchase shares of the Company's  common stock (the "Options")
               is as set forth on the  attached  Exhibit A "Closing  Statement."
               Pursuant to the terms of the  existing  stock  option  agreements
               (the "Option  Agreements") for your Options and the provisions of
               the  Company's  Stock  Option  Plan (the  "Plan")  to which  your
               Options are subject,  your options are vested and  exercisable on
               the Departure  Date for a total of 362,250  shares.  You will not
               vest in any  additional  shares after  December 8, 1998. You will
               have  until  March 8,  1999 or June 8,  1999 as set  forth on the
               attached  Exhibit A to exercise your Options for up to the number
               of  shares  that are  vested  and  outstanding.  All of the other
               terms,  conditions  and  limitations  applicable  to your Options
               pursuant to the Option  Agreements  will remain in full force and
               effect.  You should  review  Exhibit A carefully  and discuss the
               terms of your Options with Jerry Bruce or corporate counsel.  You
               acknowledge  that you have no stock rights in the Company (or any
               parent or subsidiary)  other than those rights enumerated in this
               paragraph 8.

          9.   You agree that you will not  disclose to others the fact or terms
               of this letter,  except that you may disclose such information to
               your  attorney or  accountant  in order for such  individuals  to
               render services to you.

          10.  You agree  that at all times in the future you shall not make any
               negative or disparaging remark, verbal, written or otherwise,  to
               any party regarding the Company's employees, officers, directors,
               agents,  products,  services or business practices. The Company's
               executive  officers and directors  agree that at all times in the
               future  they will not make any  negative or  disparaging  remark,
               verbal, written or otherwise, to any party outside of the Company
               regarding  any matter  arising  out of your  employment  with the
               Company.

          11.  You agree that except as expressly provided in this letter,  this
               letter renders null and void any and all prior agreements between
               you and the Company.

          12.  If any provision of this agreement is found to be  unenforceable,
               it  shall  not  affect  the   enforceability   of  the  remaining
               provisions and the remaining  provisions shall be enforced to the
               extent permitted by law.

          13.  This agreement  shall be construed and  interpreted in accordance
               with the laws of the State of California.

          14.  You should understand that you are subject to numerous securities
               laws, rules and regulations, and you must seek your own advice on
               compliance  with such laws,  rules and  regulations.  The Company
               will not be responsible for advising you on such matters.

          15.  You have up to twenty-one  (21) days after receipt of this letter
               within  which to review it, and to discuss it with an attorney of
               your own  choosing  regarding  whether or not you wish to execute
               it.  Furthermore,  you have seven (7) days after you have  signed
               this letter during which time you may revoke this agreement.

          If you wish to revoke this  agreement,  you may do so by  delivering a
          letter of revocation to me.  Because of this  revocation  period,  you
          understand  that the  agreement  set  forth in this  letter  shall not
          become  effective or  enforceable  until the eighth day after the date
          you sign this letter.

Please indicate your agreement with the above terms by signing below.

                                          Sincerely,


                                          /s/ WARREN LAZAROW, ESQ.
                                          ------------------------

          My agreement with the above terms is signified by my signature  below.
Furthermore,  I acknowledge that I have read and understand this letter and that
I sign this release of all claims voluntarily. with full appreciation that at no
time in the future may I pursue any of the rights I have waived in this release.

Dated:  January 19, 1999                 /s/ WILMER R. BOTTOMS                  
                                         -------------------------
                                             Wilmer R. Bottoms