EXECUTIVE EMPLOYMENT AGREEMENT

EXHIBIT 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (this “Agreement”), dated April 13, 2007, is between CREDENCE SYSTEMS CORPORATION (the “Company”) and JOY E. LEO (“Executive”).

A. Position . Effective as of April 16, 2007, Executive is employed by the Company to render services to the Company. Effective with the filing with the Securities and Exchange Commission of the Company’s quarterly report on form 10-Q for the second fiscal quarter FY 2007, contemplated to be filed on or about June 8, 2007, Executive is appointed to the position of Senior Vice President, Chief Financial Officer and Secretary, reporting to the Company’s Chief Executive Officer. Executive shall perform such duties and responsibilities as are normally related to such position in accordance with the standards of the industry and any additional duties now or hereafter assigned to Executive by the Company. Executive shall abide by the rules, regulations, and practices as adopted or modified from time to time in the Company’s sole discretion.

B. Other Activities . Except upon the prior written consent of the Company, Executive will not, during the term of this Agreement: (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. The following shall be understood not to interfere with Executive’s duties and responsibilities hereunder: (i) Executive’s management of her personal finances, (ii) Executive’s participation in charitable organizations; and (iii) Executive’s participation on the Advisory Board or similar body of the companies listed on Schedule I to this Agreement (as amended by mutual agreement of the parties from time to time) and their respective affiliates, provided that Executive shall not serve as an operating officer of any such company.

C. No Conflict . Executive represents and warrants that her execution of this Agreement, her employment with the Company, and the performance of her proposed duties under this Agreement shall not violate any obligations she 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.

A. Base Salary . In consideration of the services to be rendered under this Agreement, the Company shall pay Executive an annual base salary of Three Hundred and Twenty-five Thousand Dollars ($325,000) (“Base Salary”). The Base Salary shall be paid in accordance with the Company’s regularly established payroll practice. Executive’s Base Salary will be reviewed on an annual basis in accordance with the established procedures of the Company for adjusting salaries for similarly situated employees and may be adjusted in the sole discretion of the Company.

B. Bonuses . Executive shall be eligible to receive the following bonuses:

1. A “sign-on bonus” of One Hundred Twenty Thousand Dollars ($120,000), payable with Executive’s first paycheck paid in accordance with the Company’s regularly established payroll practice after the date Executive commences employment with the Company, which bonus shall be subject to repayment to the Company by Executive in the event Executive, prior to that date two years after the date of this Agreement, terminates her employment with the Company (other than for “Good Reason” or “Good Reason” after a “Change in Control”) or Executive is terminated by the Company “For Cause.” In the event of a termination giving rise to an obligation by Executive to repay the “sign-on bonus,” the amount of the “sign-on bonus” subject to repayment shall be the pro rata portion of the “sign-on bonus” determined multiplying the original bonus amount by a fraction, the numerator of which shall be the number of complete months of service by Executive under this Agreement and the denominator of which shall be twenty-four (24);

2. An annual target incentive bonus equal to sixty percent (60%) of her then-current annual salary compensation (“Target Bonus”), based on Executive’s achievement of performance objectives determined by the Company; and

3. A “special bonus” either with a target equal to twenty-five percent (25%) of the Chief Executive Officer’s target “special bonus” or providing such other remuneration as the parties shall mutually agree, which bonus shall be based on the Company’s achievement of performance objectives determined by the Company’s Board of Directors not later than two months after the date hereof.

C. Initial Equity Grants . Contemporaneous with the commencement of Executive’s employment with the Company, the Company shall grant to Executive an option to purchase Two Hundred Fifty Thousand (250,000) shares of the Company’s Common Stock. The Option Shares shall vest according to the following schedule, subject to Executive’s continued service to the Company: (i) 12.5% of the Option Shares shall vest on the first six months of the date of grant, and (ii) the remaining 87.5% of the Option Shares shall vest in fourteen equal and successive quarterly installments upon the Executive’s completion of each additional three (3) month period of service thereafter. In addition, contemporaneous with the commencement of Executive’s employment, Executive will be granted Fifty Thousand (50,000) restricted shares of the Company’s Common Stock (the “Restricted Shares”), subject to the terms of the Company’s Restricted Stock Agreement (the “Restricted Stock Agreement”) and the Company’s Stock Incentive Plan. The Restricted Shares shall vest according to the following schedule, subject to Executive’s continued service to the Company: 25% of the Restricted Shares shall vest on the first anniversary of the date of grant, and an additional 25% of the Restricted Shares shall vest on each anniversary thereafter for the next three years. The date of grant and the exercise or purchase price per share of the Restricted Shares shall be determined by the Board.

D. Benefits . Executive shall be eligible to participate in the benefits made generally available by the Company to similarly-situated executives, in accordance with the benefit plans established by the Company, and as may be amended from time to time in the Company’s sole discretion.

E. Expenses . The Company shall reimburse Executive for reasonable business expenses incurred in the performance of Executive’s duties hereunder in accordance with the Company’s expense reimbursement guidelines.

A. At-Will Termination by Company . Executive’s employment with the Company shall be “at-will” at all times. The Company may terminate Executive’s employment with the Company at any time, without any advance notice, for any reason or no reason at all, notwithstanding anything to the contrary contained in or arising from any statements, policies or practices of the Company relating to the employment, discipline or termination of its employees. Upon and after such termination, all obligations of the Company under this Agreement shall cease, except as otherwise provided herein.

B. Separation Benefits . Except in situations where the employment of Executive is terminated For Cause, By Death or By Disability (as defined in Section IV below), in the event that the Company terminates Executive’s employment at any time, Executive will be eligible to receive the following benefits (collectively, “Separation Benefits”):

1. An amount equal to: (a) one hundred percent (100%) of Executive’s then-current Base Salary; plus (b) one hundred percent (100%) of Executive’s annual Target Bonus, payable in equal monthly installments over the twelve (12) month period following the date of such termination (“Salary Continuation Period”);

2. Accelerated vesting of Executive’s outstanding and unvested stock options and/or restricted stock grants such that said stock options and/or restricted stock shall be vested as of the date Executive’s employment terminates to the same extent as if she were continuously employed through the end of the Salary Continuation Period; provided that notwithstanding the terms of the relevant notice of stock option award or notice

of restricted stock award (each an “Award”), such vesting shall be calculated as if such stock options and restricted stock vested in equal amounts on a monthly basis commencing on the initial grant date and ending on the final vesting date under the relevant Award;

3. If Executive elects to continue her medical, dental and vision coverage under the Consolidated Omnibus Reconciliation Act (“COBRA”), the Company shall pay the premiums for Executive’s COBRA coverage until the earlier of: (a) the end of the Salary Continuation Period; or (b) the date Executive becomes covered under another employer’s health plan; and

4. Continued payment of the premiums required to maintain Executive’s coverage under her Company-provided life insurance policy during the Salary Continuation Period.

Notwithstanding the foregoing, if Executive begins other employment during the Salary Continuation Period, Executive shall receive an accelerated lump-sum payment of the remaining payments for the Salary Continuation Period, in lieu of salary continuation. Executive shall not be eligible to participate in the Company’s deferred compensation, 401K, or employee stock purchase plans during the Salary Continuation Period.

Executive’s eligibility for the foregoing Separation Benefits is conditioned on: (a) Executive remaining available during the Salary Continuation Period to consult with the Company regarding matters for which she previously had responsibility as a Company executive; (b) Executive having first signed a Mutual Release Agreement in the form attached as Exhibit A ; and (c) Executive’s agreement not to compete with the Company, or its successors or assigns, during the Salary Continuation Period. If Executive engages in any business activity competitive with the Company or its successors or assigns during the Salary Continuation Period, all Separation Benefits immediately shall cease.

A. Termination for Cause . For purposes of this Agreement, “For Cause” shall mean: (i) Executive is convicted of or pleads no contest to a crime involving dishonesty, breach of trust, or intentional physical harm to any person; (ii) Executive willfully engages in conduct that is in bad faith and materially injurious to the Company, including but not limited to, misappropriation of trade secrets, fraud or embezzlement; (iii) Executive commits a material breach of this Agreement, which breach is not cured within twenty (20) days after written notice to Executive from the Company; (iv) Executive willfully refuses to implement or follow a reasonable lawful policy or directive of the Company, which refusal has a material adverse effect on the Company and which refusal is not cured within twenty (20) days after written notice to Executive from the Company; or (v) Executive engages in misfeasance or malfeasance demonstrated by a pattern of failure to perform job duties diligently and professional