Exhibit 10.38

AMENDMENT
TO
LOAN AND SECURITY AGREEMENT

This Amendment to Loan and Security Agreement is entered into as of December 20,
2001 (the "Amendment"), by and between COMERICA BANK- CALIFORNIA ("Bank") and
THERMA-WAVE, INC. ("Borrower").

RECITALS

Borrower and Bank are parties to that certain Loan and Security Agreement dated
as of March 28, 2001, as amended from time to time (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 reference to "180 days" in clause (a) of the defined term "Eligible
    Accounts" in Section 1.1 is amended to read "210 days". The definition of
    "Revolving Line" in Section 1.1 is amended to read "Thirteen Million Five
    Hundred Thousand Dollars ($13,500,00)". The definition of "Revolving
    Maturity Date" in Section 1.1 is amended to read "June 30, 2004".
 2. The first sentence of Section 2.1.1(a) is deleted, and the second sentence
    of Section 2.1.1(a) is amended to read as follows: Subject to and upon the
    terms and conditions of this Agreement, Borrower may request Advances in an
    aggregate outstanding amount not to exceed the lesser of (i) the Revolving
    Line or (ii) the Borrowing Base, in each case minus the aggregate face
    amount of outstanding Letters of Credit, including any drawn but
    unreimbursed Letters of Credit.
 3. Sections 6.8 and 6.9 to the Agreement are amended, and Sections 6.13 and
    6.14 are added to the Agreement, as follows:
    
    6.8 Quick Ratio. Borrower shall maintain, as of the last day of each
    calendar quarter, a ratio of Quick Assets to Current Liabilities of at least
    1.30 to 1.00.
    
    6.9 Tangible Net Worth. Borrower shall maintain, as of the last day of each
    calendar quarter, a Tangible Net Worth of not less than Sixty Two Million,
    Five Hundred Thousand Dollars ($62,500,000) plus seventy five percent (75%)
    of net profit after taxes for each quarter after the quarter ending December
    31, 2001, without deduction for losses, plus eighty percent (80%) of the
    proceeds received after December 31, 2001 for the sale or issuance by
    Borrower of its equity or Subordinated Debt securities. The calculation of
    Tangible Net Worth under this Section excludes the goodwill arising out of
    Borrower's acquisition of Sensys Instruments.
    
    6.13. Loss. Borrower shall not suffer a loss in any quarter in excess of the
    following: $15,000,000 for the quarter ending December 31, 2001, March 31,
    2002 or June 30, 2002; $10,000,000 for the quarter ending September 30,
    2002; $5,000,000 for the quarter ending December 31, 2002 or March 31, 2003;
    or $2,500,000 for the quarter ending June 30, 2003 or any quarter
    thereafter.
    
    6.14 Unrestricted Cash. Borrower shall maintain a balance of unrestricted
    cash at Bank or an Affiliate of Bank subject to a control agreement in form
    and substance acceptable to Bank of not less than the Revolving Line.
 4. The Compliance Certificate to be delivered after the date of this Amendment
    shall be in substantially the form of Exhibit C hereto.
 5. Unless otherwise defined, all initially capitalized terms in this Amendment
    shall be as defined in the Agreement. The Agreement, as amended hereby,
    shall be and remain in full force and effect in accordance with its
    respective terms and hereby is ratified and confirmed in all respects.
    Except as expressly set forth herein, the execution, delivery, and
    performance of this Amendment shall not operate as a waiver of, or as an
    amendment of, any right, power, or remedy of Bank under the Agreement, as in
    effect prior to the date hereof. Borrower ratifies and reaffirms the
    continuing effectiveness of all promissory notes, guaranties, security
    agreements, mortgages, deeds of trust, environmental agreements, and all
    other instruments, documents and agreements entered into in connection with
    the Agreement.
 6. 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, other than as referenced in Section 10, no Event of
    Default has occurred and is continuing.
 7. 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.
 8. As a condition to the effectiveness of this Amendment, Bank shall have
    received, in form and substance satisfactory to Bank, the following:
     a. this Amendment, duly executed by Borrower;
     b. a fee of $10,000, plus an amount equal to all Bank Expenses incurred
        through the date of this Amendment
     c. a compliance certificate and opening balance sheet including all tax
        consequences, merger, compensation and one-time expenses arising out of
        the acquisition of Sensys Instruments;
     d. an Intellectual Property Security Agreement; and
     e. such other documents, and completion of such other matters, as Bank may
        reasonably deem necessary or appropriate.

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

 

THERMA-WAVE, INC.

 

By:

Title:

     

COMERICA BANK-CALIFORNIA

 

By:

Title:

 

EXHIBIT C
COMPLIANCE CERTIFICATE

TO: COMERICA BANK-CALIFORNIA

FROM: THERMA-WAVE, INC.

The undersigned authorized officer of THERMA-WAVE, INC. hereby certifies that in
accordance with the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the "Agreement"), (i) Borrower is in complete
compliance for the period ending _________________ with all required covenants
except as noted below and (ii) all representations and warranties of Borrower
stated in the Agreement are true and correct in all material respects as of the
date hereof. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. All days and periods specified relate to
fiscal period end

Please indicate compliance status by circling Yes/No under "Complies" column.

Reporting Covenant

Required

Complies

10Q Report

Quarterly within 45 days

Yes No

Annual (CPA Audited)

FYE within 90 days (consolidated and consolidating)

Yes No

10-K Report

FYE within 90 days

Yes No

A/P and A/R Agings

Quarterly within 25 days

Yes No

BBC, A/P and A/R Agings

Monthly within 15 days

Yes No

     

Financial Covenant

Required

Actual

Complies

Maintain on a Quarterly Basis

:      

Minimum Quick Ratio

1.30:1.00

____:1.00

Yes No

Maximum Debt-TNW

1.00:1.00

____:1.00

Yes No

Minimum Tangible Net Worth

$62,500,000*

$___________

Yes No

Maximum Quarterly Loss

**

$___________

Yes No

Minimum Unrestricted Cash

$13,500,000

$___________

Yes No

Minimum Domestic Assets

80%

____%

Yes No

Maximum Capital Expenditures

$20,000,000

$___________

Yes No

* Borrower shall maintain, as of the last day of each fiscal quarter, a Tangible
Net Worth of not less than Sixty Two Million Five Hundred Thousand Dollars
($62,500,000) plus seventy-five percent (75%) of net profit after taxes for each
quarter after 12/31/01 plus 80% of the proceeds received after 12/31/01 from the
sale or issuance by Borrower of its equity or Subordinated Debt securities.

** Loss < $15,000,000 through 6/30/02; Loss < $10,000,000 for 9/30/02; Loss <
$5,000,000 for 12/31/02 or 03/31/03; Loss < $2,500,000 thereafter

Comments Regarding Exceptions:

See Attached.

Lender USE ONLY

Sincerely,

SIGNATURE

TITLE

DATE

Received By:____________________

Date:________________

Reviewed By:____________________

Compliance Status: Yes / No

CORPORATE RESOLUTIONS TO BORROW

Borrower: THERMA-WAVE, INC.

I, the undersigned Secretary or Assistant Secretary of THERMA-WAVE, INC. (the
"Corporation"), HEREBY CERTIFY that the Corporation is organized and existing
under and by virtue of the laws of the state of Delaware.

I FURTHER CERTIFY that at a meeting of the Directors of the Corporation duly
called and held, at which a quorum was present and voting, (or by other duly
authorized corporate action in lieu of a meeting), the following resolutions
were adopted.

BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:

NAMES POSITIONS ACTUAL SIGNATURES _______________ _______________
_______________ _______________ _______________ _______________ _______________
_______________ _______________ _______________ _______________ _______________
_______________ _______________ _______________ _______________ _______________
_______________

acting for and on behalf of this Corporation and as its act and deed be, and
they hereby are, authorized and empowered:

Borrow Money.

To borrow from time to time from Comerica Bank-California ("Bank"), on such
terms as may be agreed upon between the officers, employees, or agents of the
Corporation and Bank, such sum or sums of money as in their judgment should be
borrowed, without limitation.

Execute Amendment.

To execute and deliver to Bank that certain Amendment to Loan and Security
Agreement dated as of December 20, 2001 (the "Amendment") and related documents,
and also to execute and deliver to Bank one or more renewals, extensions,
modifications, consolidations, or substitutions therefor.

Grant Security.

To grant a security interest to Bank in the Collateral described in the
Amendment, which security interest shall secure all of the Corporation's
Obligations, as described in the Amendment.

Letters of Credit.

To execute letter of credit applications and other related documents pertaining
to Bank's issuance of letters of credit.

Negotiate Items.

To draw, endorse, and discount with Bank all drafts, trade acceptances,
promissory notes, or other evidences of indebtedness payable to or belonging to
the Corporation or in which the Corporation may have an interest, and either to
receive cash for the same or to cause such proceeds to be credited to the
account of the Corporation with Bank, or to cause such other disposition of the
proceeds derived therefrom as they may deem advisable.

Further Acts.

In the case of lines of credit, to designate additional or alternate individuals
as being authorized to request advances thereunder, and in all cases, to do and
perform such other acts and things, to pay any and all fees and costs, and to
execute and deliver such other documents and agreements as they may in their
discretion deem reasonably necessary or proper in order to carry into effect the
provisions of these Resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.

I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set forth opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever.

I FURTHER CERTIFY that attached hereto are true and correct copies of the
Certificate of Incorporation and Bylaws of the Corporation.

IN WITNESS WHEREOF, I have hereunto set my hand on December 20, 2001 and attest
that the signatures set opposite the names listed above are their genuine
signatures.

 

CERTIFIED TO AND ATTESTED BY:

 

X ______________

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