<B><P ALIGN="RIGHT">Exhibit 10.38</P>
</B><P ALIGN="CENTER">LOAN MODIFICATION AGREEMENT</P>
<P ALIGN="JUSTIFY">This Loan Modification Agreement is entered into as of July
24, 2003, by and between  Therma-Wave, Inc., a Delaware corporation (the
"Borrower") and Silicon Valley Bank ("Bank").</P>
<OL>

<U><P ALIGN="JUSTIFY"><LI>DESCRIPTION OF EXISTING INDEBTEDNESS</U>: Among other
indebtedness which may be owing by Borrower to Bank, Borrower is indebted to
Bank pursuant to, among other documents, a Loan and Security Agreement, dated
June 13, 2003, as may be amended from time to time (the "Loan
Agreement").  The Loan Agreement provides for, among other things, a
Committed Revolving Line in the original principal amount of Fifteen Million
Dollars ($15,000,000).  Defined terms used but not otherwise defined herein
shall have the same meanings as in the Loan Agreement.  </LI></P>
<P ALIGN="JUSTIFY">Hereinafter, all indebtedness owing by Borrower to Bank shall
be referred to as the "Indebtedness."</P>
<U><P ALIGN="JUSTIFY"><LI>DESCRIPTION OF COLLATERAL</U>.  Repayment of the
Indebtedness is secured by the Collateral as described in the Loan Agreement.
</LI></P>
<P ALIGN="JUSTIFY">Hereinafter, the above-described security document, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents".  Hereinafter, the Security
Documents, together with all other documents evidencing or securing the
Indebtedness shall be referred to as the "Existing Loan
Documents".</P>
<U><P ALIGN="JUSTIFY"><LI>DESCRIPTION OF CHANGE IN TERMS</U>.</LI></P>
<OL TYPE="A">

<U><P ALIGN="JUSTIFY"><LI>Modification(s) to Loan Agreement</U>.</LI></P>
<OL>

<P ALIGN="JUSTIFY"><LI>Sub-section (i) of Section 6.7 entitled "Quick Ratio
(Adjusted)" is amended to read as follows:</LI></P>
<P ALIGN="JUSTIFY">"(i)	<B>Quick Ratio (Adjusted)</B>.  As of the last
day of each month, a ratio of Quick Assets to Current Liabilities minus current
portions of Deferred Revenue of at least 1.20 to 1.00.</P>
<P ALIGN="JUSTIFY"><LI>Sub-section (ii) of Section 6.7 entitled
"Profitability" is amended in part to change the Applicable Amount for
the quarter-ended 06/30/03 from a negative <$8,500,000> to a negative
<$9,500,000>.  </LI></P>
<P ALIGN="JUSTIFY"><LI>Sections 7 (Negative Covenants) and 7.2 (Changes in
Business, Ownership, Management or Business Locations) are amended to read as
follows:</LI></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY"> </P>
<P ALIGN="JUSTIFY">"7.	<U>Negative Covenants</P>
</U><P ALIGN="JUSTIFY">	Borrower will not do any of the following without
Bank's and Exim Bank's prior written consent, which will not be unreasonably
withheld:"</P>
<P ALIGN="JUSTIFY">"7.2	<U>Changes in Business, Ownership, Management or
Business Locations</U>.</P>
<P ALIGN="JUSTIFY">Suffer a Change of Control, or engage in or permit any of its
Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrower and its Subsidiaries or reasonably related thereto.
Borrower will not, without at least 30 days prior written notice, relocate its
chief executive office or add any new offices or business locations in which
Borrower maintains more than $1,500,000 in Collateral.  Neither Borrower nor any
of its Subsidiaries shall be under any restriction with respect to the offer,
sale or issuance of equity securities in a public or private offering so long as
no Event of Default exists or will result from such public or private offering.
This modification is subject to Silicon Valley Bank maintaining at all times a
first priority secured interest in the Export-Related Collateral as required by
the Working Capital Guarantee Program."</P>
<P ALIGN="JUSTIFY"><LI>The definition of "Revolving Maturity Date" set
forth in Section 13.1 is amended to June 11, 2004.</LI></P>
<P ALIGN="JUSTIFY"><LI>The Exim Borrowing Base Certificate, which comprises
Exhibit E, is amended in part to change Line 19 thereof to read as
follows:</LI></P>


<P ALIGN="JUSTIFY">"19.	Accounts with 50% over 60 days past invoice due
date  $_______"</P></OL></OL>

<U><P ALIGN="JUSTIFY"><LI>CONSISTENT CHANGES</U>.  The Existing Loan Documents
are hereby amended wherever necessary to reflect the changes described
above.</LI></P>
<U><P ALIGN="JUSTIFY"><LI>PAYMENT OF LOAN MODIFICATION EXPENSES</U>.  Borrower
shall pay Bank its reasonable out-of-pocket expenses incurred for preparation of
this Loan Modification Agreement.</LI></P>
<U><P ALIGN="JUSTIFY"><LI>NO DEFENSES OF BORROWER</U>.  Borrower agrees that, as
of the date hereof, it has no defenses against the obligations to pay any
amounts under the Indebtedness.</LI></P>
<U><P ALIGN="JUSTIFY"><LI>CONTINUING VALIDITY</U>.  Borrower understands and
agrees that in modifying the existing Indebtedness, Bank is relying upon
Borrower's representations, warranties, and agreements, as set forth in the
Existing Loan Documents.  Except as expressly modified pursuant to this Loan
Modification Agreement, the terms of the Existing Loan Documents remain
unchanged and in full force and effect.  Bank's agreement to modifications to
the existing Indebtedness pursuant to this Loan Modification Agreement in no way
shall obligate Bank to make any future modifications to the Indebtedness.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Indebtedness.  It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing.  No maker, endorser, or guarantor will be
released by virtue of this Loan Modification Agreement.  The terms of this
paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.</LI></P>
<U><P ALIGN="JUSTIFY"><LI>CONDITIONS</U>.  The effectiveness of this Loan
Modification Agreement is conditioned upon receipt by Bank of a fully executed
copy of this Loan Modification Agreement, together with payment of its out-of-
pocket expenses incurred for preparation of this Loan Modification
Agreement.</LI></P></OL>

<P ALIGN="JUSTIFY">This Loan Modification Agreement is executed as of the date
first written above.</P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="50%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">BORROWER:</P>
<P ALIGN="JUSTIFY">THERMA-WAVE, INC.</P>
</B><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">By:<U>	/s:/ L. Ray Christie			</P>
</U><P ALIGN="JUSTIFY">Name:<U>	L. Ray Christie			</P>
</U><P ALIGN="JUSTIFY">Title:<U>	V.P., CFO & Secretary		</P>
</U><P ALIGN="JUSTIFY"></TD>
<TD WIDTH="50%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">BANK:</P>
<P ALIGN="JUSTIFY">SILICON VALLEY BANK</P>
</B><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">By:<U>	/s:/ Kevin Walsh			</P>
</U><P ALIGN="JUSTIFY">Name:<U>	  Kevin Walsh				</P>
</U><P ALIGN="JUSTIFY">Title:<U>	  VP					</P>
</U><P ALIGN="JUSTIFY"></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP"> </TD>
<TD WIDTH="50%" VALIGN="TOP"> </TD>
</TR>
</TABLE>