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EXHIBIT 10.38  


        Veeco Instruments Inc.
  100 Sunnyside Boulevard, Suite B    •    Woodbury, NY 11797
    •    Phone (516) 677-0200    •    Fax (516) 677-0380 


January 21, 2004 


John
Kiernan

xxxxxxxxxxxxx

xxxxxxxxxxxxx 


Dear
John: 


        On
behalf of Veeco, I am pleased to offer to you enhanced severance arrangements in recognition of the valuable contributions you have made to Veeco's success. 


        In
the event you are terminated without "Cause" or you resign for "Good Reason" (each as defined below), the following would apply: 



        (a)   Veeco
will pay you 18 months severance in the form of a salary continuation benefit based on your annual base salary in effect immediately prior to such
termination (but without regard to any salary reduction program then in place), less applicable deductions. 


        (b)   Any
options to purchase shares of Veeco common stock granted to you on or after the date hereof ("Options") which are held by you as of the date of such termination
shall remain exerciseable until the earlier of (x) 12 months following the date of such termination and (y) the expiration of the original term of such Options. 



        (c)   In
addition, if such termination or resignation occurs within 12 months following a "Change of Control" (as defined below), any Options which are held by you as
of the date of such termination that were not vested as of such date shall become immediately and fully vested as of such date. 




Receipt
of the benefits described above is conditioned upon your execution (without revocation) of a general release of claims in a form satisfactory to Veeco, including non-competition
and non-solicitation provisions for the duration of the period during which salary continuation benefits are payable as described above. Please see the attached page for certain additional
provisions of this letter. 


        I
appreciate the commitment you have made to Veeco and it is with that understanding that you have been selected as a key member of the Veeco team to receive these severance benefits. 


        If
you agree with the foregoing, please sign below to so indicate. 



	Sincerely,	 	ACCEPTED AND AGREED:
	/s/  EDWARD H. BRAUN      	 	/s/  JOHN KIERNAN      
	Edward H. Braun	 	John Kiernan
	Chairman and Chief Executive Officer	 	 







 
 

Additional Provisions    
    


        Please note that this letter does not alter the "at-will" nature of your employment with Veeco. This means that your employment may be terminated by
you or by Veeco at any time, with or without cause. As described above, however, you may be entitled to severance benefits depending upon the circumstances of the termination of employment. 


        As
used above, the following definitions shall apply: 


        "Cause" shall mean (i) your willful and substantial misconduct, (ii) your repeated, after written notice, neglect of duties
or failure to perform your assigned duties, (iii) your commission of any material fraudulent act with respect to Veeco or its business, or (iv) your conviction of (or plea of no contest
to) a crime constituting a felony. 


        "Change of Control" shall mean: (a) any person or group of persons becomes the beneficial owner of securities representing
50 percent or more of Veeco's outstanding voting securities, or (b) the approval by Veeco's stockholders of one of the following: 



        (i)    Any
merger or statutory plan of exchange ("Merger") in which Veeco would not be the surviving corporation or pursuant to which Veeco's voting securities would be
converted into cash, securities or other property, other than a Merger in which the holders of Veeco's voting securities immediately prior to the Merger have the same proportionate ownership of voting
securities of the surviving corporation after the Merger; 


        (ii)   Any
Merger in which the holders of outstanding voting securities of Veeco prior to such Merger will not, in the aggregate, own a majority of the outstanding voting
securities of the combined entity after such Merger; or 


        (iii)  Any
sale or other transfer (in one transaction or a series of related transactions) of all or substantially all of the Veeco's assets or the adoption of any plan or
proposal for Veeco's liquidation or dissolution. 




        "Good Reason" shall mean a reduction of your base salary, other than as part of a salary reduction program affecting management employees
generally. 









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Additional Provisions