<PAGE>
 
                                                                    Exhibit 10.1


                                FIRST AMENDMENT
                                ---------------

          FIRST AMENDMENT (this "Amendment"), dated as of June 30, 1998, among
THERMA-WAVE, INC., a Delaware corporation (the "Borrower"), the lenders party to
the Credit Agreement referred to below (each a "Bank" and, collectively, the
"Banks") and BANKERS TRUST COMPANY, as Agent (the "Agent").  All capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings provided such terms in the Credit Agreement referred to below.

                              W I T N E S S E T H:
                              ------------------- 

          WHEREAS, the Borrower, the Banks and the Agent are parties to a Credit
Agreement, dated as of May 16, 1997 (the "Credit Agreement"); and

          WHEREAS, the Borrower has requested, and the Banks are willing to
grant (subject to the terms and conditions hereof), certain amendments to the
Credit Agreement as set forth herein;

          NOW, THEREFORE, it is agreed:

          1.  Section 1.01(c) of the Credit Agreement is hereby amended by
inserting the following text at the end of clause (v) of the second sentence
thereof:

          "or the amount of the Borrowing Base at such time".

          2.  Section 1.01 of the Credit Agreement is hereby amended by
inserting the following new clause (d) at the end thereof:

          "(d)  Notwithstanding anything to the contrary contained in this
     Agreement (including in this Section 1.01 or in Section 2.01), at no time
     on and after July 1, 1998 and prior to the date of delivery of the
     financial statements and related officer's certificate pursuant to Sections
     7.01(c) and 7.01(e) in respect of the Borrower's fiscal year ending closest
     to March 31, 2000, shall the sum of (I) the aggregate principal amount of
     all outstanding Revolving Loans plus (II) the aggregate principal amount of
     all outstanding Swingline Loans plus (III) the aggregate amount of all
     Letter of Credit Outstandings exceed the Borrowing Base  at such time
     (based on the Borrowing Base Certificate last delivered)."

          3.  Section 4.02(a) of the Credit Agreement is hereby amended by
inserting the following new paragraph at the end thereof:

          "If, on any date on and after July 1, 1998 and prior to the date of
     delivery of the financial statements and related officer's certificate
     pursuant to Sections 7.01(c) and 7.01(e) in respect of the Borrower's
     fiscal year ending closest to March 31, 2000, the sum of (i) the aggregate
     outstanding principal amount of Revolving Loans and Swingline
<PAGE>
 
     Loans (after giving effect to all other repayments thereof on such date)
     plus (ii) the Letter of Credit Outstandings on such date exceeds the
     Borrowing Base at such time (based on the Borrowing Base Certificate last
     certificate), the Borrower shall repay on such date the principal of
     Swingline Loans, and if no Swingline Loans are or remain outstanding,
     Revolving Loans, in an aggregate amount equal to such excess.  If, on any
     date during the period set forth above in the immediately preceding
     sentence and after giving effect to the prepayment of all outstanding
     Swingline Loans and Revolving Loans, the aggregate amount of Letter of
     Credit Outstandings exceeds the Borrowing Base at such time (based on the
     Borrowing Base Certificate last delivered), the Borrower agrees to pay to
     the Agent on such date an amount in cash and/or Cash Equivalents equal to
     such excess (up to the aggregate amount of Letter of Credit Outstandings at
     such time) and the Agent shall hold such payment as security for the
     obligations of the Borrower hereunder pursuant to a cash collateral
     agreement to be entered into in form and substance reasonably satisfactory
     to the Agent (which shall permit certain investments in Cash Equivalents
     reasonably satisfactory to the Agent until the proceeds are applied to the
     secured obligations)."

          4.   Section 7.01 of the Credit Agreement is hereby amended by
inserting the following new clause (j) at the end thereof:

          "(j)  Borrowing Base Certificate.  Until the Borrower delivers its
                --------------------------                                  
     financial statements and related officer's certificate pursuant to Sections
     7.01(c) and 7.01(e) in respect of its fiscal year ending closest to March
     31, 2000, (x) on July 13, 1998 and (y) not later than 3:00 P.M. (New York
     time) on the fifteenth day of each fiscal month of the Borrower (commencing
     on July 20, 1998), a borrowing base certificate in the form of Exhibit M
     (each, a "Borrowing Base Certificate"), which shall be prepared (A) as of
     May 31, 1998 in the case of the initial Borrowing Base Certificate and (B)
     as of the last Business Day of the preceding fiscal month in the case of
     each subsequent monthly Borrowing Base Certificate, in each case certified
     by the chief financial officer or other Authorized Officer of the
     Borrower."

          5.   Section 7.02 of the Credit Agreement is hereby amended by
inserting the following new sentence at the end thereof:

     "In addition, the Borrower will, and will cause each of its Subsidiaries
     to, permit upon reasonable prior notice to the Borrower, the Agent to
     conduct, at the Borrower's expense, an audit of the inventories and
     accounts receivable of the Borrower and its Subsidiaries at such times (but
     no more frequently than once a year unless an Event of Default shall have
     occurred and be continuing) as the Agent shall reasonably require."

          6. Section 8.09 of the Credit Agreement is hereby deleted in its
entirety and the following new Section 8.09 is inserted in lieu thereof:

          "8.09  Minimum Consolidated EBITDA.  (a)  The Borrower will not permit
                 ---------------------------                                    
     Consolidated EBITDA (i) for the Borrower's fiscal quarter ending closest to
     June 30, 1997 to be less than $2,500,000 and (ii) for any Test Period
     ending on the last day of a
<PAGE>
 
     fiscal quarter of the Borrower set forth below to be less than the amount
     set forth opposite such fiscal quarter below:

                Fiscal Quarter
               Ending Closest To                     Amount
               -----------------                     ------

               September 30, 1997                  $5,000,000

               December 31, 1997                   $5,000,000

               March 31, 1998                      $5,000,000

               June 30, 1998                       ($1,000,000)

               September 30, 1998                  ($9,000,000)

               December 31, 1998                   ($5,500,000)

               March 31, 1999                      ($3,500,000)

               June 30, 1999                       ($2,500,000)

               September 30, 1999                  ($500,000)

               December 31, 1999                   $1,500,000

               March 31, 2000                      $3,500,000

               June 30, 2000                       $10,000,000

               September 30, 2000                  $15,000,000

               December 31, 2000                   $15,000,000

               March 31, 2001                      $15,000,000

               June 30, 2001                       $15,750,000

               September 30, 2001                  $16,500,000

               December 31, 2001                   $16,500,000

               March 31, 2002                      $16,500,000

               June 30, 2002                       $16,500,000
<PAGE>
 
          (b) The Borrower will not permit Consolidated EBITDA for the period
     from April 6, 1997 to the last day of a fiscal quarter of the Borrower set
     forth below (in each case taken as one accounting period) to be less than
     the amount set forth opposite such fiscal quarter below:
                                
                 Fiscal Quarter                  
               Ending Closest To                     Amount
               -----------------                     ------

               June 30, 1997                       $2,500,000

               September 30, 1997                  $5,000,000

               December 31, 1997                   $7,500,000

               March 31, 1998                      $10,000,000

               June 30, 1998                       $13,000,000

               September 30, 1998                  $11,000,000

               December 31, 1998                   $9,500,000

               March 31, 1999                      $8,500,000

               June 30, 1999                       $8,000,000

               September 30, 1999                  $9,000,000

               December 31, 1999                   $11,000,000

               March 31, 2000                      $13,500,000"


          7. The definition of "Consolidated EBITDA" appearing in Section 10 of
the Credit Agreement is hereby deleted in its entirety and the following new
definition of "Consolidated EBITDA" is inserted in lieu thereof:

          "Consolidated EBITDA" shall mean, for any period, Consolidated EBIT
     for such period, adjusted by (x) adding thereto (i) the amount of all
     depreciation expense and amortization expense that were deducted in
     determining Consolidated EBIT for such period and (ii) to the extent
     incurred during the Borrower's fiscal quarter ended closest to June 30,
     1998, up to $750,000 of non-cash restructuring charges that were deducted
     in determining Consolidated EBIT for such period and (y) subtracting
     therefrom the amount of all cash expenses, cash charges and cash payments
     made or incurred during such period which relate to any non-cash
     restructuring charges referred to above in this definition.
<PAGE>
 
          8.  Section 10 of the Credit Agreement is hereby further amended by
inserting the following new definitions in the appropriate alphabetical order:

          "Borrowing Base" shall mean, as at any date on which the amount
    thereof is being determined, an amount equal to the sum of 90% of Eligible
    Receivables plus 60% of Eligible Inventory, each as determined from the
    Borrowing Base Certificate most recently delivered pursuant to Section
    8.01(j).

          "Borrowing Base Certificate" shall have the meaning provided in
Section 8.01(j).

          "Eligible Inventory" shall mean the gross dollar value (valued at the
     lower of cost or market value) of the inventory of the Borrower and the
     Subsidiary Guarantors which, except as provided below in this definition,
     conforms to the representations and warranties contained in the Security
     Agreement (including by the Collateral Agent having a first priority
     perfected security interest therein subject only to Permitted Liens) and
     which at all times continue to be acceptable to the Collateral Agent in its
     reasonable judgment, less (i) any supplies (other than raw materials),
     goods returned or rejected (except to the extent that such returned or
     rejected goods continue to conform to the representations and warranties
     contained in the Security Agreement and continue to be acceptable to the
     Collateral Agent in its reasonable judgment) by customers and goods to be
     returned to suppliers, (ii) any advance payments made by customers with
     respect to inventory of the Borrower and the Subsidiary Guarantors, (iii)
     reserves required by the Collateral Agent in its reasonable judgment and
     (iv) any inventory held on consignment, provided that Eligible Inventory
     also may include up to $3,000,000 in the aggregate of inventory of the
     Borrower and its Subsidiaries which is located outside the United States
     and in which the Collateral Agent does not have a perfected security
     interest so long as such inventory otherwise meets the eligibility
     requirements set forth above in this definition.

          "Eligible Receivables" shall mean the total face amount of the
     receivables of the Borrower and the Subsidiary Guarantors which conform to
     the representations and warranties contained in the Security Agreement
     (including by the Collateral Agent having a first priority perfected
     security interest therein subject only to Permitted Liens) and at all times
     continue to be acceptable to the Collateral Agent in its reasonable
     judgment, less any returns, discounts, claims, credit and allowances of any
     nature (whether issued, owing, granted or outstanding) and less reserves
     booked or made by the Borrower or any Subsidiary Guarantor for any other
     matter affecting the creditworthiness of account debtors owing the
     receivables and excluding (i) bill and hold (deferred shipment)
     transactions, (ii) contracts or sales to any Affiliate of the Borrower or
     any of its Subsidiaries, (iii) all receivables to the extent that same have
     not been paid in full within 90 days of the due date thereof or which have
     been disputed by the account debtor, and (iv) governmental sales, provided
     that governmental sales shall be included to the extent that the Borrower
     or the respective Subsidiary Guarantor has taken all action required to be
     taken by the Federal Assignment of Claims Act to grant to the Collateral
     Agent a valid, enforceable and perfected security interest in the
     respective receivable.
<PAGE>
 
          9.  The Credit Agreement is hereby further amended by inserting a new
Exhibit M thereto in the form of Exhibit M hereto.

          10.  In order to induce the Banks to enter into this Amendment, the
Borrower hereby represents and warrants that (i) the representations, warranties
and agreements contained in Section 6 of the Credit Agreement are true and
correct in all material respects on and as of the First Amendment Effective Date
(as defined below), after giving effect to this Amendment and (ii) there exists
no Default or Event of Default on the First Amendment Effective Date, after
giving effect to this Amendment.

          11.  This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other provision of any other Credit Document.

          12.  This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.  A complete set of
counterparts shall be lodged with the Borrower and the Agent.

          13.  This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the law of the
State of New York.

          14.  This Amendment shall become effective as of the date first above
written on the date (the "First Amendment Effective Date") when the Borrower and
the Required Banks shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered (included by way of facsimile
transmission) the same to the Agent at the Notice Office.


                                     * * *
<PAGE>
 
        IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered as of the date first above
written.

                                 THERMA-WAVE, INC.

                                 By:      /s/ CHARLOTTE HOLLAND
                                    ----------------------------------
                                    Title:  Vice President of Finance

                                 BANKERS TRUST COMPANY,
                                    Individually and as Agent

                                 By:      /s/ RYAN ZANIN
                                    ----------------------------------
                                    Title:  Managing Director

                                 FLEET BANK, N.A.


                                 By:
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                                    Title: