EXHIBIT 10.1

THERMA-WAVE, INC.

STOCK OPTION AGREEMENT
(Nonqualified Stock Option)

          THIS STOCK OPTION AGREEMENT (this “Agreement”) is made and entered
into as of _________, 20_________by and between Therma-Wave, Inc., a Delaware
corporation (the “Company”), and the employee of the Company listed on the
signature page hereto (“Optionee”).

          Pursuant to the Company’s 2000 Equity Incentive Plan (the “Plan”), the
Company and the Optionee desire to enter into an agreement to evidence the grant
by the Company to the Optionee of an option (the “Option”) to acquire that
number of shares of the Company’s common stock, par value $0.01 per share (the
“Common Stock”) listed on the signature page hereto (the “Option Shares”).
Capitalized terms used herein and not otherwise defined are defined in Section 6
hereof.

          The parties hereto agree as follows:

          1. Option Grant. The Company hereby grants to the Optionee, pursuant
to the Plan, an Option to purchase the Option Shares at a price per share equal
to that amount listed on the signature page hereto (the “Exercise Price”). The
Exercise Price and the number of Option Shares will be equitably adjusted for
any stock split, stock dividend, reclassification or recapitalization of the
Company which occurs subsequent to the date of this Agreement. The Option is not
intended to be an “incentive stock option” within the meaning of Section 422A of
the Code.

          2. Exercise of Option.

          (1) Normal Vesting. The Option granted hereunder may be exercised only
to the extent it has become vested. The Option shall vest and become exercisable
with respect to the following number of Option Shares (set forth on a cumulative
basis): (i) 25% of the Option Shares on the first year anniversary of the Grant
Date; (ii) 2.083% of the Option Shares each month on the thirteenth (13th)
through the forty eighth (48th) monthly anniversary of the Grant Date (each a
“Vesting Date”), if and only if the Optionee is, and has been, continuously
employed by the Company from the Grant Date through the applicable Vesting Date.

          (2) No Vesting After Termination Date. The Option shall cease to vest
after the Termination Date. Any portion of the Option which has vested and
become exercisable prior to the Termination Date shall remain exercisable for
the period set forth in Section 3.

          (3) Procedure for Exercise. At any time prior to the Expiration Date,
Optionee may exercise all or a portion of the Option (to the extent vested),
which has not expired pursuant to subsection 3(b) below by delivering written
notice of exercise to the Company,

 

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together with (i) a written acknowledgment that Optionee has read and has been
afforded an opportunity to ask questions of members of the Company’s management
regarding all financial and other information provided to Optionee regarding the
Company and (ii) full payment for the Shares with respect to which the Option is
exercised. Full payment may consist of payment in cash, check, other shares of
capital stock of the Company or any combination of the foregoing. As a condition
to any exercise of the Option, Optionee will permit the Company to deliver to
him all financial and other information regarding the Company and its
Subsidiaries which it believes necessary to enable Optionee to make an informed
investment decision. Shares issued upon exercise of an Option shall be issued in
the name of the Optionee or, if requested by the Optionee, in the name of the
Optionee and his or her spouse.

          3. Expiration of Option.

          (1) Normal Expiration. In no event shall any part of the Option be
exercisable after the Expiration Date.

          (2) Expiration Upon Termination of Employment. Any portion of the
Option that was not vested and exercisable on the Termination Date shall expire
on such date and may not be exercised thereafter under any circumstance. Any
portion of the Option that was vested and exercisable on the Termination Date
shall expire on the earlier of (i) three months after the Termination Date (or
12 months after the Termination Date if the termination was caused by Optionee’s
death, disability or retirement) and (ii) the Expiration Date and may not be
exercised thereafter under any circumstance.

          (3) Non-Transferability of Option. The Option is personal to Optionee
and is not transferable by Optionee except pursuant to the laws of descent or
distribution and may be exercised, during the lifetime of the Optionee, only by
the Optionee.

          4. Adjustments upon Dissolution, Merger or Asset Sale.

          (1) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify each Optionee
as soon as practicable prior to the effective date of such proposed transaction.
To the extent it has not been previously exercised, an Option will terminate
immediately prior to the consummation of such proposed action.

          (2) Merger or Assets Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and shall be assumed or an equivalent
option or right substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option, the Optionee shall
fully vest in and have the right to exercise the Option as to all of the Option
Shares, including Shares as to which it would not otherwise be vested or
exercisable.

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          (3) Change in Control. Notwithstanding the previous sections, in the
event that following a Change in Control Optionee (A) is not subsequently
offered a comparable position to that held by Optionee immediately prior to the
Change in Control with comparable base salary, bonus and benefits (a “Comparable
Position”) or (B) is offered and accepts a Comparable Position but, within six
months of the Change in Control, he terminates his employment in such Comparable
Position for Good Reason, then any Option awarded under this Agreement not
previously vested shall become fully vested and fully exercisable immediately
upon the Change in Control.

          5. Definition of Option Shares. For all purposes of this Agreement,
Option Shares will continue to be Option Shares in the hands of any holder other
than Optionee (except for the Company, purchasers pursuant to an offering
registered under the 1933 Act and subsequent transferees), and each such other
holder of Option Shares will succeed to all rights and obligations attributable
to Optionee as a holder of Option Shares hereunder. Option Shares will also
include shares of the Company’s capital stock issued with respect to Option
Shares by way of a stock split, stock dividend or other recapitalization.

          6. Definitions. The following terms are defined as follows:

          “1933 Act” means the Securities Act of 1933, as amended from time to
time.

          “Affiliate” means, with respect to any Person, any other Person who is
controlling, controlled by, or under common control with such Person and, in the
case of a Person which is a partnership, any partner of such Person.

          “Board” means the Company’s Board of Directors.

          “Change in Control” means the occurrence of any of the following:

  (1)   When any “person” as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Sections
13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the
Exchange Act but excluding the Company and any Subsidiary and any employee
benefit plan sponsored or maintained by the Company or any Subsidiary (including
any trustee of such plan acting as trustee), directly or indirectly, becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act, as amended
from time to time), after the effective date of the Plan, of securities of the
Company representing 50 percent or more of the combined voting power of the
Company’s then outstanding securities;     (2)   When, during any period of 24
consecutive months during the existence of the Plan, the individuals who, at the
beginning of such period, constitute the Board (the “Incumbent Directors”) cease
for any reason other than death to constitute at least a majority thereof,
provided, however, that a director who was not a director at the beginning of
such 24-month period

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      shall be deemed to have satisfied such 24-month requirement (and be an
Incumbent Director) if such director was elected by, or on the recommendation of
or with the approval of, at least two-thirds of the directors who then qualified
as Incumbent Directors either actually (because they were directors at the
beginning of such 24-month period) or by prior operation of this provision; or  
  (3)   The approval by the stockholders of the Company of a transaction
involving the acquisition of the Company by an entity other than the Company or
a Subsidiary through purchase of assets, by merger, or otherwise.

          “Code” means the Internal Revenue Code of 1986, as amended from time
to time.

          “Common Stock” means, collectively, the Company’s common stock, par
value $0.01 per share.

          “Expiration Date” means, with respect to any Option, the date which is
the tenth anniversary of the date hereof.

          “Good Reason” means (i) the assignment to Optionee of duties that
represent a substantial adverse alteration in the nature or status of his
responsibilities as they were prior to the Change of Control as an executive
offer or key employee of the Company, except in the event Optionee is unable to
or fails to perform his normal full time duties and responsibility with the
Company as a result of incapacity due to physical or mental illness or
incapacity; (ii) a reduction in Optionee’s base salary as in effect on the date
of the Change in Control; (iii) the relocation of the Company’s principal
executive offices to a location outside the San Francisco Area (which includes
the counties of San Francisco, Alameda, Santa Clara, Contra Costa, San Mateo and
Marin) or the Company’s requiring Optionee to be based anywhere other than the
Company’s principal executive offices (but not including required travel on the
Company’s business); or (iv) the wrongful failure by the Company to pay to
Optionee any portion of his base salary, bonus, or benefits, or to pay to
Optionee any portion of an installment of deferred compensation or benefits
under any deferred compensation or benefits program of the Company, within
45 days of the date such base salary, bonus, compensation or benefit is due.

          “Grant Date” means the date the Board approves the grant by the
Company to the Optionee of the Option governed by this Agreement.

          “Option Shares” means (i) all shares of Common Stock purchased
pursuant to the Options granted pursuant to this Agreement and (ii) all shares
of Common Stock issued with respect to Common Stock referred to in clause (i) by
way of stock dividend or stock split or in connection with a recapitalization or
other reorganization affecting the Common Stock.

          “Person” means an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.

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          “Plan” has the meaning set forth in the preamble.

          “Subsidiary” means any corporation of which shares of stock having a
majority of the general voting power in electing the board of directors are, at
the time as of which any determination is being made, owned by the Company
either directly or through its Subsidiaries.

          “Termination Date” means the date that Optionee ceases to be employed
by the Company or any of its Subsidiaries for any reason.

          7. Notices. Any notice provided for in this Agreement must be in
writing and must be personally delivered, received by certified mail, return
receipt requested, or sent by guaranteed overnight delivery service, to the
Optionee at the address appearing on the signature page hereto and to the other
recipients at the address indicated below:

     To the Company:

Therma-Wave, Inc.
1250 Reliance Way
Fremont, California 94539
Attn: President

     and

Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: Matthew W. Sonsini

or such other address or to the attention of such other person as the recipient
party will have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.

          8. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

          9. Complete Agreement. This Agreement and the Plan embody the complete
agreement and understanding among the parties and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
Without limiting the foregoing, all

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existing stock option agreements between the Company and/or the Company’s
existing stockholders and Optionee are hereby cancelled and terminated.

          10. Counterparts. This Agreement may be executed in separate
counterparts, each of which will be deemed to be an original and all of which
taken together will constitute one and the same agreement.

          11. Successors and Assigns; Transfer. This Agreement is intended to
bind and inure to the benefit of and be enforceable by Optionee, the Company,
and their respective successors and assigns, provided that Optionee may not
assign any of his or her rights or obligations, except as expressly provided by
the terms of this Agreement.

          12. Governing Law. The corporate law of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other issues concerning the enforceability, validity and
binding effect of this Agreement will be governed by and construed in accordance
with the laws of the State of California, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of California or
any other jurisdiction) that would cause the application of the law of any
jurisdiction other than the State of California.

          13. Remedies. The parties hereto acknowledge and agree that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party hereto will have the right to injunctive relief, in
addition to all of its other rights and remedies at law or in equity, to enforce
the provisions of this Agreement.

          14. Effect of Transfers in Violation of Agreement. The Company will
not be required (a) to transfer on its books any Option Shares which have been
sold or transferred in violation of any of the provisions set forth in this
Agreement or (b) to treat as owner of such Option Shares, to accord the right to
vote as such owner or to pay dividends to any transferee to whom such Option
Shares have been transferred in violation of this Agreement.

          15. Amendments and Waivers. The Board may at any time amend, alter,
suspend or terminate the Plan without the consent of any Optionee; provided,
however, that no amendment, alteration, suspension or termination of the Plan
shall impair the rights of any Optionee.

          16. Therma-Wave, Inc. 2000 Equity Incentive Plan. The grant of any
Option hereunder is pursuant to and subject to all of the terms and conditions
of the Plan.

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          IN WITNESS WHEREOF, the parties have executed this Stock Option
Agreement on the day and year first above written.

         

  THERMA-WAVE, INC.    
 
       

 

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  By: L. RAY CHRISTIE    

  Its: Vice President Finance & CFO    
 
       

  OPTIONEE:    
 
       

 

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  Name:    
 
       

  Address (please print):    
 
       

 

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  Number of Option Shares:                                             
 
       

  Exercise Price: $                                            
 
       

  [insert closing price on trading date immediately preceding    

  date of Board authorization of this agreement]    

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