Document:

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                                                                     Exhibit 4.3
                             musicmaker.com, Inc.

                           AMENDED STOCK OPTION PLAN

1.        Establishment, Purpose and Types of Awards

          Musicmaker.com, Inc. (the "Corporation") hereby establishes THE
musicmaker.com, Inc. AMENDED STOCK OPTION PLAN (the "Plan"), as an amendment and
restatement of The Music Connection Corporation Stock Option Plan previously
adopted by the Corporation (the "Original Plan"). The purpose of the Plan is to
promote the long-term growth and profitability of the Corporation by (i)
providing key people with incentives to improve stockholder value and to
contribute to the growth and financial success of the Corporation, and (ii)
enabling the Corporation to attract, retain and reward the best available
persons for positions of substantial responsibility.

          The Plan permits the granting of stock options (including nonqualified
stock options and incentive stock options qualifying under Section 422 of the
Code) and stock appreciation rights (including free-standing, tandem and limited
stock appreciation rights) or any combination of the foregoing (collectively,
"Awards").

          The Plan is a compensatory benefit plan within the meaning of Rule 701
under the Securities Act of 1933 (the "Securities Act"). Except to the extent
any other exemption from the Securities Act is expressly relied upon in
connection with any agreement entered into pursuant to the Plan or the
securities issuable hereunder are registered under the Securities Act, the
issuance of Common Stock pursuant to the Plan is intended to qualify for the
exemption from registration under the Securities Act provided by Rule 701. To
the extent that an exemption from registration under the Securities Act provided
by Rule 701 is unavailable, all unregistered offers and sales of Awards and
shares of Common Stock issuable upon exercise of an Award are intended to be
exempt from registration under the Securities Act in reliance upon the private
offering exemption contained in Section 4(2) of the Securities Act, or other
available exemption, and the Plan shall be so administered.

2.        Definitions

          Under this Plan, except where the context otherwise indicates, the
following definitions apply:

          (a)  "Award" shall mean any stock option or stock appreciation right
issued hereunder.

          (b)  "Board" shall mean the Board of Directors of the Corporation.

          (c)  "Change in Control" shall mean (i) any sale, exchange or other
disposition of substantially all of the Corporation's assets; or (ii) any
merger, share exchange, consolidation or other reorganization or business
combination in which the Corporation is not the surviving or continuing
corporation, or in which the Corporation's stockholders become entitled to
receive cash, securities of the Corporation other than voting common stock, or
securities of another issuer.

          (d)  "Code" shall mean the Internal Revenue Code of 1986, as amended,
and any regulations issued thereunder.
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          (e)  "Committee" shall mean the Board or committee of Board members
appointed pursuant to Section 3 of the Plan to administer the Plan.

          (f)  "Common Stock" shall mean shares of the Corporation's voting and
nonvoting classes of common stock.

          (g)  "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

          (h)  "Fair Market Value" of a share of the Corporation's Common Stock
for any purpose on a particular date shall be determined in a manner such as the
Committee shall in good faith determine to be appropriate.

          (i)  "Grant Agreement" shall mean a written agreement between the
Corporation and a grantee memorializing the terms and conditions of an Award
granted pursuant to the Plan.

          (j)  "Grant Date" shall mean the date on which the Committee formally
acts to grant an Award to a grantee or such other date as the Committee shall so
designate at the time of taking such formal action.

          (k)  "Parent" shall mean a corporation, whether now or hereafter
existing, within the meaning of the definition of "parent corporation" provided
in Section 424(e) of the Code, or any successor thereto of similar import.

          (l)  "Rule 16b-3" shall mean Rule 16b-3 as in effect under the
Exchange Act on the effective date of the Plan, or any successor provision
prescribing conditions necessary to exempt the issuance of securities under the
Plan (and further transactions in such securities) from Section 16(b) of the
Exchange Act.

          (m)  "Subsidiary" and "subsidiaries" shall mean only a corporation or
corporations, whether now or hereafter existing, within the meaning of the
definition of "subsidiary corporation" provided in Section 424(f) of the Code,
or any successor thereto of similar import.
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3.        Administration

          (a)  Procedure. The Plan shall be administered by the Board. In the
alternative, the Board may appoint a Committee consisting of not less than two
(2) members of the Board to administer the Plan on behalf of the Board, subject
to such terms and conditions as the Board may prescribe. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board. From
time to time, the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and, thereafter, directly administer the Plan. In
the event that the Board is the administrator of the Plan in lieu of a
Committee, the term "Committee" as used herein shall be deemed to mean the
Board.

               Members of the Board or Committee who are either eligible for
Awards or have been granted Awards may vote on any matters affecting the
administration of the Plan or the grant of Awards pursuant to the Plan, except
that no such member shall act upon the granting of an Award to himself or
herself, but any such member may be counted in determining the existence of a
quorum at any meeting of the Board or the Committee during which action is taken
with respect to the granting of an Award to him or her.

               The Committee shall meet at such times and places and upon such
notice as it may determine. A majority of the Committee shall constitute a
quorum. Any acts by the Committee may be taken at any meeting at which a quorum
is present and shall be by majority vote of those members entitled to vote.
Additionally, any acts reduced to writing or approved in writing by all of the
members of the Committee shall be valid acts of the Committee.

          (b)  Notwithstanding the provisions above, the grant of any Awards to
any "insider" subject to Section 16 of the Securities Act of 1933, as amended,
or any of the four most highly compensated employees of the Company, shall be
approved by either the full Board of Directors of the Company or a subcommittee
of any Committee, such subcommittee consisting of solely two or more "non-
employee directors" within the meaning of Rule 16b-3 and "outside directors"
within the meaning of Section 162(m) of the Code.

          (c)  Powers of the Committee. The Committee shall have all the powers
vested in it by the terms of the Plan, such powers to include authority, in its
sole and absolute discretion, to grant Awards under the Plan, prescribe Grant
Agreements evidencing such Awards and establish programs for granting Awards.
The Committee shall have full power and authority to take all other actions
necessary to carry out the purpose and intent of the Plan, including, but not
limited to, the authority to:

                (i)  determine the eligible persons to whom, and the time or
     times at which Awards shall be granted,

               (ii)  determine the types of Awards to be granted,
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               (iii) determine the number of shares to be covered by or used
     for reference purposes for each Award,

               (iv)  impose such terms, limitations, restrictions and conditions
     upon any such Award as the Committee shall deem appropriate,

               (v)   modify, extend or renew outstanding Awards, accept the
     surrender of outstanding Awards and substitute new Awards, provided that no
     such action shall be taken with respect to any outstanding Award which
     would adversely affect the grantee without the grantee's consent, and

               (vi)  accelerate or otherwise change the time in which an Award
     may be exercised or becomes payable and to waive or accelerate the lapse,
     in whole or in part, of any restriction or condition with respect to such
     Award, including, but not limited to, any restriction or condition with
     respect to the vesting or exercisability of an Award following termination
     of any grantee's employment.

The Committee shall have full power and authority to administer and interpret
the Plan and to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Plan and for the conduct of its
business as the Committee deems necessary or advisable and to interpret same,
all within the Committee's sole and absolute discretion.

          (d)  Limited Liability. To the maximum extent permitted by law, no
member of the Board or Committee shall be liable for any action taken or
decision made in good faith relating to the Plan or any Award thereunder.

          (e)  Indemnification. To the maximum extent permitted by law, the
members of the Board and Committee shall be indemnified by the Corporation in
respect of all their activities under the Plan.

          (f)  Effect of Committee's Decision. All actions taken and decisions
and determinations made by the Committee on all matters relating to the Plan
pursuant to the powers vested in it hereunder shall be in the Committee's sole
and absolute discretion and shall be conclusive and binding on all parties
concerned, including the Corporation, its stockholders, any participants in the
Plan and any other employee of the Corporation, and their respective successors
in interest.

4.        Shares Available for the Plan; Maximum Awards

          Subject to adjustments as provided in Section 10 of the Plan, the
shares of stock that may be delivered or purchased or used for reference
purposes (with respect to stock appreciation rights) with respect to Awards
granted under the Plan, together with Awards granted under the Original Plan,
including with respect to incentive stock options intended to qualify under
Section 422 of the Code, shall not exceed an aggregate of 4,200,000 shares of
Voting Common Stock of the Corporation.  The Corporation shall reserve said
number of shares for Awards under the Plan, subject to adjustments as provided
in Section 10 of the Plan.  If any Award, or portion of an
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Award, under the Plan, or the Original Plan, expires or terminates unexercised,
becomes unexercisable or is forfeited or otherwise terminated, surrendered or
canceled as to any shares without the delivery of shares of Common Stock or
other consideration, the shares subject to such Award shall thereafter be shares
with respect to which further Awards may be granted under the Plan.

          To the extent required by Section 162(m) of the Code, the maximum
number of shares of Common Stock subject to Awards of any combination that may
be granted during any one calendar year to any one individual shall be limited
to 500,000, subject to adjustments as provided in Section 10 of the Plan.  To
the extent required by Section 162(m) of the Code and so long as Section 162(m)
of the Code is applicable to persons eligible to participate in the Plan, shares
of Common Stock subject to the foregoing limit with respect to which the related
Award is terminated, surrendered or canceled shall not again be available for
grant under this limit.

5.        Participation

          Participation in the Plan shall be open to all employees, officers,
directors and consultants of the Corporation, or of any Parent or Subsidiary of
the Corporation, as may be selected by the Committee from time to time.
Notwithstanding the foregoing, participation in the Plan with respect to Awards
of incentive stock options shall be limited to employees of the Corporation, or
of any Parent or Subsidiary of the Corporation. To the extent necessary to
comply with Rule 16b-3 or to constitute an "outside director" within the meaning
of Section 162(m) of the Code, and only in the event that Rule 16b-3 or Section
162(m) of the Code is applicable to the Plan or an Award made thereunder,
Committee members shall not be eligible to participate in the Plan while members
of the Committee.

          Awards may be granted to such eligible persons and for or with respect
to such number of shares of Common Stock as the Committee shall determine,
subject to the limitations in Section 4 of the Plan. A grant of any type of
Award made in any one year to an eligible person shall neither guarantee nor
preclude a further grant of that or any other type of Award to such person in
that year or subsequent years.

6.        Stock Options

          Subject to the other applicable provisions of the Plan, the Committee
may from time to time grant to eligible participants nonqualified stock options
or incentive stock options as that term is defined in Section 422 of the Code.
The stock options granted shall be subject to the following terms and
conditions.

          (a)  Grant of Option. The grant of a stock option shall be evidenced
by a Grant Agreement, executed by the Corporation and the grantee, stating the
number of shares of Common Stock subject to the stock option evidenced thereby
and the terms and conditions of such stock option, in such form as the Committee
may from time to time determine.

          (b)  Price.  The price per share payable upon the exercise of each
stock option ("exercise price") shall be determined by the Committee; provided,
however, that in the case of
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incentive stock options, the exercise price shall not be less than 100% of the
Fair Market Value of the shares on the date the stock option is granted.

          (c)  Payment.  Stock options may be exercised in whole or in part by
payment of the exercise price of the shares to be acquired in accordance with
the provisions of the Grant Agreement, and/or such rules and regulations as the
Committee may have prescribed, and/or such determinations, orders, or decisions
as the Committee may have made.  Payment may be made in cash (or cash
equivalents acceptable to the Committee) or, unless otherwise determined by the
Committee, in shares of Common Stock or a combination of cash and shares of
Common Stock, or by such other means as the Committee may prescribe.  The Fair
Market Value of shares of Common Stock delivered on exercise of stock options
shall be determined as of the date of exercise.  Shares of Common Stock
delivered in payment of the exercise price may be previously owned shares or, if
approved by the Committee, shares acquired upon exercise of the stock option.
Any fractional share will be paid in cash.  The Corporation may make or
guarantee loans to grantees to assist grantees in exercising stock options.

          If the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, the Committee, subject to such limitations as it may determine,
may authorize payment of the exercise price, in whole or in part, by delivery of
a properly executed exercise notice, together with irrevocable instructions, to:
(i) a brokerage firm designated by the Corporation to deliver promptly to the
Corporation the aggregate amount of sale or loan proceeds to pay the exercise
price and any withholding tax obligations that may arise in connection with the
exercise, and (ii) the Corporation to deliver the certificates for such
purchased shares directly to such brokerage firm.

          (d)  Terms of Options.  The term during which each stock option may be
exercised shall be determined by the Committee.  In no event shall a stock
option be exercisable more than ten years from the date it is granted.  Prior to
the exercise of the stock option and delivery of the shares certificates
represented thereby, the grantee shall have none of the rights of a stockholder
with respect to any shares represented by an outstanding stock option.

          (e)  Restrictions on Incentive Stock Options.  Incentive Stock Options
granted under Code Section 422 shall meet the following additional requirements.

                (i)   Grant Date. An incentive stock option must be granted
     within 10 years of the earlier of the Original Plan's adoption by the Board
     of Directors or approval by the Corporation's shareholders.

               (ii)  Exercise Price and Term. The exercise price of an incentive
     stock option shall not be less than 100% of the Fair Market Value of the
     shares on the date the stock option is granted. Also, the exercise price of
     any incentive stock option granted to a grantee who owns (within the
     meaning of Section 422(b)(6) of the Code, after the application of the
     attribution rules in Section 424(d) of the Code) more than 10% of the total
     combined voting power of all classes of shares of the Corporation or its
     Parent or Subsidiary corporations (within the meaning of Sections 422 and
     424 of the Code) shall
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     be not less than 110% of the Fair Market Value of the Common Stock on the
     grant date and the term of such stock option shall not exceed five years.

               (iii) Maximum Grant. The aggregate Fair Market Value (determined
     as of the Grant Date) of shares of Common Stock with respect to which all
     incentive stock options first become exercisable by any grantee in any
     calendar year under this or any other plan of the Corporation and its
     Parent and Subsidiary corporations may not exceed $100,000 or such other
     amount as may be permitted from time to time under Section 422 of the Code.
     To the extent that such aggregate Fair Market Value shall exceed $100,000,
     or other applicable amount, such stock options shall be treated as
     nonqualified stock options. In such case, the Corporation may designate the
     shares of Common Stock that are to be treated as stock acquired pursuant to
     the exercise of an incentive stock option by issuing a separate certificate
     for such shares and identifying the certificate as incentive stock option
     shares in the stock transfer records of the Corporation.

               (iv)  Grantee. Incentive stock options shall only be issued to
     employees of the Corporation, or of a Parent or Subsidiary of the
     Corporation.

               (v)   Designation.  No stock option shall be an incentive stock
     option unless so designated by the Committee at the time of grant or in the
     Grant Agreement evidencing such stock option.

          (f)  Other Terms and Conditions.  Stock options may contain such other
provisions, not inconsistent with the provisions of the Plan, as the Committee
shall determine appropriate from time to time.

7.        Stock Appreciation Rights

          (a)  Award of Stock Appreciation Rights. Subject to the other
applicable provisions of the Plan, the Committee may at any time and from time
to time grant stock appreciation rights ("SARs") to eligible participants,
either on a free-standing basis (without regard to or in addition to the grant
of a stock option) or on a tandem basis (related to the grant of an underlying
stock option), as it determines. SARs granted in tandem with or in addition to a
stock option may be granted either at the same time as the stock option or at a
later time; provided, however, that a tandem SAR shall not be granted with
respect to any outstanding incentive stock option Award without the consent of
the grantee. SARs shall be evidenced by Grant Agreements, executed by the
Corporation and the grantee, stating the number of shares of Common Stock
subject to the SAR evidenced thereby and the terms and conditions of such SAR,
in such form as the Committee may from time to time determine. The term during
which each SAR may be exercised shall be determined by the Committee. In no
event shall an SAR be exercisable more than ten years from the date it is
granted. The grantee shall have none of the rights of a stockholder with respect
to any shares of Common Stock represented by an SAR.

          (b)  Restrictions of Tandem SARs. No incentive stock option may be
surrendered in connection with the exercise of a tandem SAR unless the Fair
Market Value of the Common Stock subject to the incentive stock option is
greater than the exercise price for such incentive
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stock option. SARs granted in tandem with stock options shall be exercisable
only to the same extent and subject to the same conditions as the stock options
related thereto are exercisable. The Committee may, in its discretion, prescribe
additional conditions to the exercise of any such tandem SAR.

          (c)  Amount of Payment Upon Exercise of SARs. An SAR shall entitle the
grantee to receive, subject to the provisions of the Plan and the Grant
Agreement, a payment having an aggregate value equal to the product of (i) the
excess of (A) the Fair Market Value on the exercise date of one share of Common
Stock over (B) the base price per share specified in the Grant Agreement, times
(ii) the number of shares specified by the SAR, or portion thereof, which is
exercised. In the case of exercise of a tandem SAR, such payment shall be made
in exchange for the surrender of the unexercised related stock option (or any
portion or portions thereof which the grantee from time to time determines to
surrender for this purpose).

          (d)  Form of Payment Upon Exercise of SARs. Payment by the Corporation
of the amount receivable upon any exercise of an SAR may be made by the delivery
of Common Stock or cash, or any combination of Common Stock and cash, as
determined in the sole discretion of the Committee from time to time. If upon
settlement of the exercise of an SAR a grantee is to receive a portion of such
payment in shares of Common Stock, the number of shares shall be determined by
dividing such portion by the Fair Market Value of a share of Common Stock on the
exercise date. No fractional shares shall be used for such payment and the
Committee shall determine whether cash shall be given in lieu of such fractional
shares or whether such fractional shares shall be eliminated.

8.        Withholding of Taxes

          The Corporation may require, as a condition to the grant of any Award
under the Plan or exercise pursuant to such Award or to the delivery of
certificates for shares issued or payments of cash to a grantee pursuant to the
Plan or a Grant Agreement (hereinafter collectively referred to as a "taxable
event"), that the grantee pay to the Corporation, in cash or, unless otherwise
determined by the Corporation, in shares of Common Stock, including shares
acquired upon grant of the Award or exercise of the Award, valued at Fair Market
Value on the date as of which the withholding tax liability is determined, any
federal, state or local taxes of any kind required by law to be withheld with
respect to any taxable event under the Plan. The withholding tax obligation that
may be paid by the withholding or delivery of shares may not exceed the
statutory minimum required withholding amount with respect to the grantee's
federal, state and local income tax obligations in connection with a taxable
event. The Corporation, to the extent permitted or required by law, shall have
the right to deduct from any payment of any kind (including salary or bonus)
otherwise due to a grantee any federal, state or local taxes of any kind
required by law to be withheld with respect to any taxable event under the Plan,
or to retain or sell without notice a sufficient number of the shares to be
issued to such grantee to cover any such taxes.
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9.        Transferability

          To the extent required to comply with Rule 16b-3, if applicable, and
in any event in the case of an incentive stock option or a stock appreciation
right granted with respect to an incentive stock option, no Award granted under
the Plan shall be transferable by a grantee otherwise than by will or the laws
of descent and distribution. Unless otherwise determined by the Committee in
accord with the provisions of the immediately preceding sentence, an Award may
be exercised during the lifetime of the grantee, only by the grantee or, during
the period the grantee is under a legal disability, by the grantee's guardian or
legal representative.

10.       Adjustments; Business Combinations

          In the event of a reclassification, recapitalization, stock split,
stock dividend, combination of shares, or other similar event, the maximum
number and kind of shares reserved for issuance or with respect to which Awards
may be granted under the Plan as provided in Section 4 shall be adjusted to
reflect such event, and the Committee shall make such adjustments as it deems
appropriate and equitable in the number, kind and price of shares covered by
outstanding Awards made under the Plan, and in any other matters which relate to
Awards and which are affected by the changes in the Common Stock referred to
above.

          In the event of any proposed Change in Control, the Committee shall
take such action as it deems appropriate and equitable to effectuate the
purposes of this Plan and to protect the grantees of Awards, which action may
include, but without limitation, any one or more of the following: (i)
acceleration or change of the exercise dates of any Award; (ii) arrangements
with grantees for the payment of appropriate consideration to them for the
cancellation and surrender of any Award; and (iii) in any case where equity
securities other than Common Stock of the Corporation are proposed to be
delivered in exchange for or with respect to Common Stock of the Corporation,
arrangements providing that any Award shall become one or more Awards with
respect to such other equity securities.

          The Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in the
preceding two paragraphs of this Section 10) affecting the Corporation, or the
financial statements of the Corporation or any Subsidiary, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan.

          In the event the Corporation dissolves and liquidates (other than
pursuant to a plan of merger or reorganization), then notwithstanding any
restrictions on exercise set forth in this Plan or any Grant Agreement, or other
agreement evidencing a stock option or stock appreciation right: (i) each
grantee shall have the right to exercise his stock option or stock appreciation
right at any time up to ten (10) days prior to the effective date of such
liquidation and dissolution; and (ii) the Committee may make arrangements with
the grantees for the payment of appropriate consideration to them for the
cancellation and surrender of any stock option or stock appreciation
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right that is so canceled or surrendered at any time up to ten (10) days prior
to the effective date of such liquidation and dissolution. The Committee may
establish a different period (and different conditions) for such exercise,
delivery, cancellation, or surrender to avoid subjecting the grantee to
liability under Section 16(b) of the Exchange Act. Any stock option or stock
appreciation right not so exercised, canceled, or surrendered shall terminate on
the last day for exercise prior to such effective date.

11.       Termination and Modification of the Plan

          The Board, without further approval of the stockholders, may modify or
terminate the Plan or any portion thereof at any time, except that no
modification shall become effective without prior approval of the stockholders
of the Corporation if stockholder approval is necessary to comply with any tax
or regulatory requirement or rule of any exchange or Nasdaq System upon which
the Common Stock is listed or quoted; including for this purpose stockholder
approval that is required for continued compliance with Rule 16b-3 or
stockholder approval that is required to enable the Committee to grant incentive
stock options pursuant to the Plan.

          The Committee shall be authorized to make minor or administrative
modifications to the Plan as well as modifications to the Plan that may be
dictated by requirements of federal or state laws applicable to the Corporation
or that may be authorized or made desirable by such laws. The Committee may
amend or modify the grant of any outstanding Award in any manner to the extent
that the Committee would have had the authority to make such Award as so
modified or amended.

12.       Non-Guarantee of Employment

          Nothing in the Plan or in any Grant Agreement thereunder shall confer
any right on an employee to continue in the employ of the Corporation or shall
interfere in any way with the right of the Corporation to terminate an employee
at any time.

13.       Transfer of Employee

          For purposes of maintaining a grantee's continuous status as an
employee and accrual of rights under any Award, transfer of an employee among
the Corporation and the Corporation's Parent or Subsidiaries shall not be
considered a termination of employment. Nor shall it be considered a termination
of employment for such purposes if an employee is placed on military or sick
leave or such other leave of absence which is considered as continuing intact
the employment relationship; in such a case, the employment relationship shall
be continued until the date when an employee's right to reemployment shall no
longer be guaranteed either by law or contract.

14.       Written Agreement

          Each Grant Agreement entered into between the Corporation and a
grantee with respect to an Award granted under the Plan shall incorporate the
terms of this Plan and shall contain
<PAGE>

such provisions, consistent with the provisions of the Plan, as may be
established by the Committee.

15.       Non-Uniform Determinations

          The Committee's determinations under the Plan (including without
limitation determinations of the persons to receive Awards, the form, amount and
timing of such Awards, the terms and provisions of such Awards and the
agreements evidencing same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, Awards under
the Plan, whether or not such persons are similarly situated.

16.       Listing and Registration

          If the Corporation determines that the listing, registration or
qualification upon any securities exchange or upon any listing or quotation
system established by the National Association of Securities Dealers, Inc.
("Nasdaq System") or under any law, of shares subject to any Award is necessary
or desirable as a condition of, or in connection with, the granting of same or
the issue or purchase of shares thereunder, no such Award may be exercised in
whole or in part and no restrictions on such Award shall lapse, unless such
listing, registration or qualification is effected free of any conditions not
acceptable to the Corporation.

17.       Compliance with Securities Law

          The Corporation may require that a grantee, as a condition to exercise
of an Award, and as a condition to the delivery of any share certificate,
provide to the Corporation, at the time of each such exercise and each such
delivery, a written representation that the shares of Common Stock being
acquired shall be acquired by the grantee solely for investment and will not be
sold or transferred without registration or the availability of an exemption
from registration under the Securities Act and applicable state securities laws.
The Corporation may also require that a grantee submit other written
representations which will permit the Corporation to comply with federal and
applicable state securities laws in connection with the issuance of the Common
Stock, including representations as to the knowledge and experience in financial
and business matters of the grantee and the grantee's ability to bear the
economic risk of the grantee's investment. The Corporation may require that the
grantee obtain a "purchaser representative" as that term is defined in
applicable federal and state securities laws. The stock certificates for any
shares of Common Stock issued pursuant to this Plan may bear a legend
restricting transferability of the shares of Common Stock unless such shares are
registered or an exemption from registration is available under the Securities
Act and applicable state securities laws. The Corporation may notify its
transfer agent to stop any transfer of shares of Common Stock not made in
compliance with these restrictions. Common Stock shall not be issued with
respect to an Award granted under the Plan unless the exercise of such Award and
the issuance and delivery of share certificates for such Common Stock pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any national securities exchange
or Nasdaq System upon which the Common Stock may then be listed or quoted, and
<PAGE>

shall be further subject to the approval of counsel for the Corporation with
respect to such compliance to the extent such approval is sought by the
Committee.

18.       No Limit on Other Compensation Arrangements

          Nothing contained in the Plan shall prevent the Corporation or its
Parent or Subsidiary corporations from adopting or continuing in effect other
compensation arrangements (whether such arrangements be generally applicable or
applicable only in specific cases) as the Committee in its discretion determines
desirable, including without limitation the granting of stock options or stock
appreciation rights otherwise than under the Plan.

19.       No Trust or Fund Created

          Neither the Plan nor any Award shall create or be construed to create
a trust or separate fund of any kind or a fiduciary relationship between the
Corporation and a grantee or any other person.  To the extent that any grantee
or other person acquires a right to receive payments from the Corporation
pursuant to an Award, such right shall be no greater than the right of any
unsecured general creditor of the Corporation.

20.       Governing Law

          The validity, construction and effect of the Plan, of Grant Agreements
entered into pursuant to the Plan, and of any rules, regulations, determinations
or decisions made by the Board or Committee relating to the Plan or such Grant
Agreements, and the rights of any and all persons having or claiming to have any
interest therein or thereunder, shall be determined exclusively in accordance
with applicable federal laws and the laws of the State of Delaware without
regard to its conflict of laws rules and principles.

21.       Plan Subject to Charter and Bylaws

          This Plan is subject to the Charter and Bylaws of the Corporation, as
they may be amended from time to time.

22.       Effective Date; Termination Date

          The Plan is effective as of the date on which the Plan was adopted by
the Board, subject to approval of the stockholders within twelve months before
or after such date.  No Award shall be granted under the Plan after the close of
business on the day immediately preceding the tenth anniversary of the effective
date of the Original Plan, which was July 2, 1996, the earlier of the date of
its adoption by the Board and the approval by the shareholders.  Subject to
other applicable provisions of the Plan, all Awards made under the Plan prior to
such termination of the Plan shall remain in effect until such Awards have been
satisfied or terminated in accordance with the Plan and the terms of such
Awards.<PAGE>

                                                                   EXHIBIT 10.24

                               THERMA-WAVE, INC.

                           2000 EQUITY INCENTIVE PLAN

     1.   Purposes of the Plan.  The purposes of this Equity Incentive Plan are:
          --------------------

          .    to attract and retain the best available personnel for positions
     of  substantial responsibility,

          .    to provide additional incentive to Employees, Directors and
     Consultants, and

          .    to promote the success of the Company's business.

     Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant.

     2.   Definitions.  As used herein, the following definitions shall apply:
          -----------

          (a) "Administrator" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.

          (b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.

          (c) "Board" means the Board of Directors of the Company.

          (d) "Change in Control" means the occurrence of any of the following:

              (i)   When any "person" as defined in Section 3(a)(9) of 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;

              (ii)  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
<PAGE>

"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 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

              (iii) 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.

          (e) "Code" means the Internal Revenue Code of 1986, as amended.

          (f) "Committee"  means a committee of Directors appointed by the Board
in accordance with Section 4 of the Plan.

          (g) "Common Stock" means the Common Stock, par value $0.01 per share,
of the Company.

          (h) "Company" means Therma-Wave, Inc., a Delaware corporation.

          (i) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.

          (j) "Director" means a member of the Board.

          (k) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

          (l) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company.  A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract.  If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a Director's fee by the Company
shall be sufficient to constitute "employment" by the Company.

          (m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (n) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

                                       2
<PAGE>

              (i)   If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;

              (ii)  If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable; or

              (iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.

          (o) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

          (p) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

          (q) "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option.  The Notice of Grant is
part of the Option Agreement.

          (r) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

          (s) "Option" means a stock option granted pursuant to the Plan.

          (t) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant.  The
Option Agreement is subject to the terms and conditions of the Plan.

          (u) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.

          (v) "Optioned Stock" means the Common Stock subject to an Option.

          (w) "Optionee" means the holder of an outstanding Option granted under
the Plan.

          (x) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

                                       3
<PAGE>

          (y) "Plan" means this 2000 Equity Incentive Plan.

          (z) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect to
the Plan.

          (aa) "Section 16(b)" means Section 16(b) of the Exchange Act.

          (bb) "Service Provider" means an Employee, Director or Consultant.

          (cc) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.

          (dd) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

     3.   Shares Subject to the Plan.  Subject to the provisions of Section 12
          --------------------------
of  the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is (a)  300,000 Shares, plus (b) any Shares returned to the
Company's existing stock option plans (the "Existing Plans") as a result of
termination of options under the Existing Plans, plus (c) an annual increase to
be added on the date of each annual meeting of the stockholders of the Company,
beginning with the 2000 annual meeting of the stockholders, equal to one
percent (1.0%) of the outstanding Shares on such date or such lesser amount
determined by the Board. The Shares may be authorized, but unissued, or
reacquired Common Stock.

          If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated); provided,
however, that Shares that have actually been issued under the Plan, whether upon
exercise of an Option shall not be returned to the Plan and shall not become
available for future distribution under the Plan.

     4.   Administration of the Plan.
          --------------------------

          (a)  Procedure.
               ---------

               (i)    Multiple Administrative Bodies. The Plan may be
                      ------------------------------
administered by different Committees with respect to different groups of Service
Providers.

               (ii)   Section 162(m).  To the extent that the Administrator
                      --------------
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.

                                       4
<PAGE>

               (iii)  Rule 16b-3. To the extent desirable to qualify
                      ----------
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.

               (iv)   Other Administration.  Other than as provided above, the
                      --------------------
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.

          (b)  Powers of the Administrator.  Subject to the provisions of the
               ---------------------------
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

               (i)    to determine the Fair Market Value;

               (ii)   to select the Service Providers to whom Options may be
granted hereunder;

               (iii)  to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;

               (iv)   to approve forms of agreement for use under the Plan;

               (v)    to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Option granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;

               (vi)   to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;

               (vii)  to institute an Option Exchange Program;

               (viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;

               (ix)   to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;

               (x)    to modify or amend each Option (subject to Section 14(c)
of the Plan), including the discretionary authority to extend the post-
termination exercisability period of Options longer than is otherwise provided
for in the Plan;

                                       5
<PAGE>

               (xi)   to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option that number of Shares having a Fair Market Value equal to
the amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined. All elections by an Optionee to have Shares withheld for
this purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable;

               (xii)  to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option previously
granted by the Administrator; and

               (xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.

          (c)  Effect of Administrator's Decision.  The Administrator's
               ----------------------------------
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.

     5.   Eligibility.  Nonstatutory Stock Options and may be granted to
          -----------
Service Providers. Incentive Stock Options may be granted only to Employees.

     6.   Limitations.
          -----------

          (a)  Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option.  However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

          (b)  Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such relationship at any
time, with or without cause.

          (c)  The following limitations shall apply to grants of Options:

               (i)    No Service Provider shall be granted, in any fiscal year
of the Company, Options to purchase more than 500,000 Shares.

                                       6
<PAGE>

               (ii)   In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 500,000 Shares
which shall not count against the limit set forth in subsection (i) above.

               (iii)  The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 12.

               (iv)   If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 12), the canceled Option will be counted against the limits
set forth in subsections (i) and (ii) above.  For this purpose, if the exercise
price of an Option is reduced, the transaction will be treated as a cancellation
of the Option and the grant of a new Option.

     7.   Term of Plan.  Subject to Section 18 of the Plan, the Plan shall
          ------------
become effective upon its adoption by the Board.  It shall continue in effect
for a term of ten (10) years unless terminated earlier under Section 14 of the
Plan.

     8.   Term of Option.  The term of each Option shall be stated in the Option
          --------------
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement.  Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.

     9.   Option Exercise Price and Consideration.
          ---------------------------------------

          (a)  Exercise Price. The per share exercise price for the Shares to be
               --------------
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

               (i)    In the case of an Incentive Stock Option

                      (A)  granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

                      (B)  granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.

               (ii)   In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code,

                                       7
<PAGE>

the per Share exercise price shall be no less than 100% of the Fair Market Value
per Share on the date of grant.

               (iii)  Notwithstanding the foregoing, Options may be granted with
a per Share exercise price of less than 100% of the Fair Market Value per Share
on the date of grant pursuant to a merger or other corporate transaction.

          (b)  Waiting Period and Exercise Dates.  At the time an Option is
               ---------------------------------
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.

          (c)  Form of Consideration.  The Administrator shall determine the
               ---------------------
acceptable form of consideration for exercising an Option, including the method
of payment.  In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant.  Such
consideration may consist entirely of:

               (i)    cash;

               (ii)   check;

               (iii)  promissory note;

               (iv)   other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;

               (v)    consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;

               (vi)   a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;

               (vii)  any combination of the foregoing methods of payment; or

               (viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.

     10.  Exercise of Option.
          ------------------

          (a)  Procedure for Exercise; Rights as a Stockholder.  Any Option
               -----------------------------------------------
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the

                                       8
<PAGE>

Administrator provides otherwise, vesting of Options granted hereunder shall be
tolled during any unpaid leave of absence. An Option may not be exercised for a
fraction of a Share.

          An Option shall be deemed exercised when the Company receives: (i)
written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. 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.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.

          Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.

          (b)  Termination of Relationship as a Service Provider. If an Optionee
               -------------------------------------------------
  ceases to be a Service Provider, other than upon the Optionee's death,
  Disability or retirement, the Optionee may exercise his or her Option within
  such period of time as is specified in the Option Agreement to the extent that
  the Option is vested on the date of termination (but in no event later than
  the expiration of the term of such Option as set forth in the Option
  Agreement). In the absence of a specified time in the Option Agreement, the
  Option shall remain exercisable for three (3) months following the Optionee's
  termination. If, on the date of termination, the Optionee is not vested as to
  his or her entire Option, the Shares covered by the unvested portion of the
  Option shall revert to the Plan. If, after termination, the Optionee does not
  exercise his or her Option within the time specified by the Administrator, the
  Option shall terminate, and the Shares covered by such Option shall revert to
  the Plan.

          (c)  Disability of Optionee.  If an Optionee ceases to be a Service
               ----------------------
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement).  In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination.  If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan.  If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

                                       9
<PAGE>

          (d)  Death of Optionee.  If an Optionee dies while a Service Provider,
               -----------------
the Option may be exercised within such period of time as is specified in the
Option Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death.  In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination.  If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan.  The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s) entitled to
exercise the Option under the Optionee's will or the laws of descent or
distribution.  If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

          (e)  Retirement of Optionee.  If an Optionee ceases to be a Service
               ----------------------
Provider as a result of the Optionee's voluntary retirement, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Agreement to the extent the Option is vested on the date of retirement
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement).  In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for twelve (12) months
following the Optionee's retirement.  If, on the date of retirement, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan.  If, after retirement,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.  This Section 10(e) shall only apply to an Optionee who
voluntarily retires from the Company or a Subsidiary on or after the date on
which such Optionee has attained the age of 59  1/2.  Notwithstanding anything
in this Section 10(e) or an Option Agreement to the contrary, if the Committee
determines in the good faith exercise of its judgment that any Optionee who has
retired engages in any conduct detrimental to the Company, upon such
determination by the Committee, such Option shall immediately and without
further action on the part of the Company, expire and become unexercisable.  No
notice of such determination need to be given to any Optionee in such
circumstance.

          (f)  Change in Control.  In the event of a Change in Control, only if
               -----------------
provided in the Option Agreement, any Option awarded under this Plan to the
extent not previously exercisable shall immediately become fully exercisable.
The Administrator in its sole discretion may direct the Company to cash out all
outstanding Options as of the date a Change in Control occurs or such other date
as the Administrator may determine prior to the Change in Control.

          (g)  Buyout Provisions. The Administrator may at any time offer to buy
               -----------------
out for a payment in cash or Shares an Option previously granted based on such
 terms and conditions as the Administrator shall establish and communicate to
 the Optionee at the time that such offer is made.

     11.  Non-Transferability of Options.  Unless determined otherwise by the
          ------------------------------
Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
decent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.  If the Administrator makes an Option
transferable,

                                      10
<PAGE>

such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.

     12.  Adjustments Upon Changes in Capitalization, Dissolution, Merger or
          ------------------------------------------------------------------
Asset Sale.
----------

          (a)  Changes in Capitalization.  Subject to any required action by the
               -------------------------
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option , shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

          (b)  Dissolution or Liquidation.  In the event of the proposed
               --------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction.  The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable.  In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated.  To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.

          (c)  Merger or Asset 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
Optioned Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option shall be fully vested and exercisable for a period of fifteen (15) days
from the date of such notice, and the Option shall terminate upon the expiration
of such period. For the purposes of this paragraph, the Option shall be
considered assumed if, following the merger or sale of assets, the option or
right confers the right to purchase or receive,

                                      11
<PAGE>

for each Share of Optioned Stock subject to the Option immediately prior to the
merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders of
Common Stock for each Share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or sale of assets is
not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option, for each Share
of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.

     13.  Date of Grant.  The date of grant of an Option shall be, for all
          -------------
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.

     14.  Amendment and Termination of the Plan.
          -------------------------------------

          (a)  Amendment and Termination.  The Board may at any time amend,
               -------------------------
alter, suspend or terminate the Plan.

          (b)  Stockholder Approval.  The Company shall obtain stockholder
               --------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

          (c)  Effect of Amendment or Termination.  No amendment, alteration,
               ----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.

     15.  Conditions Upon Issuance of Shares.
          ----------------------------------

          (a)  Legal Compliance.  Shares shall not be issued pursuant to the
               ----------------
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

          (b)  Investment Representations.  As a condition to the exercise of an
               --------------------------
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.

                                      12
<PAGE>

     16.  Inability to Obtain Authority.  The inability of the Company to obtain
          -----------------------------
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

     17.  Reservation of Shares.  The Company, during the term of this Plan,
          ---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     18.  Stockholder Approval.  The Plan shall be subject to approval by the
          --------------------
stockholders of the Company within twelve (12) months after the date the Plan is
adopted by the Board.  Such stockholder approval shall be obtained in the manner
and to the degree required under Applicable Laws.  The Plan shall terminate in
the event that it is not approved by the stockholders of the Company within the
time period set forth herein.  In addition, all of the Options granted under
this Plan prior to its approval by the stockholders of the Company shall be
granted subject to, and conditioned upon, such approval and shall automatically
terminate in the event that the Plan has not been approved by the stockholders
within the time period set forth herein.

                                      13
<PAGE>

                                   EXHIBIT A

                           2000 Equity Incentive Plan

                                EXERCISE NOTICE

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

Attention: Chief Financial Officer

     1.   Exercise of Option.  Effective as of today, ________________, _____,
          ------------------
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Therma-Wave, Inc. (the "Company") under
and pursuant to the 2000 Equity Incentive Plan (the "Plan") and the Stock Option
Agreement dated _____________, _____ (the "Option Agreement"). The purchase
price for the Shares shall be $_____________, as required by the Option
Agreement.

     2.   Delivery of Payment.  Purchaser herewith delivers to the Company the
          -------------------
full purchase price for the Shares.

     3.   Representations of Purchaser.  Purchaser acknowledges that Purchaser
          ----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

     4.   Rights as Stockholder.  Until the issuance (as evidenced by the
          ---------------------
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option.  The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.

     5.   Tax Consultation.  Purchaser understands that Purchaser may suffer
          ----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares.  Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

     6.   Entire Agreement; Governing Law.  The Plan and Option Agreement are
          -------------------------------
incorporated herein by reference.  This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter

                                      14
<PAGE>

hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser.  This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.

Submitted by:                       Accepted by:

PURCHASER:                          THERMA-WAVE, INC.

----------------------              ----------------------------
Signature                           By

----------------------              ----------------------------
Print Name                          Its

Address:                            Address:

                                           1250 Reliance Way
----------------------
                                            Fremont, California 94539
----------------------

----------------------
Date Received

                                      15

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