Document:

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                                                                    Exhibit 10.1

                 THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
                  CERTAIN PROVISIONS CONTAINED HEREIN AND TO
                         RESALE RESTRICTIONS UNDER THE
                      SECURITIES ACT OF 1933, AS AMENDED

          STOCK OPTION AGREEMENT, dated February 14, 2000, between Heritage
Bancorp, Inc., a Delaware corporation ("Issuer"), and SouthBanc Shares, Inc., a
Delaware corporation ("Grantee").

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

          WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Stock Option Agreement
(this "Agreement");

          WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as hereinafter defined); and

          WHEREAS, as a condition and inducement to Issuer's willingness to
enter into the Merger Agreement and this Agreement, Issuer has requested that
Grantee agree and Grantee has agreed, to grant Issuer an option to purchase
shares of Grantee's Common Stock on substantially the same terms as the Option
(as hereinafter defined).

          NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:

          1.   (a)   Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 855,916 fully paid and non  assessable shares of Issuer's Common Stock, par
value $0.01 per share ("Common Stock"), at a price of $13.25 per share (the
"Option Price"); provided, however, that in no event shall the number of shares
                 -------- --------
of Common Stock for which this Option is exercisable exceed 19.9% of the
Issuer's issued and outstanding shares of Common Stock without giving effect to
any shares subject to or issued pursuant to the Option.  The number of shares of
Common Stock that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.

               (b)   In the event that any additional shares of Common Stock are
either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased,
retired or otherwise cease to be outstanding after the date of this Agreement,
the number of shares of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such issuance, such number equals
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19.9% of the number of shares of Common Stock then issued and outstanding
without giving ef  fect to any shares subject or issued pursuant to the Option.
Nothing contained in this Section 1(b) or elsewhere in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreement.

          2.   (a)   The Holder (as hereinafter defined) may exercise the
Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as here  inafter defined) and a Subsequent Triggering
Event (as hereinafter defined) shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined) and the Holder is not in
material beach of the agreements or covenants contained in this Agreement or the
Merger Agreement, provided that the Holder shall have sent the written notice of
                  --------
such exercise (as provided in subsection (e) of this Section 2) within 90 days
following such Subsequent Triggering Event (or such longer period as provided in
Section 10), provided further, however, that if the Option cannot be exercised
             -------- -------  -------
on any day because of any injunction, order or similar restraint issued by a
court of competent jurisdiction, the period during which the Option may be
exercised shall be extended so that the Option shall expire no earlier than on
the tenth business day after such injunction, order or restraint shall have been
dissolved or when such injunction, order or restraint shall have become
permanent and no longer subject to appeal, as the case may be.  Each of the
following shall be an "Exercise Termination Event":  (i) the Effective Time (as
defined in the Merger Agreement) of the Merger; (ii) termination of the Merger
Agreement in ac cordance with the provisions thereof if such termination occurs
prior to the occurrence of an Initial Triggering Event except a termination by
Grantee pursuant to Section 6.1(e) of the Merger Agreement (unless the breach by
Issuer giving rise to such right of termination is non-volitional); or (iii) the
passage of 12 months after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or is a
termination by Grantee pursuant to Section 6.1(e) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is non-
volitional).  Notwithstanding any other provision of this Agreement, in no event
shall any of Issuer's obligations under this Agreement continue six months
beyond an Exercise Termination Event.  The term "Holder" shall mean the holder
or holders of the Option.

               (b)   The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:

                     (i) Issuer or any of its Subsidiaries (each an "Issuer
     Subsidiary"), without having received Grantee's prior written consent,
     shall have entered into an agreement to engage in an Acquisition
     Transaction (as hereinafter defined) with any person (the term "person" for
     purposes of this Agreement having the meaning as  signed thereto in
     Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as
     amended (the "1934 Act"), and the rules and regulations thereunder) other
     than Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or
     the Board of Directors of Issuer shall have recommended that the
     stockholders of Issuer approve or accept any Acquisition Transaction with
     any person other than Grantee or a Subsidiary of Grantee. For purposes of
     this Agreement, "Acquisition Transaction" shall mean (A) a merger or
     consolidation, or any similar transaction, involving Issuer or any
     Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X
     promulgated by the Securities and Exchange

                                      -2-
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     Commission (the "SEC")) of Issuer, (B) a purchase, lease or other
     acquisition or as sumption of all or a substantial portion of the assets or
     deposits of Issuer or any Significant Subsidiary of Issuer, (C) a purchase
     or other acquisition (including by way of merger, consolidation, share
     exchange or otherwise) of securities representing 10% or more of the voting
     power of Issuer, or (D) any substantially similar transaction; provided,
                                                                    --------
     however, that in no event shall any merger, consolidation,  purchase or
     -------
     similar transaction involving only the Issuer and one or more of its
     Subsidiaries or involving only two or more of such Subsidiaries, be deemed
     to be an Acquisition Transaction, provided that any such transaction is not
     entered into in violation of the terms of the Merger Agreement;

                    (ii)   Issuer or any Issuer Subsidiary, without having
     received Grantee's prior written consent, shall have authorized,
     recommended, proposed or publicly announced its intention to authorize,
     recommend or propose, an Acquisition Transaction with any person other than
     Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer shall
     have publicly withdrawn or modified, or publicly announced its intent to
     withdraw or modify, in any manner adverse to Grantee, its recommendation
     that the stockholders of Issuer approve the transactions contemplated by
     the Merger Agreement in anticipation of engaging in an Acquisition
     Transaction;

                    (iii)  Any person, other than Grantee, any Grantee
     Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity in the
     ordinary course of its business, shall have acquired beneficial ownership
     or the right to acquire beneficial ownership of 10% or more of the
     outstanding shares of Common Stock (the term "beneficial ownership" for
     purposes of this Agreement having the meaning assigned thereto in Section
     13(d) of the 1934 Act, and the rules and regulations thereunder);

                    (iv)   Any person other than Grantee or any Grantee
     Subsidiary shall have made a bona fide proposal to Issuer or its
     stockholders by public announcement or written communication that is or
     becomes the subject of public disclo sure to engage in an Acquisition
     Transaction;

                    (v)    After a proposal is made by a third party to Issuer
     or its stockholders to engage in an Acquisition Transaction, Issuer shall
     have breached any cov enant or obligation contained in the Merger Agreement
     and such breach (x) would entitle Grantee to terminate the Merger Agreement
     and (y) shall not have been cured prior to the Notice Date (as defined
     below); or

                    (vi)   Any person other than Grantee or any Grantee
     Subsidiary, other than in connection with a transaction to which Grantee
     has given its prior written consent, shall have filed an application or
     notice with the Federal Reserve Board, the Office of Thrift Supervision
     ("OTS") or any other federal or state bank regulatory authority for
     approval to engage in an Acquisition Transaction.

              (c)   The term "Subsequent Triggering Event" shall mean either of
the following events or transactions occurring after the date hereof:

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                     (i)   The acquisition by any person of beneficial ownership
     of 25% or more of the then outstanding shares of Common Stock; or

                     (ii)  The occurrence of the Initial Triggering Event
     described in paragraph (i) of subsection (b) of this Section 2, except that
     the percentage referred to in clause (c) shall be 25%.

               (d)   Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event of
which it has notice (together, a "Triggering Event"), it being understood that
the giving of such notice by Issuer shall not be a condition to the right of the
Holder to exercise the Option.

               (e)  In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the date of which
being herein referred to as the "Notice Date") specifying (i) the total number
of shares it will purchase pursuant to such exercise and (ii) a place and date
not earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided that
                                                                   --------
if prior notification to or approval of the Federal Reserve Board, the OTS or
any other regulatory agency is required in connection with such purchase, the
Holder shall promptly file the required notice or application for approval and
shall expeditiously process the same and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall have
passed. Any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto.

               (f)  At the closing referred to in subsection (e) of this Section
2, the Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
--------
shall not preclude the Holder from exercising the Option.

               (g)  At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder, and
the Holder shall deliver to Issuer this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.

               (h)  Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:

     "The transfer of the shares represented by this certificate is subject to
     certain provisions of an agreement between the registered holder hereof and
     Issuer and to

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     resale restrictions arising under the Securities Act of 1933, as amended. A
     copy of such agreement is on file at the principal office of Issuer and
     will be provided to the holder hereof without charge upon receipt by Issuer
     of a written request therefor."

It is understood and agreed that:  (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions to this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or trans  ferred in
compliance with the provisions of this Agreement and under circumstances that do
not require the retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied.  In addition, such certificates shall bear any other legend
as may be required by law.

               (i)  Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (e) of this
Section 2 and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder. Issuer shall pay all expenses, and any and all United States
federal, state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock certificates under
this Section 2 in the name of the Holder or its assignee, transferee or
designee.

          3.   Issuer agrees:  (i) that it shall at all times maintain, free
from preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period re  quirements specified in 15 U.S.C. (S) 18a and regulations promulgated
thereunder and (y) in the event, under the Bank Holding Company Act of 1956, as
amended, the Change in Bank Control Act of 1978, as amended, or any other
federal or state banking law, prior approval of or notice to the Federal Reserve
Board, the OTS or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board, the OTS or such state regulatory authority as they may require) in order
to permit the Holder to exercise the Option and Issuer duly and effectively to
issue shares of Common Stock pursuant hereto; and (iv) promptly to take all
action provided herein to protect the rights of the Holder against dilution.

                                      -5-
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          4.   This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged.  Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.  Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.

          5.   In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5.  In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, distributions on or in respect of the Common Stock that
would be prohibited under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such manner as shall fully
preserve the economic benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to provide for such proper
ad  justment and the full satisfaction of the Issuer's obligations hereunder.

          6.   Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
(whether on its own behalf or on behalf of any subsequent holder of this Option
(or part thereof) or any of the shares of Common Stock issued pursuant hereto)
delivered within 90 days of such Subsequent Triggering Event (or such longer
period as provided in Section 10), promptly prepare, file and keep current a
shelf registration statement under the 1933 Act covering this Option and any
shares issued and issuable pursuant to this Option and shall use its reasonable
best efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of this Option and any
shares of Common Stock issued upon total or partial exercise of this Option
("Option Shares") in accordance with any plan of disposition requested by
Grantee. Issuer will use its reasonable best efforts to cause such registration
statement first to become effective and then to remain effective for such period
not in excess of 180 days from the day such registration statement first becomes
effective or such shorter time as may be reasonably necessary to effect such
sales or other dispositions.  Grantee shall have the right to demand two such
registrations.  The foregoing notwithstanding, if, at the time of any request by
Grantee for registration of the Option or Option Shares as provided above,
Issuer is in registration with respect to an underwritten public offering of
shares of Common Stock, and if in the good faith

                                      -6-
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judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or under writers, of such offering the inclusion of the
Holder's Option or Option Shares would interfere with the successful marketing
of the shares of Common Stock offered by Issuer, the number of Option Shares
otherwise to be covered in the registration statement contemplated hereby may be
reduced; provided, however, that after any such required reduction the number of
         --------  -------
Option Shares to be included in such offering for the account of the Holder
shall constitute at least 25% of the total number of shares to be sold by the
Holder and Issuer in the aggregate; and provided further, however, that if such
                                        -------- -------  -------
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practicable and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in secondary
offering underwriting agree ments for the Issuer. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration rights under
this Section 6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall
Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.

          7.   (a)  Immediately prior to the occurrence of a Repurchase Event
(as defined below) and prior to twelve months thereafter, (i) following a
request of the Holder, delivered prior to an Exercise Termination Event, Issuer
(or any successor thereto) shall repur  chase the Option from the Holder at a
price (the "Option Repurchase Price") equal to the amount by which (A) the
Market/Offer Price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered within 90 days of such oc  currence (or such longer period as provided
in Section 10), Issuer shall repurchase such number of the Option Shares from
the Owner as the Owner shall designate at a price (the "Option Share Repurchase
Price") equal to the Market/Offer Price multiplied by the number of Option
Shares so designated.  The term "Market/Offer Price" shall mean the highest of
(i) the price per share of Common Stock at which a tender offer or exchange
offer therefor has been made, (ii) the price per share of Common Stock to be
paid by any third party pursuant to an agreement with Issuer, (iii) the highest
closing price for shares of Common Stock within the six-month period immedi
ately preceding the date the Holder gives notice of the required repurchase of
this Option or the Owner gives notice of the required repurchase of Option
Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to Issuer,
divided by the number of shares of Common Stock of Issuer outstanding at the
time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment

                                      -7-
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banking firm selected by the Holder or Owner, as the case may be, and reasonably
acceptable to Issuer.

               (b)  The Holder and the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (i) five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (ii) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall deliver
or cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share Re purchase Price therefor or the portion thereof that
Issuer is not then prohibited under applicable law and regulation from so
delivering.

               (c)  To the extent that Issuer is prohibited under applicable law
or regulation from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify the Holder and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the Option
Share Repurchase Price, respectively, that it is no longer prohibited from
delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
                      --------  -------
delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7
is prohibited under applicable law or regulation from delivering to the Holder
and/or the Owner, as appropriate, the Option Repurchase Price and the Option
Share Repurchase Price, respectively, in full (and Issuer hereby undertakes to
use its best efforts to obtain all required regulatory and legal approvals and
to file any required notices as promptly as practicable in order to accomplish
such repurchase), the Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder
and/or the Owner, as appropriate, that portion of the Option Repurchase Price or
the Option Share Repurchase Price that Issuer is not prohibited from delivering;
and (ii) deliver, as appropriate, either (A) to the Holder, a new Stock Option
Agreement evidencing the right of the Holder to purchase that number of shares
of Common Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Op tion Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, or (B)
to the Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.

               (d)  For purposes of this Section 7, a Repurchase Event shall be
deemed to have occurred (i) upon the consummation of any merger, consolidation
or similar transaction involving Issuer or any purchase, lease or other
acquisition of all or a substantial portion of the assets of Issuer, other than
any such transaction which would not constitute an Acquisition Transaction
pursuant to the provisos to Section 2(b)(i) hereof or (ii) upon the

                                      -8-
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acquisition by any person of beneficial ownership of 50% or more of the then
outstanding shares of Common Stock, provided that no such event shall constitute
a Repurchase Event unless a Subsequent Triggering Event shall have occurred
prior to an Exercise Termination Event. The parties hereto agree that Issuer's
obligations to repurchase the Option or Option Shares under this Section 7 shall
not terminate upon the occurrence of an Exercise Termination Event unless no
Subsequent Triggering Event shall have occurred prior to the occurrence of an
Exercise Termination Event.

          8.   (a)  In the event that prior to an Exercise Termination Event,
Issuer shall enter into an agreement (i) to consolidate with or merge into any
person, other than Grantee or one of its Subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its Subsidiaries, to merge into
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding voting shares
and voting share equivalents of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that controls
the Acquiring Corporation.

               (b)   The following terms have the meanings indicated:

                     (1)   "Acquiring Corporation" shall mean (i) the continuing
     or surviving corporation of a consolidation or merger with Issuer (if other
     than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
     surviving person, and (iii) the transferee of all or substantially all of
     Issuer's assets.

                     (2)   "Substitute Common Stock" shall mean the common stock
     issued by the issuer of the Substitute Option upon exercise of the
     Substitute Option.

                     (3)   "Assigned Value" shall mean the Market/Offer Price,
     as defined in Section 7.

                     (4)   "Average Price" shall mean the average closing price
     of a share of the Substitute Common Stock for the one year immediately
     preceding the consolidation, merger or sale in question, but in no event
     higher than the closing price of the shares of Substitute Common Stock on
     the day preceding such consolidation, merger or sale; provided that if
                                                           --------
     Issuer is the issuer of the Substitute Option, the Average Price shall be
     computed with respect to a share of common stock issued by the person
     merging into Issuer or by any company which controls or is controlled by
     such person, as the Holder may elect.

                                      -9-
<PAGE>

               (c)   The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for legal
        --------
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to the Holder. The issuer of the Substitute
Option shall also enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Agreement, which shall
be applicable to the Substitute Option.

               (d)   The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the denom
inator of which shall be the number of shares of Substitute Common Stock for
which the Substitute Option is exercisable.

               (e)   In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 19.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substi tute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.

               (f)   Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.

          9.   (a)   At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exer cise price of the
Substitute Option, multiplied by the number of shares of Substitute Common Stock
for which the Substitute Option may then be exercised, and at the request of the
owner (the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.

                                      -10-
<PAGE>

               (b)   The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to re purchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this
Agreement) and certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute Option Issuer
to repurchase the Substitute Option and/or the Substitute Shares in accordance
with the provisions of this Section 9. As promptly as practicable, and in any
event within five business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or, in either case, the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.

               (c)   To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing the Substitute
Option and/or the Substitute Shares in part or in full, the Substitute Option
Issuer following a request for repurchase pursuant to this Section 9 shall
immediately so notify the Substitute Option Holder and/or the Substitute Share
Owner and thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited; provided,
                                                               --------
however, that if the Substitute Option Issuer is at any time after delivery of a
-------
notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation from delivering to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder or Substitute Share
Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiply  ing the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.

                                      -11-
<PAGE>

          10.  The 90-day period for exercise of certain rights under Sections
2, 6, 7 and 14 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the expiration of
all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.

          11.  Issuer hereby represents and warrants to Grantee as follows:

               (a)  Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate pro  ceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated.  This Agreement has been duly and validly executed
and delivered by Issuer.

               (b)  Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.

          12.  Grantee hereby represents and warrants to Issuer that:

               (a)  Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all neces sary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.

               (b)  The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the 1933 Act.

          13.  (a)  Grantee may, at any time following a Repurchase Event and
prior to the occurrence of an Exercise Termination Event (or such later period
as provided in Section 10), relinquish the Option (together with any Option
Shares issued to and then owned by Grantee) to Issuer in exchange for a cash fee
equal to the Surrender Price (as defined below); provided, however, that Grantee
                                                 --------  -------
may not exercise its rights pursuant to this Section 13 if Issuer has
repurchased the Option (or any portion thereof) or any Option Shares pursuant to
Section 7.

                                      -12-
<PAGE>

The "Surrender Price" shall be equal to $1,600,000 (i) plus, if applicable,
Grantee's purchase price with respect to any Option Shares and (ii) minus, if
applicable, the sum of (A) the excess of (1) the net cash amounts, if any,
received by Grantee pursuant to the arms' length sale of Option Shares (or any
other securities into which such Option Shares were converted or exchanged) to
any unaffiliated party, over (2) Grantee's purchase price of such Option Shares
and (B) the net cash amounts, if any, received by Grantee pursuant to an arms'
length sale of a portion of the Op tion to any unaffiliated party.

               (b)   Grantee may exercise its right to relinquish the Option and
any Option Shares pursuant to this Section 13 by surrendering to Issuer, at its
principal office, this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 13 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.

               (c)   To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited, provided, however, that if Issuer at any time after delivery of a
            --------  -------
notice of surrender pursuant to paragraph (b) of this Section 13 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (C) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such notice of revocation, the
Exercise Termination Date shall be extended to a date six months from the date
on which the Exercise Termination Date would have occurred if not for the
provisions of this Section 13(c) (during which period Grantee may exercise any
of its rights hereunder, including any and all rights pursuant to this Section
13).

          14.  Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within 90 days
following such Subsequent Triggering Event (or such longer period as provided in
Section 10); provided, however, that until the date 15 days following the date
             --------  -------
on which the Federal Reserve Board or the OTS, as applicable, approves an
application by Grantee to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except

                                      -13-
<PAGE>

in (i) a widely dispersed public distribution, (ii) a private placement in which
no one party acquires the right to purchase in excess of 2% of the voting shares
of Issuer, (iii) an assignment to a single party (e.g., a broker or investment
                                                  ----
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve Board
or the OTS, as applicable.

          15.  Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the Nasdaq National Market upon
official notice of issuance and applying to the Federal Reserve Board and/or the
OTS, as applicable, for approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking authorities for
approval to acquire the shares of Common Stock issuable hereunder until such
time, if ever, as it deems appropriate to do so.

          16.  (a)   Notwithstanding any other provision of this Agreement, in
no event shall the Grantee's Total Profit (as hereinafter defined) exceed
$2,000,000 and, if it otherwise would exceed such amount, the Grantee, at its
sole election, shall either (i) reduce the number of shares of Common Stock
subject to this Option, (ii) deliver to the Issuer for cancellation Option
Shares previously purchased by Grantee, (iii) pay cash to the Issuer, or (iv)
any combination thereof, so that Grantee's actually realized Total Profit shall
not exceed $2,000,000 after taking into account the foregoing actions.

               (b)   Notwithstanding any other provision of this Agreement, this
Option may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) of more than
$2,000,000; provided, that nothing in this sentence shall restrict any exercise
            --------
of the Option permitted hereby on any subsequent date.

               (c)   As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount received by
Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 7 of this Agreement, (ii)(x) the amount received by Grantee
pursuant to Issuer's repurchase of Option Shares pursuant to Section 7, less (y)
the Grantee's purchase price for such Option Shares, (iii)(x) the net cash
amounts received by Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, less (y) the Grantee's purchase price of such Option Shares,
(iv) any amounts received by Grantee on the transfer of the Option (or any
portion thereof) to any unaffiliated party, and (v) any equivalent amount with
respect to the Substitute Option.

               (d)   As used herein, the term "Notional Total Profit" with
respect to any number of shares as to which Grantee may propose to exercise this
Option shall be the Total Profit determined as of the date of such proposed
exercise assuming that this Option were exercised on such date for such number
of shares and assuming that such shares, together with all other Option Shares
held by Grantee and its affiliates as of such date, were sold for cash at the

                                      -14-
<PAGE>

closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).

          17.   The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the par  ties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief.

          18.   If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated.  If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to acquire or
to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.

          19.   All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.

          20.   This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, regardless of the laws that might
otherwise govern under ap plicable principles of conflicts of laws thereof.

          21.   This Agreement may be executed in two counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.

          22.   Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.

          23.   Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.

                                      -15-
<PAGE>

          24.   Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.

                                      -16-
<PAGE>

          IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.

                                        HERITAGE BANCORP, INC.

                                        By: /s/ J. Edward Wells
                                           -------------------------------------
                                           J. Edward Wells
                                           President and Chief Executive Officer

                                        SOUTHBANC SHARES, INC.

                                        By: /s/ Robert W. Orr
                                           -------------------------------------
                                           Robert W. Orr
                                           President and Chief Executive Officer

                                      -17-<PAGE>

                                                                     EXHIBIT 4.4

                               THERMA-WAVE, INC.

                       2000 EMPLOYEE STOCK PURCHASE PLAN

     The following constitute the provisions of the 2000 Employee Stock Purchase
Plan of Therma-Wave, Inc.

1.   PURPOSE.

     The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock of the
Company. It is the intention of the Company to have the Plan qualify as an
"Employee Stock Purchase Plan" under Section 423 of the Code. The provisions of
the Plan shall, accordingly, be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.

2.   DEFINITIONS.

     (a) "BOARD" means the Board of Directors of the Company.

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

     (c) "COMMON STOCK" means the Company's common stock, par value $0.01 per
share.

     (d) "COMPANY" means Therma-Wave, Inc., a Delaware corporation.

     (e) "COMPENSATION" means all regular straight time gross earnings, and
shall not include commissions, payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses and other compensation.

     (f) "CONTINUOUS STATUS AS AN EMPLOYEE" means the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of (i) sick leave; (ii)
military leave; (iii) any other leave of absence approved by the Administrator,
provided that such leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company and its Designated Subsidiaries.

     (g) "CONTRIBUTIONS" means all amounts credited to the account of a
participant pursuant to the Plan.

     (h) "CORPORATE TRANSACTION" means a sale of all or substantially all of the
Company's assets, or a merger, consolidation or other capital reorganization of
the Company with or into another corporation.

                                       1
<PAGE>

     (i) "DESIGNATED SUBSIDIARIES" means the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan; provided however that the Board shall only have the
discretion to designate Subsidiaries if the issuance of options to such
Subsidiary's Employees pursuant to the Plan would not cause the Company to incur
adverse accounting charges.

     (j) "EMPLOYEE" means any person, including an Officer, who is customarily
employed for at least twenty (20) hours per week and more than five (5) months
in a calendar year by the Company or one of its Designated Subsidiaries.

     (k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

     (l) "OFFERING DATE" means the first business day of each Offering Period of
the Plan.

     (m) "OFFERING PERIOD" means a period of twenty-four (24) months commencing
on April 1, July 1, October 1 and January 1 of each year, except for the first
Offering Period as set forth in Section 4(a).

     (n) "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.

     (o) "PLAN" means this Employee Stock Purchase Plan.

     (p) "PURCHASE DATE" means the last day of each Purchase Period of the Plan.

     (q) "PURCHASE PERIOD" means a period of three (3) months within an Offering
Period, except for the first Purchase Period as set forth in Section 4(b).

     (r) "PURCHASE PRICE" means with respect to a Purchase Period an amount
equal to 85% of the Fair Market Value (as defined in Section 7(b) below) of a
Share of Common Stock on the Offering Date or on the Purchase Date, whichever is
lower; provided, however, that in the event (i) of any increase in the number of
Shares available for issuance under the Plan as a result of a stockholder-
approved amendment to the Plan, and (ii) all or a portion of such additional
Shares are to be issued with respect to one or more Offering Periods that are
underway at the time of such increase ("Additional Shares"), and (iii) the Fair
Market Value of a Share of Common Stock on the date of such increase (the
"Approval Date Fair Market Value") is higher than the Fair Market Value on the
Offering Date for any such Offering Period, then in such instance the Purchase
Price with respect to Additional Shares shall be 85% of the Approval Date Fair
Market Value or the Fair Market Value of a Share of Common Stock on the Purchase
Date, whichever is lower.

                                       2
<PAGE>

     (s) "SHARE" means a share of Common Stock, as adjusted in accordance with
Section 19 of the Plan.

     (t) "SUBSIDIARY" means a corporation, domestic or foreign, of which not
less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.

3.   ELIGIBILITY.

     (a) Any person who is an Employee as of the Offering Date of a given
Offering Period shall be eligible to participate in such Offering Period under
the Plan, subject to the requirements of Section 5(a) and the limitations
imposed by Section 423(b) of the Code; provided however that eligible Employees
may not participate in more than one Offering Period at a time.

     (b) Any provisions of the Plan to the contrary notwithstanding, no Employee
shall be granted an option under the Plan (i) if, immediately after the grant,
such Employee (or any other person whose stock would be attributed to such
Employee pursuant to Section 424(d) of the Code) would own capital stock of the
Company and/or hold outstanding options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or of any subsidiary of the Company, or (ii) if such
option would permit his or her rights to purchase stock under all employee stock
purchase plans (described in Section 423 of the Code) of the Company and its
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) of the Fair Market Value (as defined in Section 7(b) below) of such
stock (determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time.

4.   OFFERING PERIODS AND PURCHASE PERIODS.

     (a) OFFERING PERIODS. The Plan shall be implemented by a series of Offering
Periods of twenty-four (24) months duration, with new Offering Periods
commencing on or about April 1, July 1, October 1 and January 1 of each year (or
at such other time or times as may be determined by the Board of Directors). The
first Offering Period shall commence on the beginning of the effective date of
the Registration Statement on Form S-1 for the initial public offering of the
Company's Common Stock (the "IPO Date") and continue until March 31, 2002. The
Plan shall continue until terminated in accordance with Section 20 hereof. The
Board of Directors of the Company shall have the power to change the duration
and/or the frequency of Offering Periods with respect to future offerings
without stockholder approval if such change is announced at least five (5) days
prior to the scheduled beginning of the first Offering Period to be affected.

     (b) PURCHASE PERIODS. Each Offering Period shall consist of eight (8)
consecutive Purchase Periods of three (3) months' duration. The last day of each
Purchase Period shall be the "Purchase Date" for such Purchase Period. A
Purchase Period

                                       3
<PAGE>

commencing on April 1 shall end on the next June 30. A Purchase Period
commencing on July 1 shall end on the next September 30. A Purchase Period
commencing on October 1 shall end on the next December 31. A Purchase Period
commencing on January 1 shall end on the next March 31. The first Purchase
Period shall commence on the IPO Date and shall end on March 31, 2000. The Board
of Directors of the Company shall have the power to change the duration and/or
frequency of Purchase Periods with respect to future purchases without
stockholder approval if such change is announced at least five (5) days prior to
the scheduled beginning of the first Purchase Period to be affected.

5.   PARTICIPATION.

     (a) An eligible Employee may become a participant in the Plan by completing
a subscription agreement on the form provided by the Company and filing it with
the Company's payroll office prior to the applicable Offering Date, unless a
later time for filing the subscription agreement is set by the Board for all
eligible Employees with respect to a given Offering Period. The subscription
agreement shall set forth the percentage of the participant's Compensation
(subject to Section 6(a) below) to be paid as Contributions pursuant to the
Plan.  The eligible Employee may choose one of the following methods of payment
for the Shares to be acquired on his or her behalf during the Purchase Period:

                (i)  periodic payroll deduction; or

                (ii) lump sum cash payment; provided, however, that the Board
                     may, for any Purchase Period, prohibit lump sum cash
                     payments.

     (b) If periodic payroll deductions are selected, payroll deductions shall
commence on the first payroll following the Offering Date and shall end on the
last payroll paid on or prior to the last Purchase Period of the Offering Period
to which the subscription agreement is applicable, unless sooner terminated by
the participant as provided in Section 10.

     (c) If the lump sum cash payment alternative is selected, the lump sum
payment must be paid by the participant within the first fifteen (15) days of
the final month of the Purchase Period to which the subscription agreement is
applicable, unless sooner terminated by the participant as provided in Section
10.

6.   METHOD OF PAYMENT OF CONTRIBUTIONS.

     (a) A participant shall elect to have payroll deductions made on each
payday during the Offering Period in an amount not less than one percent (1%)
and not more than fifteen percent (15%) (or such greater percentage as the Board
may establish from time to time before an Offering Date) of such participant's
Compensation on each payday during the Offering Period; provided, however, that,
in the event the participant chooses the lump sum payment alternative, such
payment may not exceed 15% of the Compensation paid to such participant. All
payroll deductions made by a participant shall be credited to

                                       4
<PAGE>

his or her account under the Plan. A participant may not make any additional
payments into such account.

     (b) A participant may discontinue his or her participation in the Plan as
provided in Section 10, or, on one occasion only during a Purchase Period may
increase and on one occasion only during a Purchase Period may decrease the rate
of his or her Contributions with respect to the Offering Period by completing
and filing with the Company a new subscription agreement authorizing a change in
the payroll deduction rate or lump sum payment, as applicable. The change shall
be effective as of the beginning of the next payroll period following the date
of filing of the new subscription agreement, if the agreement is filed at least
ten (10) business days prior to such date and, if not, as of the beginning of
the next succeeding payroll period.

     (c) Notwithstanding the foregoing, to the extent necessary to comply with
Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's payroll
deductions or lump sum payment, as applicable, may be decreased by the Company
to 0% at any time during a Purchase Period. Payroll deductions or lump sum
payments shall re-commence at the rate provided in such participant's
subscription agreement at the beginning of the first Purchase Period which is
scheduled to end in the following calendar year, unless terminated by the
participant as provided in Section 10. In addition, a participant's payroll
deductions or lump sum payment, as applicable, may be decreased by the Company
to 0% at any time during a Purchase Period in order to avoid unnecessary payroll
contributions as a result of application of the maximum share limit set forth in
Section 7(a), in which case payroll deductions or lump sum payments shall re-
commence at the rate provided in such participant's subscription agreement at
the beginning of the next Purchase Period, unless terminated by the participant
as provided in Section 10.

7.   GRANT OF OPTION.

     (a) On the Offering Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option to purchase on
each Purchase Date a number of Shares of the Company's Common Stock determined
by dividing such Employee's Contributions accumulated prior to such Purchase
Date and retained in the participant's account as of the Purchase Date by the
applicable Purchase Price; provided however that the maximum number of Shares an
Employee may purchase during any Purchase Period shall be 400 Shares (subject to
any adjustment pursuant to Section 19 below), and provided further that such
purchase shall be subject to the limitations set forth in Sections 3(b) and 13.

     (b) The fair market value of the Company's Common Stock on a given
date (the "Fair Market Value") shall be determined by the Board in its
discretion based on the closing sales price of the Common Stock for such date
(or, in the event that the Common Stock is not traded on such date, on the
immediately preceding trading date), as reported by the National Association of
Securities Dealers Automated Quotation (Nasdaq) National Market or, if such
price is not reported, the mean of the bid and asked prices per share of the
Common Stock as reported by Nasdaq or, in the event the Common Stock is listed
on a stock exchange, the Fair Market Value per share shall be the closing sales

                                       5
<PAGE>

price on such exchange on such date (or, in the event that the Common Stock is
not traded on such date, on the immediately preceding trading date), as reported
in The Wall Street Journal. For purposes of the Offering Date under the first
Offering Period under the Plan, the Fair Market Value of a share of the Common
Stock of the Company shall be the Price to Public as set forth in the final
prospectus filed with the Securities and Exchange Commission pursuant to Rule
424 under the Securities Act of 1933, as amended.

8.   EXERCISE OF OPTION.

     Unless a participant withdraws from the Plan as provided in Section 10, his
or her option for the purchase of Shares will be exercised automatically on each
Purchase Date of an Offering Period, and the maximum number of full Shares
subject to the option will be purchased at the applicable Purchase Price with
the accumulated Contributions in his or her account. No fractional Shares shall
be issued. The Shares purchased upon exercise of an option hereunder shall be
deemed to be transferred to the participant on the Purchase Date. During his or
her lifetime, a participant's option to purchase Shares hereunder is exercisable
only by him or her.

9.   DELIVERY.

     As promptly as practicable after each Purchase Date of each Offering
Period, the Company shall arrange the delivery to each participant, as
appropriate, the Shares purchased upon exercise of his or her option. No
fractional Shares shall be purchased; any payroll deductions accumulated in a
participant's account which are not sufficient to purchase a full Share shall be
retained in the participant's account for the subsequent Purchase Period or
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 10 below. Any other amounts left over in a participant's account after a
Purchase Date shall be returned to the participant.

10.  VOLUNTARY WITHDRAWAL; TERMINATION OF EMPLOYMENT.

     (a) A participant may withdraw all but not less than all the Contributions
credited to his or her account under the Plan at any time prior to each Purchase
Date by giving written notice to the Company. All of the participant's
Contributions credited to his or her account will be paid to him or her promptly
after receipt of his or her notice of withdrawal and his or her option for the
current period will be automatically terminated, and no further Contributions
for the purchase of Shares will be made during the Offering Period.

     (b) Upon termination of the participant's Continuous Status as an Employee
prior to the Purchase Date of an Offering Period for any reason, including
retirement or death, the Contributions credited to his or her account will be
returned to him or her or, in the case of his or her death, to the person or
persons entitled thereto under Section 14, and his or her option will be
automatically terminated.

                                       6
<PAGE>

     (c) In the event an Employee fails to remain in Continuous Status as an
Employee of the Company for at least twenty (20) hours per week during the
Offering Period in which the employee is a participant, he or she will be deemed
to have elected to withdraw from the Plan and the Contributions credited to his
or her account will be returned to him or her and his or her option terminated.

     (d) A participant's withdrawal from an offering will not have any effect
upon his or her eligibility to participate in a succeeding offering or in any
similar plan which may hereafter be adopted by the Company.

11.  AUTOMATIC WITHDRAWAL.

     If the Fair Market Value of the Shares on any Purchase Date of an Offering
Period is less than the Fair Market Value of the Shares on the Offering Date for
such Offering Period, then every participant shall automatically (i) be
withdrawn from such Offering Period at the close of such Purchase Date and after
the acquisition of Shares for such Purchase Period, and (ii) be enrolled in the
Offering Period commencing on the first business day subsequent to such Purchase
Period.

12.  INTEREST.

     No interest shall accrue on the Contributions of a participant in the Plan.

13.  STOCK.

     (a) Subject to adjustment as provided in Section 19, the maximum number of
Shares which shall be made available for sale under the Plan shall be 500,000
Shares or such lesser number of Shares as is determined by the Board. If the
Board determines that, on a given Purchase Date, the number of shares with
respect to which options are to be exercised may exceed (i) the number of shares
of Common Stock that were available for sale under the Plan on the Offering Date
of the applicable Offering Period, or (ii) the number of shares available for
sale under the Plan on such Purchase Date, the Board may in its sole discretion
provide (x) that the Company shall make a pro rata allocation of the Shares of
Common Stock available for purchase on such Offering Date or Purchase Date, as
applicable, in as uniform a manner as shall be practicable and as it shall
determine in its sole discretion to be equitable among all participants
exercising options to purchase Common Stock on such Purchase Date, and continue
all Offering Periods then in effect, or (y) that the Company shall make a pro
rata allocation of the shares available for purchase on such Offering Date or
Purchase Date, as applicable, in as uniform a manner as shall be practicable and
as it shall determine in its sole discretion to be equitable among all
participants exercising options to purchase Common Stock on such Purchase Date,
and terminate any or all Offering Periods then in effect pursuant to Section 20
below. The Company may make pro rata allocation of the Shares available on the
Offering Date of any applicable Offering Period pursuant to the preceding
sentence, notwithstanding any authorization of additional Shares for issuance
under the Plan by the Company's stockholders subsequent to such Offering Date.

                                       7
<PAGE>

     (b) The participant shall have no interest or voting right in Shares
covered by his or her option until such option has been exercised.

     (c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.

14.  ADMINISTRATION.

     The Board, or a committee named by the Board, shall supervise and
administer the Plan and shall have full power to adopt, amend and rescind any
rules deemed desirable and appropriate for the administration of the Plan and
not inconsistent with the Plan, to construe and interpret the Plan, and to make
all other determinations necessary or advisable for the administration of the
Plan.

15.  DESIGNATION OF BENEFICIARY.

     (a) A participant may file a written designation of a beneficiary who is to
receive any Shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of a
Purchase Period but prior to delivery to him or her of such Shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to the Purchase Date of an Offering Period. If
a participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.

     (b) Such designation of beneficiary may be changed by the participant (and
his or her spouse, if any) at any time by written notice. In the event of the
death of a participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such participant's death, the
Company shall deliver such Shares and/or cash to the executor or administrator
of the estate of the participant, or if no such executor or administrator has
been appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such Shares and/or cash to the spouse or to any one or
more dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.

16.  TRANSFERABILITY.

     Neither Contributions credited to a participant's account nor any rights
with regard to the exercise of an option or to receive Shares under the Plan may
be assigned, transferred, pledged or otherwise disposed of in any way (other
than by will, the laws of descent and distribution, or as provided in Section
15) by the participant. Any such attempt at assignment, transfer, pledge or
other disposition shall be without effect, except that the Company may treat
such act as an election to withdraw funds in accordance with Section 10.

                                       8
<PAGE>

17.  USE OF FUNDS.

     All Contributions received or held by the Company under the Plan may be
used by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such Contributions.

18.  REPORTS.

     Individual accounts will be maintained for each participant in the Plan.
Statements of account will be given to participating Employees at least
annually, which statements will set forth the amounts of Contributions, the per
Share Purchase Price, the number of Shares purchased and the remaining cash
balance, if any.

19.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS.

     (a) ADJUSTMENT. Subject to any required action by the stockholders of the
Company, the number of Shares covered by each option under the Plan which has
not yet been exercised and the number of Shares which have been authorized for
issuance under the Plan but have not yet been placed under option (collectively,
the "Reserves"), as well as the maximum number of shares of Common Stock which
may be purchased by a participant in a Purchase Period, the number of shares of
Common Stock set forth in Section 13(a) above, and the price per Share of Common
Stock covered by each option under the Plan which has not yet been exercised,
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock (including any such change
in the number of Shares of Common Stock effected in connection with a change in
domicile of the Company), or any other increase or decrease in the number of
Shares 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 issue
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 subject to an
option.

     (b) CORPORATE TRANSACTIONS. In the event of a dissolution or liquidation of
the Company, any Purchase Period and Offering Period then in progress will
terminate immediately prior to the consummation of such action, unless otherwise
provided by the Board. In the event of a Corporate Transaction, each option
outstanding under the Plan shall be assumed or an equivalent option shall be
substituted by the successor corporation or a parent or Subsidiary of such
successor corporation. In the event that the successor corporation refuses to
assume or substitute for outstanding options, each Purchase Period and Offering
Period then in progress shall be shortened and a new Purchase Date shall be set
(the "New Purchase Date"), as of which date any Purchase Period and Offering
Period then in progress will terminate. The New Purchase Date shall be on or
before the date of

                                       9
<PAGE>

consummation of the transaction and the Board shall notify each participant in
writing, at least ten (10) days prior to the New Purchase Date, that the
Purchase Date for his or her option has been changed to the New Purchase Date
and that his or her option will be exercised automatically on the New Purchase
Date, unless prior to such date he or she has withdrawn from the Offering Period
as provided in Section 10. For purposes of this Section 19, an option granted
under the Plan shall be deemed to be assumed, without limitation, if, at the
time of issuance of the stock or other consideration upon a Corporate
Transaction, each holder of an option under the Plan would be entitled to
receive upon exercise of the option the same number and kind of shares of stock
or the same amount of property, cash or securities as such holder would have
been entitled to receive upon the occurrence of the transaction if the holder
had been, immediately prior to the transaction, the holder of the number of
Shares of Common Stock covered by the option at such time (after giving effect
to any adjustments in the number of Shares covered by the option as provided for
in this Section 19); provided however that if the consideration received in the
transaction is not solely common stock of the successor corporation or its
parent (as defined in Section 424(e) of the Code), the Board may, with the
consent of the successor corporation, provide for the consideration to be
received upon exercise of 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 transaction.

        The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per Share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of Shares of its outstanding Common
Stock, and in the event of the Company's being consolidated with or merged into
any other corporation.

20.  AMENDMENT OR TERMINATION.

     (a) The Board may at any time and for any reason terminate or amend the
Plan. Except as provided in Section 19, no such termination of the Plan may
affect options previously granted, provided that the Plan or an Offering Period
may be terminated by the Board on a Purchase Date or by the Board's setting a
new Purchase Date with respect to an Offering Period and Purchase Period then in
progress if the Board determines that termination of the Plan and/or the
Offering Period is in the best interests of the Company and the stockholders or
if continuation of the Plan and/or the Offering Period would cause the Company
to incur adverse accounting charges as a result of a change after the effective
date of the Plan in the generally accepted accounting rules applicable to the
Plan. Except as provided in Section 19 and in this Section 20, no amendment to
the Plan shall make any change in any option previously granted which adversely
affects the rights of any participant. In addition, to the extent necessary to
comply with Rule 16b-3 under the Exchange Act, or under Section 423 of the Code
(or any successor rule or provision or any applicable law or regulation), the
Company shall obtain stockholder approval in such a manner and to such a degree
as so required.

                                       10
<PAGE>

     (b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been adversely affected, the Board
(or its committee) shall be entitled to change the Offering Periods and Purchase
Periods, limit the frequency and/or number of changes in the amount withheld
during an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a participant in order to adjust for delays
or mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from
the participant's Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable which are consistent with the Plan.

21.  NOTICES.

     All notices or other communications by a participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.

22.  CONDITIONS UPON ISSUANCE OF SHARES.

     Shares shall not be issued with respect to an option unless the exercise of
such option and the issuance and delivery of such Shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, applicable state securities
laws and the requirements of any stock exchange upon which the Shares may then
be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

     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 by any of the
aforementioned applicable provisions of law.

23.  TERM OF PLAN; EFFECTIVE DATE.

     The Plan shall become effective upon the IPO Date. It shall continue in
effect for a term of ten (10) years unless sooner terminated under Section 20.

24.  ADDITIONAL RESTRICTIONS OF RULE 16b-3.

     The terms and conditions of options granted hereunder to, and the purchase
of Shares by, persons subject to Section 16 of the Exchange Act shall comply
with the

                                       11
<PAGE>

applicable provisions of Rule 16b-3. This Plan shall be deemed to contain, and
such options shall contain, and the Shares issued upon exercise thereof shall be
subject to, such additional conditions and restrictions as may be required by
Rule 16b-3 to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.

                                       12
<PAGE>

                               THERMA-WAVE, INC.

                       2000 EMPLOYEE STOCK PURCHASE PLAN
                        FORM OF SUBSCRIPTION AGREEMENT

                                                             New Election ______
                                                        Change of Election______

1.   I, ________________________, hereby elect to participate in the Therma-
     Wave, Inc. 2000 Employee Stock Purchase Plan (the "Plan") for the Offering
     Period ______________, ____ to _______________, ____, and subscribe to
     purchase shares of the Company's Common Stock in accordance with this
     Subscription Agreement and the Plan.

2.   I elect to have Contributions in the amount of ____% of my Compensation, as
     those terms are defined in the Plan, applied to this purchase. I understand
     that this amount must not be less than 1% and not more than 15% of my
     Compensation during the Offering Period. (Please note that no fractional
     percentages are permitted).

3.   I elect to have these Contributions made through (choose one): ____ Payroll
     Deduction or ____ Lump Sum Payment.

4.   In the event the payroll deduction option was selected, I hereby authorize
     payroll deductions from each paycheck during the Offering Period at the
     rate stated in Item 2 of this Subscription Agreement. I understand that all
     payroll deductions made by me shall be credited to my account under the
     Plan and that I may not make any additional payments into such account.

5.   I understand that all payments made by me shall be accumulated for the
     purchase of shares of Common Stock at the applicable purchase price
     determined in accordance with the Plan. I further understand that, except
     as otherwise set forth in the Plan, shares will be purchased for me
     automatically on the Purchase Date of each Offering Period unless I
     otherwise withdraw from the Plan by giving written notice to the Company
     for such purpose.

6.   I understand that I may discontinue at any time prior to the Purchase Date
     my participation in the Plan as provided in Section 10 of the Plan. I also
     understand that I can increase or decrease the rate of my Contributions on
     one occasion only with respect to any increase and one occasion only with
     respect to any decrease during any Purchase Period by completing and filing
     a new Subscription Agreement with such increase or decrease taking effect
     as of the beginning of the calendar month following the date of filing of
     the new Subscription Agreement, if filed at least ten (10) business days
     prior to the beginning of such month. Further, I may change the rate of my
     Contributions for future Offering Periods by filing a

                                       13
<PAGE>

     new Subscription Agreement, and any such change will be effective as of the
     beginning of the next Offering Period. In addition, I acknowledge that,
     unless I discontinue my participation in the Plan as provided in Section 10
     of the Plan, my election will continue to be effective for each successive
     Offering Period.

7.   I have received a copy of the complete "Therma-Wave, Inc. 2000 Employee
     Stock Purchase Plan." I understand that my participation in the Plan is in
     all respects subject to the terms of the Plan.

8.   Shares purchased for me under the Plan should be issued in the name(s) of
     (name of employee or employee and spouse only):

9.   In the event of my death, I hereby designate the following as my
     beneficiary(ies) to receive all payments and shares due to me under the
     Plan:

NAME:  (Please print)
                              (First)       (Middle)        (Last)

(Relationship)                   (Address)

                                      AND

NAME:  (Please print)
                               (First)       (Middle)        (Last)

(Relationship)                   (Address)

10.  I understand that if I dispose of any shares received by me pursuant to the
     Plan within 2 years after the Offering Date (the first day of the Offering
     Period during which I purchased such shares) or within 1 year after the
     Purchase Date, I will be treated for federal income tax purposes as having
     received ordinary compensation income at the time of such disposition in an
     amount equal to the excess of the fair market value of the shares on the
     Purchase Date over the price which I paid for the shares, regardless of
     whether I disposed of the shares at a price less than their fair market
     value at the Purchase Date. The remainder of the gain or loss, if any,
     recognized on such disposition will be treated as capital gain or loss.

                                       14
<PAGE>

     I hereby agree to notify the Company in writing within 30 days after the
     date of any such disposition, and I will make adequate provision for
     federal, state or other tax withholding obligations, if any, which arise
     upon the disposition of the Common Stock. The Company may, but will not be
     obligated to, withhold from my compensation the amount necessary to meet
     any applicable withholding obligation including any withholding necessary
     to make available to the Company any tax deductions or benefits
     attributable to the sale or early disposition of Common Stock by me.

11.  If I dispose of such shares at any time after expiration of the 2-year and
     1-year holding periods, I understand that I will be treated for federal
     income tax purposes as having received compensation income only to the
     extent of an amount equal to the lesser of (1) the excess of the fair
     market value of the shares at the time of such disposition over the
     purchase price which I paid for the shares under the option, or (2) 15% of
     the fair market value of the shares on the Offering Date. The remainder of
     the gain or loss, if any, recognized on such disposition will be treated as
     capital gain or loss.

     I understand that this tax summary is only a summary and is subject to
     change. I further understand that I should consult a tax advisor concerning
     the tax implications of the purchase and sale of stock under the Plan.

12.  I hereby agree to be bound by the terms of the Plan. The effectiveness of
     this Subscription Agreement is dependent upon my eligibility to participate
     in the Plan.

SIGNATURE:

SOCIAL SECURITY #:

DATE:

SPOUSE'S SIGNATURE (necessary
if beneficiary is not spouse):

(Signature)

(Print name)

                                       15
<PAGE>

                               THERMA-WAVE, INC.

                       2000 EMPLOYEE STOCK PURCHASE PLAN

                              NOTICE OF WITHDRAWAL

        I, __________________________, hereby elect to withdraw my participation
in the Therma-Wave, Inc. 2000 Employee Stock Purchase Plan (the "Plan") for the
Offering Period that began on _________ ___, _____. This withdrawal covers all
Contributions credited to my account and is effective on the date designated
below.

        I understand that all Contributions credited to my account will be paid
to me within ten (10) business days of receipt by the Company of this Notice of
Withdrawal and that my option for the current period will automatically
terminate, and that no further Contributions for the purchase of shares can be
made by me during the Offering Period.

        The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to the
Company a new Subscription Agreement.

Dated:
                                                   Signature of Employee

                                                   Social Security Number

                                       16

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