<PAGE>   1
                                                                    EXHIBIT 10.1



                                   VIALTA.COM

                            1999 STOCK INCENTIVE PLAN

                         EFFECTIVE AS OF AUGUST 1, 1999


<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            PAGE
<S>        <C>                                                                               <C>
SECTION 1.    INTRODUCTION....................................................................2

SECTION 2.    DEFINITIONS.....................................................................2
     (a)    "Affiliate".......................................................................2
     (b)    "Award"...........................................................................2
     (c)    "Board"...........................................................................2
     (d)    "Change in Control"...............................................................2
     (e)    "Code"............................................................................3
     (f)    "Committee".......................................................................3
     (g)    "Common Stock"....................................................................3
     (h)    "Company".........................................................................3
     (i)    "Consultant"......................................................................3
     (j)    "Director"........................................................................3
     (k)    "Disability"......................................................................3
     (l)    "Employee"........................................................................3
     (m)    "Exchange Act"....................................................................3
     (n)    "Exercise Price"..................................................................3
     (o)    "Fair Market Value"...............................................................3
     (p)    "Grant"...........................................................................4
     (q)    "Incentive Stock Option" or "ISO".................................................4
     (r)    "Key Employee"....................................................................4
     (s)    "Non-Employee Director"...........................................................4
     (t)    "Nonstatutory Stock Option" or "NSO"..............................................4
     (u)    "Option"..........................................................................4
     (v)    "Optionee"........................................................................4
     (w)    "Parent"..........................................................................4
     (x)    "Participant".....................................................................4
     (y)    "Plan"............................................................................4
     (z)    "Restricted Stock"................................................................4
     (aa)   "SAR Agreement"...................................................................4
     (bb)   "Securities Act"..................................................................4
     (cc)   "Service".........................................................................4
     (dd)   "Share"...........................................................................5
     (ee)   "Stock Appreciation Right" or "SAR"...............................................5
     (ff)   "Stock Award Agreement"...........................................................5
     (gg)   "Stock Option Agreement"..........................................................5
     (hh)   "Stock Unit"......................................................................5
     (ii)   "Subsidiary"......................................................................5
     (jj)   "10-Percent Shareholder"..........................................................5
</TABLE>


                                       -i-
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                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
                                                                                            PAGE
<S>        <C>                                                                               <C>
SECTION 3.    ADMINISTRATION..................................................................5
     (a)    Committee Composition.............................................................5
     (b)    Authority of the Committee........................................................6
     (c)    Financial Reports.................................................................6

SECTION 4.    ELIGIBILITY.....................................................................6
     (a)    General Rules.....................................................................6
     (b)    Incentive Stock Options...........................................................6

SECTION 5.    SHARES SUBJECT TO PLAN..........................................................6
     (a)    Basic Limitation..................................................................6
     (b)    Additional Shares.................................................................6
     (c)    Dividend Equivalents..............................................................7

SECTION 6.    TERMS AND CONDITIONS FOR AWARDS OF RESTRICTED STOCK AND STOCK UNITS.............7
     (a)    Time, Amount and Form of Awards...................................................7
     (b)    Payment for Awards................................................................7
     (c)    Vesting Conditions................................................................7
     (d)    Form and Time of Settlement of Stock Units........................................7
     (e)    Death of Recipient................................................................7
     (f)    Creditors' Rights.................................................................8

SECTION 7.    TERMS AND CONDITIONS OF OPTIONS.................................................8
     (a)    Stock Option Agreement............................................................8
     (b)    Number of Shares..................................................................8
     (c)    Exercise Price....................................................................8
     (d)    Exercisability and Term...........................................................8
     (e)    Effect of a Change in Control.....................................................9
     (f)    Modifications or Assumption of Options............................................9
     (g)    Transferability of Options........................................................9
     (h)    No Rights as a Shareholder........................................................9
     (i)    Restrictions on Transfer..........................................................9

SECTION 8.    PAYMENT FOR OPTION SHARES......................................................10
     (a)    General Rule.....................................................................10
     (b)    Surrender of Stock...............................................................10
     (c)    Promissory Note..................................................................10
     (d)    Other Forms of Payment...........................................................10

SECTION 9.    STOCK APPRECIATION RIGHTS......................................................10
     (a)    SAR Agreement....................................................................10
     (b)    Number of Shares.................................................................10
</TABLE>

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                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
                                                                                            PAGE
<S>        <C>                                                                               <C>
     (c)    Exercise Price...................................................................10
     (d)    Exercisability and Term..........................................................10
     (e)    Effect of Change in Control......................................................11
     (f)    Exercise of SARs.................................................................11
     (g)    Modification or Assumption of SARs...............................................11

SECTION 10.   PROTECTION AGAINST DILUTION....................................................11
     (a)    Adjustments......................................................................11
     (b)    Reorganizations..................................................................12

SECTION 11.   VOTING AND DIVIDEND RIGHTS.....................................................12
     (a)    Restricted Stock.................................................................12
     (b)    Stock Units......................................................................12

SECTION 12.   AWARDS UNDER OTHER PLANS.......................................................12

SECTION 13.   LIMITATIONS ON RIGHTS..........................................................12
     (a)    Retention Rights.................................................................12
     (b)    Shareholders' Rights.............................................................13
     (c)    Regulatory Requirements..........................................................13

SECTION 14.   WITHHOLDING TAXES..............................................................13
     (a)    General..........................................................................13
     (b)    Share Withholding................................................................13

SECTION 15.   ASSIGNMENT OR TRANSFER OF AWARDS...............................................13
     (a)    General..........................................................................13
     (b)    Trusts...........................................................................13

SECTION 16.   DURATION AND AMENDMENTS........................................................14
     (a)    Term of the Plan.................................................................14
     (b)    Right to Amend or Terminate the Plan.............................................14

SECTION 17.   EXECUTION......................................................................14
</TABLE>



                                     -iii-
<PAGE>   5

                                   VIALTA.COM
                            1999 STOCK INCENTIVE PLAN
                         EFFECTIVE AS OF AUGUST 1, 1999

SECTION 1.   INTRODUCTION.

          The Company's Board of Directors adopted the Vialta.com 1999 Stock
Incentive Plan on August 1, 1999, subject to approval by the Company's
shareholder.

          The purpose of the Plan is to promote the long-term success of the
Company and the creation of shareholder value by offering Key Employees an
opportunity to acquire a proprietary interest in the success of the Company, or
to increase such interest, and to encourage such selected persons to continue to
provide services to the Company and to attract new individuals with outstanding
qualifications.

          The Plan seeks to achieve this purpose by providing for Awards in the
form of Restricted Stock, Stock Units, Options (which may constitute Incentive
Stock Options or Nonstatutory Stock Options) or Stock Appreciation Rights.

          The Plan shall be governed by, and construed in accordance with, the
laws of the State of California (except its choice-of-law provisions).
Capitalized terms shall have the meaning provided in Section 2 unless otherwise
provided in this Plan, or in the applicable Stock Award Agreement, SAR Agreement
or Stock Option Agreement.

SECTION 2.   DEFINITIONS.

          (a) "AFFILIATE" means any entity other than a Subsidiary, if the
Company and/or one or more Subsidiaries own not less than 50% of such entity.

          (b) "AWARD" means any award of an Option, SAR, Restricted Stock or
Stock Unit under the Plan.

          (d) "BOARD" means the Board of Directors of the Company, as
constituted from time to time.

          (d) "CHANGE IN CONTROL" means the occurrence of any "person" (as
defined in Section 13(d) of the Exchange Act), other than the Company, its
Parent or Subsidiary or employee benefit plan or trust maintained by the
Company, its Parent or Subsidiary, becoming the "beneficial owner" (as defined
in Rule 13d-3 of the Exchange Act), directly or indirectly, of more than 50% of
the Shares of the Company outstanding at such time, without the prior approval
of the Board.

          A transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company's incorporation or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.


<PAGE>   6





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

          (f) "COMMITTEE" means a committee consisting of one or more members of
the Board that is appointed by the Board (as described in Section 3) to
administer the Plan.

          (g) "COMMON STOCK" means the Company's common stock.

          (h) "COMPANY" means Vialta.com, a California corporation.

          (i) "CONSULTANT" means an individual who performs bona fide services
to the Company, a Parent, a Subsidiary or an Affiliate other than as an Employee
or Director or Non-Employee Director.

          (j) "DIRECTOR" means a member of the Board who is also a common-law
employee of the Company, Parent or Subsidiary.

          (k) "DISABILITY" means that the Key Employee is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
12 months.

          (l) "EMPLOYEE" means any individual who is a common-law employee of
the Company, a Parent, a Subsidiary or an Affiliate.

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

          (n) "EXERCISE PRICE" in the case of an Option, means the amount for
which a Share may be purchased upon exercise of such Option, as specified in the
applicable Stock Option Agreement. "Exercise Price," in the case of a SAR, means
an amount, as specified in the applicable SAR Agreement, which is subtracted
from the Fair Market Value of a Share in determining the amount payable upon
exercise of such SAR.

          (o) "FAIR MARKET VALUE" means the market price of Shares, determined
by the Committee as follows:

               (i) If the Shares were traded over-the-counter on the date in
          question but were not classified as a national market issue, then the
          Fair Market Value shall be equal to the mean between the last reported
          representative bid and asked prices quoted by the NASDAQ system for
          such date;

               (ii) If the Shares were traded over-the-counter on the date in
          question and were classified as a national market issue, then the Fair
          Market Value shall be equal to the last-transaction price quoted by
          the NASDAQ system for such date;

               (iii) If the Shares were traded on a stock exchange on the date
          in question, then the Fair Market Value shall be equal to the closing
          price reported by the applicable composite transactions report for
          such date; and


                                       3
<PAGE>   7
               (iv) If none of the foregoing provisions is applicable, then the
          Fair Market Value shall be determined by the Committee in good faith
          on such basis as it deems appropriate.

          Whenever possible, the determination of Fair Market Value by the
Committee shall be based on the prices reported in the Western Edition of The
Wall Street Journal. Such determination shall be conclusive and binding on all
persons.

          (p) "GRANT" means any grant of an Option under the Plan.

          (q) "INCENTIVE STOCK OPTION" OR "ISO" means an incentive stock option
described in Code section 422(b).

          (r) "KEY EMPLOYEE" means an Employee, Director, Non-Employee Director
or Consultant who has been selected by the Committee to receive an Award under
the Plan.

          (s) "NON-EMPLOYEE DIRECTOR" means a member of the Board who is not a
common-law employee of the Company, Parent or Subsidiary.

          (t) "NONSTATUTORY STOCK OPTION" OR "NSO" means a stock option that is
not an ISO.

          (u) "OPTION" means an ISO or NSO granted under the Plan entitling the
Optionee to purchase Shares.

          (v) "OPTIONEE" means an individual or estate who holds an Option or
SAR.

          (w) "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a
Parent on a date after the adoption of the Plan shall be considered a Parent
commencing as of such date.

          (x) "PARTICIPANT" means an individual or estate who holds an Award.

          (y) "PLAN" means this Vialta.com 1999 Stock Incentive Plan as it may
be amended from time to time.

          (z) "RESTRICTED STOCK" means a Share awarded under the Plan.

          (aa) "SAR AGREEMENT" means the agreement between the Company and an
Optionee which contains the terms, conditions and restrictions pertaining to his
or her SAR.

          (bb) "SECURITIES ACT" means the Securities Act of 1933, as amended.

          (cc) "SERVICE" means service as an Employee, Director, Non-Employee
Director or Consultant.


                                       4
<PAGE>   8

          (dd) "SHARE" means one share of Common Stock.

          (ee) "STOCK APPRECIATION RIGHT" OR "SAR" means a stock appreciation
right awarded under the Plan.

          (ff) "STOCK AWARD AGREEMENT" means the agreement between the Company
and the recipient of a Restricted Stock or Stock Unit award which contains the
terms, conditions and restrictions pertaining to such Restricted Stock or Stock
Unit Award.

          (gg) "STOCK OPTION AGREEMENT" means the agreement between the Company
and an Optionee that contains the terms, conditions and restrictions pertaining
to his or her Option.

          (hh) "STOCK UNIT" means a bookkeeping entry representing the
equivalent of a Share, as awarded under the Plan.

          (ii) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. A corporation
that attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.

          (jj) "10-PERCENT SHAREHOLDER" means an individual who owns more than
ten percent (10%) of the total combined voting power of all classes of
outstanding stock of the Company, or of its Parent or Subsidiaries. In
determining stock ownership, the attribution rules of section 424(d) of the Code
shall be applied.

SECTION 3.  ADMINISTRATION.

          (a) COMMITTEE COMPOSITION. The Plan shall be administered by a
Committee appointed by the Board. The Board shall designate one of the members
of the Committee as chairperson. If no Committee has been appointed, the entire
Board shall constitute the Committee. Members of the Committee shall serve for
such period of time as the Board may determine and shall be subject to removal
by the Board at any time. The Board may also at any time terminate the functions
of the Committee and reassume all powers and authority previously delegated to
the Committee.

          Effective with the Company's initial public offering, the Committee
shall consist of two or more directors of the Company who shall satisfy the
requirements of Rule 16b-3 (or its successor) under the Exchange Act with
respect to Awards to persons who are officers or directors of the Company under
Section 16 of the Exchange Act or the Board itself.

          The Board may also appoint one or more separate committees of the
Board, each composed of one or more directors of the Company who need not
qualify under Rule 16b-3, who may administer the Plan with respect to Key
Employees who are not considered officers or directors of the Company under
Section 16 of the Exchange Act, may grant Awards under the Plan to such Key
Employees and may determine all terms of such Awards.


                                       5
<PAGE>   9

          (b) AUTHORITY OF THE COMMITTEE. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take any actions it
deems necessary or advisable for the administration of the Plan. Such actions
shall include:

               (i) selecting Key Employees who are to receive Awards under the
          Plan;

               (ii) determining the type, number, vesting requirements and other
          features and conditions of such Awards;

               (iii) interpreting the Plan; and

               (iv) making all other decisions relating to the operation of the
          Plan.

          The Committee may adopt such rules or guidelines as it deems
appropriate to implement the Plan. The Committee's determinations under the Plan
shall be final and binding on all persons.

          (c) FINANCIAL REPORTS. To the extent required by applicable law, and
not less often than annually, the Company shall furnish to Optionees the
Company's summary financial information including a balance sheet regarding the
Company's financial condition and results of operations, unless such Optionees
have duties with the Company that assure them access to equivalent information.
Such financial statements need not be audited.

SECTION 4.  ELIGIBILITY.

          (a) GENERAL RULES. Only Employees, Directors, Non-Employee Directors
and Consultants shall be eligible for designation as Key Employees by the
Committee.

          (b) INCENTIVE STOCK OPTIONS. Only Key Employees who are common-law
employees of the Company, its Parent or a Subsidiary shall be eligible for the
grant of ISOs. In addition, a Key Employee who is a 10-Percent Shareholder shall
not be eligible for the grant of an ISO unless the requirements set forth in
section 422(c)(5) of the Code are satisfied.

SECTION 5.  SHARES SUBJECT TO PLAN.

          (a) BASIC LIMITATION. The stock issuable under the Plan shall be
authorized but unissued Shares or treasury Shares. The aggregate number of
Shares reserved for Awards under the Plan shall not exceed 10,000,000 Shares on
a fully diluted basis, subject to adjustment pursuant to Section 10.

          (b) ADDITIONAL SHARES. If Stock Units, Options or SARs are forfeited
or if Options or SARs terminate for any other reason before being exercised,
then such Stock Units, Options or SARs shall again become available for Awards
under the Plan. If SARs are exercised, then only the number of Shares (if any)
actually issued in settlement of such SARs shall reduce the number available
under Section 5(a) and the balance shall again become available for Awards under
the Plan. If Restricted Stock is forfeited, then such Restricted Stock shall
again become available for Awards under the Plan.


                                       6
<PAGE>   10

          (c) DIVIDEND EQUIVALENTS. Any dividend equivalents distributed under
the Plan shall not be applied against the number of Restricted Stock, Stock
Units, Options or SARs available for Awards, whether or not such dividend
equivalents are converted into Stock Units.

SECTION 6.  TERMS AND CONDITIONS FOR AWARDS OF RESTRICTED STOCK AND STOCK UNITS.

          (a) TIME, AMOUNT AND FORM OF AWARDS. Awards under the Plan may be
granted in the form of Restricted Stock, in the form of Stock Units, or in any
combination of both. Restricted Stock or Stock Units may also be awarded in
combination with NSOs or SARs, and such an Award may provide that the Restricted
Stock or Stock Units will be forfeited in the event that the related NSOs or
SARs are exercised.

          (b) PAYMENT FOR AWARDS. Except as may be required under applicable
law, no cash consideration shall be required of the recipients of Restricted
Stock or Stock Units under this Section 6.

          (c) VESTING CONDITIONS. Each Award of Restricted Stock or Stock Units
shall become vested, in full or in installments, upon satisfaction of the
conditions specified in the Stock Award Agreement. A Stock Award Agreement may
provide for accelerated vesting in the event of the Participant's death,
Disability or retirement or other events. The Committee may determine, at the
time of granting Restricted Stock or Stock Units or thereafter, that such Award
shall become fully vested in the event that a Change in Control occurs with
respect to the Company. If the Committee finds that there is a reasonable
possibility that, within the succeeding six (6) months, a Change in Control will
occur with respect to the Company, then the Committee, at its sole discretion,
may determine that any or all outstanding Restricted Stock or Stock Units shall
become fully vested as to all Shares subject to such Awards.

          (d) FORM AND TIME OF SETTLEMENT OF STOCK UNITS. Settlement of vested
Stock Units may be made in the form of (i) cash, (ii) Shares or (iii) any
combination of both. The actual number of Stock Units eligible for settlement
may be larger or smaller than the number included in the original Award, based
on predetermined performance factors. Methods of converting Stock Units into
cash may include (without limitation) a method based on the average Fair Market
Value of Shares over a series of trading days. Vested Stock Units may be settled
in a lump sum or in installments. The distribution may occur or commence when
all vesting conditions applicable to the Stock Units have been satisfied or have
lapsed, or it may be deferred to any later date. The amount of a deferred
distribution may be increased by an interest factor or by dividend equivalents.
Until an Award of Stock Units is settled, the number of such Stock Units shall
be subject to adjustment pursuant to Section 10.

          (e) DEATH OF RECIPIENT. Any Stock Units Award that becomes payable
after the Award recipient's death shall be distributed to the recipient's
beneficiary or beneficiaries. Each recipient of a Stock Units Award under the
Plan shall designate one or more beneficiaries for this purpose by filing the
prescribed form with the Company. A beneficiary designation may be changed by
filing the prescribed form with the Company at any time before the recipient's
death. If no beneficiary was designated or if no designated beneficiary survives
the recipient, then any


                                       7
<PAGE>   11
Stock Units Award that becomes payable after the recipient's death shall be
distributed to the recipient's estate.

          (f) CREDITORS' RIGHTS. A holder of Stock Units shall have no rights
other than those of a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Award Agreement.

SECTION 7.  TERMS AND CONDITIONS OF OPTIONS.

          (a) STOCK OPTION AGREEMENT. Each Grant under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions that are not inconsistent with
the Plan and that the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical. A Stock Option Agreement may provide
that new Options will be granted automatically to the Optionee when he or she
exercises the prior Options. The Stock Option Agreement shall also specify
whether the Option is an ISO or an NSO.

          (b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 10.

          (c) EXERCISE PRICE. An Option's Exercise Price shall be established by
the Committee and set forth in a Stock Option Agreement. The Exercise Price of
an ISO shall not be less than 100% of the Fair Market Value (110% for 10-Percent
Shareholders) of a Share on the date of Grant. In the case of an NSO, a Stock
Option Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the NSO is outstanding. To the extent required by
applicable law, the Exercise Price for an NSO shall not be less than 85% of the
Fair Market Value (110% for 10-Percent Shareholders) of a Share on the date of
Grant.

          (d) EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to become exercisable. To
the extent required by applicable law, Options shall vest at least as rapidly as
20% annually over a five-year period. The Stock Option Agreement shall also
specify the term of the Option; provided that the term of an ISO, and to the
extent required by applicable law a NSO, shall in no event exceed ten (10) years
from the date of Grant (five (5) years for ISO Grants to 10-Percent
Shareholders). To the extent required by applicable law, Options shall be
exercisable for a minimum period of six months following termination of
employment due to death or Disability and thirty days following termination of
employment (other than terminations for cause, as defined in the Company's
personnel policies). Notwithstanding the previous sentence, no Option can be
exercised after the expiration date provided in the applicable Stock Option
Agreement. A Stock Option Agreement may provide for accelerated exercisability
in the event of the Optionee's death, Disability or retirement or other events
and may provide for expiration prior to the end of its term in the event of the
termination of the Optionee's Service. Options may be awarded in combination
with SARs, and such an Award may provide that the Options will not be
exercisable


                                       8
<PAGE>   12
unless the related SARs are forfeited. NSOs may also be awarded in combination
with Restricted Stock or Stock Units, and such an Award may provide that the
NSOs will not be exercisable unless the related Restricted Stock or Stock Units
are forfeited. A Stock Option Agreement may permit an Optionee to exercise an
Option before it is vested, subject to the Company's right of repurchase over
any Shares acquired under the unvested portion of the Option (an "early
exercise"), which right of repurchase shall lapse at the same rate the Option
would have vested had there been no early exercise. In no event shall the
Company be required to issue fractional Shares upon the exercise of an Option.

          (e) EFFECT OF A CHANGE IN CONTROL. The Committee may determine, at the
time of granting an Option or thereafter, that such Option shall become fully
vested in the event that a Change in Control occurs with respect to the Company.
If the Committee finds that there is a reasonable possibility that, within the
succeeding six (6) months, a Change in Control will occur with respect to the
Company, then the Committee at its sole discretion may determine that any or all
outstanding Options shall become fully exercisable as to all Shares subject to
such Options.

          (f) MODIFICATIONS OR ASSUMPTION OF OPTIONS. Within the limitations of
the Plan, the Committee may modify, extend or assume outstanding Options or may
accept the cancellation of outstanding options (whether granted by the Company
or by another issuer) in return for the grant of new Options for the same or a
different number of Shares and at the same or a different Exercise Price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
such Option.

          (g) TRANSFERABILITY OF OPTIONS. Except as otherwise provided in the
applicable Stock Option Agreement and then only to the extent permitted by
applicable law, no Option shall be transferable by the Optionee other than by
will or by the laws of descent and distribution. Except as otherwise provided in
the applicable Stock Option Agreement, an Option may be exercised during the
lifetime of the Optionee only by the Optionee or by the guardian or legal
representative of the Optionee. No Option or interest therein may be assigned,
pledged or hypothecated by the Optionee during his lifetime, whether by
operation of law or otherwise, or be made subject to execution, attachment or
similar process.

          (h) NO RIGHTS AS A SHAREHOLDER. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by an Option until such person becomes entitled to receive such Shares
by filing a notice of exercise and paying the Exercise Price pursuant to the
terms of such Option.

          (i) RESTRICTIONS ON TRANSFER. Any Shares issued upon exercise of an
Option shall be subject to such rights of repurchase, rights of first refusal
and other transfer restrictions as the Committee may determine. Such
restrictions shall apply in addition to any restrictions that may apply to
holders of Shares generally and shall also comply to the extent necessary with
applicable law.

SECTION 8.   PAYMENT FOR OPTION SHARES.

          (a) GENERAL RULE. The entire Exercise Price of Shares issued upon
exercise of Options shall be payable in cash at the time when such Shares are
purchased, except as follows:


                                       9
<PAGE>   13

               (i) In the case of an ISO granted under the Plan, payment shall
          be made only pursuant to the express provisions of the applicable
          Stock Option Agreement. The Stock Option Agreement may specify that
          payment may be made in any form(s) described in this Section 8.

               (ii) In the case of an NSO, the Committee may at any time accept
          payment in any form(s) described in this Section 8.

          (b) SURRENDER OF STOCK. To the extent that this Section 8(b) is
applicable, payment for all or any part of the Exercise Price may be made with
Shares which have already been owned by the Optionee for such duration as shall
be specified by the Committee. Such Shares shall be valued at their Fair Market
Value on the date when the new Shares are purchased under the Plan.

          (c) PROMISSORY NOTE. To the extent that this Section 8(c) is
applicable, payment for all or any part of the Exercise Price may be made with a
full recourse promissory note.

          (d) OTHER FORMS OF PAYMENT. To the extent that this Section 8(d) is
applicable, payment may be made in any other form that is consistent with
applicable laws, regulations and rules.

SECTION 9.   STOCK APPRECIATION RIGHTS.

          (a) SAR AGREEMENT. To the extent permitted under applicable law, the
Committee may grant Awards which are SARs. Each grant of a SAR under the Plan
shall be evidenced by a SAR Agreement between the Optionee and the Company. Such
SAR shall be subject to all applicable terms of the Plan and may be subject to
any other terms that are not inconsistent with the Plan. The provisions of the
various SAR Agreements entered into under the Plan need not be identical. SARs
may be granted in consideration of a reduction in the Optionee's other
compensation.

          (b) NUMBER OF SHARES. Each SAR Agreement shall specify the number of
Shares to which the SAR pertains and shall provide for the adjustment of such
number in accordance with Section 10.

          (c) EXERCISE PRICE. Each SAR Agreement shall specify the Exercise
Price. A SAR Agreement may specify an Exercise Price that varies in accordance
with a predetermined formula while the SAR is outstanding.

          (d) EXERCISABILITY AND TERM. Each SAR Agreement shall specify the date
when all or any installment of the SAR is to become exercisable. The SAR
Agreement shall also specify the term of the SAR. A SAR Agreement may provide
for accelerated exercisability in the event of the Optionee's death, Disability
or retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionee's Service. SARs may
also be awarded in combination with Options, Restricted Stock or Stock Units,
and such an Award may provide that the SARs will not be exercisable unless the
related Options, Restricted Stock or Stock Units are forfeited. A SAR may be
included in an ISO only at the time of Grant but may be included in an NSO at
the time of Grant or at any subsequent time, but not later than



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<PAGE>   14

six months before the expiration of such NSO. A SAR granted under the Plan may
provide that it will be exercisable only in the event of a Change in Control.

          (e) EFFECT OF CHANGE IN CONTROL. The Committee may determine, at the
time of granting a SAR or thereafter, that such SAR shall become fully vested in
the event that a Change in Control occurs with respect to the Company. If the
Committee finds that there is a reasonable possibility that, within the
succeeding six (6) months, a Change in Control will occur with respect to the
Company, then the Committee at its sole discretion may determine that any or all
outstanding SARs shall become fully vested.

          (f) EXERCISE OF SARS. If, on the date when a SAR expires, the Exercise
Price under such SAR is less than the Fair Market Value on such date but any
portion of such SAR has not been exercised or surrendered, then such SAR shall
automatically be deemed to be exercised as of such date with respect to such
portion. Upon exercise of a SAR, the Optionee (or any person having the right to
exercise the SAR after his or her death) shall receive from the Company (i)
Shares, (ii) cash or (iii) a combination of Shares and cash, as the Committee
shall determine. The amount of cash and/or the Fair Market Value of Shares
received upon exercise of SARs shall, in the aggregate, be equal to the amount
by which the Fair Market Value (on the date of surrender) of the Shares subject
to the SARs exceeds the Exercise Price.

          (g) MODIFICATION OR ASSUMPTION OF SARS. Within the limitations of the
Plan, the Committee may modify, extend or assume outstanding SARs or may accept
the cancellation of outstanding SARs (whether granted by the Company or by
another issuer) in return for the grant of new SARs for the same or a different
number of Shares and at the same or a different Exercise Price. The foregoing
notwithstanding, no modification of a SAR shall, without the consent of the
Optionee, alter or impair his or her rights or obligations under such SAR.

SECTION 10.       PROTECTION AGAINST DILUTION.

          (a) ADJUSTMENTS. In the event of a subdivision of the outstanding
Shares, a declaration of a dividend payable in Shares, a declaration of a
dividend payable in a form other than Shares in an amount that has a material
effect on the price of Shares, a combination or consolidation of the outstanding
Shares (by reclassification or otherwise) into a lesser number of Shares, a
recapitalization, a spinoff or a similar occurrence, the Committee shall make
such adjustments as it, in its sole discretion, deems appropriate in one or more
of:

               (i) the number of Options, SARs, Restricted Stock and Stock Units
          available for future Awards under Section 5;

               (ii) the number of Stock Units included in any prior Award which
          has not yet been settled;

               (iii) the number of Shares covered by each outstanding Option and
          SAR; or

               (iv) the Exercise Price under each outstanding Option and SAR.

Except as provided in this Section 10, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any


                                       11
<PAGE>   15

subdivision or consolidation of shares of stock of any class, the payment of any
stock dividend or any other increase or decrease in the number of shares of
stock of any class.

          (b) REORGANIZATIONS. In the event that the Company is a party to a
merger or other reorganization, outstanding Options, SARs, Restricted Stock and
Stock Units shall be subject to the agreement of merger or reorganization. Such
agreement may provide, without limitation, for the assumption of outstanding
Awards by the surviving corporation or its parent or for their continuation by
the Company (if the Company is a surviving corporation), for accelerated vesting
and accelerated expiration, or for settlement in cash or for cancellation.

SECTION 11.  VOTING AND DIVIDEND RIGHTS.

          (a) RESTRICTED STOCK. The holders of Restricted Stock awarded under
the Plan shall have the same voting, dividend and other rights as the Company's
other shareholders. A Stock Award Agreement, however, may require that the
holders of Restricted Stock invest any cash dividends received in additional
Restricted Stock. Such additional Restricted Stock shall be subject to the same
conditions and restrictions as the Award with respect to which the dividends
were paid. Such additional Restricted Stock shall not reduce the number of
Shares available under Section 5.

          (b) STOCK UNITS. The holders of Stock Units shall have no voting
rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan
may, at the Committee's discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one Share while the Stock Unit is outstanding.
Dividend equivalents may be converted into additional Stock Units. Settlement of
dividend equivalents may be made in the form of cash, in the form of Shares, or
in a combination of both. Prior to distribution, any dividend equivalents which
are not paid shall be subject to the same conditions and restrictions as the
Stock Units to which they attach.

SECTION 12.  AWARDS UNDER OTHER PLANS.

          The Company may grant awards under other plans or programs. Such
awards may be settled in the form of Shares issued under this Plan. Such Shares
shall be treated for all purposes under the Plan like Shares issued in
settlement of Stock Units and shall, when issued, reduce the number of Shares
available under Section 5.

SECTION 13.  LIMITATIONS ON RIGHTS.

          (a) RETENTION RIGHTS. Neither the Plan nor any Award granted under the
Plan shall be deemed to give any individual a right to remain an employee,
consultant or director of the Company, a Parent, a Subsidiary or an Affiliate.
The Company and its Parents and Subsidiaries and Affiliates reserve the right to
terminate the Service of any person at any time, and for any reason, subject to
applicable laws, the Company's articles of incorporation and bylaws and a
written employment agreement (if any).

          (b) SHAREHOLDERS' RIGHTS. A Participant shall have no dividend rights,
voting rights or other rights as a shareholder with respect to any Shares
covered by his or her Award prior to the issuance of a stock certificate for
such Shares. No adjustment shall be made for cash


                                       12
<PAGE>   16
dividends or other rights for which the record date is prior to the date when
such certificate is issued, except as expressly provided in Sections 6, 10 and
11.

          (c) REGULATORY REQUIREMENTS. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Shares under the Plan
shall be subject to all applicable laws, rules and regulations and such approval
by any regulatory body as may be required. The Company reserves the right to
restrict, in whole or in part, the delivery of Shares pursuant to any Award
prior to the satisfaction of all legal requirements relating to the issuance of
such Shares, to their registration, qualification or listing or to an exemption
from registration, qualification or listing.

SECTION 14.  WITHHOLDING TAXES.

          (a) GENERAL. To the extent required by applicable federal, state,
local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any withholding
tax obligations that arise in connection with the Plan. The Company shall not be
required to issue any Shares or make any cash payment under the Plan until such
obligations are satisfied.

          (b) SHARE WITHHOLDING. If a public market for the Company's Shares
exists, the Committee may permit a Participant to satisfy all or part of his or
her withholding or income tax obligations by having the Company withhold all or
a portion of any Shares that otherwise would be issued to him or her or by
surrendering all or a portion of any Shares that he or she previously acquired.
Such Shares shall be valued at their Fair Market Value on the date when taxes
otherwise would be withheld in cash. Any payment of taxes by assigning Shares to
the Company may be subject to restrictions, including any restrictions required
by rules of the Securities and Exchange Commission.

SECTION 15.  ASSIGNMENT OR TRANSFER OF AWARDS.

          (a) GENERAL. Except as provided in Section 14, or in an applicable
agreement, or as required by applicable law, an Award granted under the Plan
shall not be anticipated, assigned, attached, garnished, optioned, transferred
or made subject to any creditor's process, whether voluntarily, involuntarily or
by operation of law. An Option or SAR may be exercised during the lifetime of
the Optionee only by him or her or by his or her guardian or legal
representative. Any act in violation of this Section 15 shall be void. However,
this Section 15 shall not preclude a Participant from designating a beneficiary
who will receive any outstanding Awards in the event of the Participant's death,
nor shall it preclude a transfer of Awards by will or by the laws of descent and
distribution.

          (b) TRUSTS. Neither this Section 15 nor any other provision of the
Plan shall preclude a Participant from transferring or assigning Restricted
Stock or Stock Units to (a) the trustee of a trust that is revocable by such
Participant alone, both at the time of the transfer or assignment and at all
times thereafter prior to such Participant's death, or (b) the trustee of any
other trust to the extent approved in advance by the Committee in writing. A
transfer or assignment of Restricted Stock or Stock Units from such trustee to
any person other than such Participant shall be permitted only to the extent
approved in advance by the Committee in writing, and Restricted


                                       13
<PAGE>   17

Stock or Stock Units held by such trustee shall be subject to all of the
conditions and restrictions set forth in the Plan and in the applicable Stock
Award Agreement, as if such trustee were a party to such Agreement.

SECTION 16.  DURATION AND AMENDMENTS.

          (a) TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board, subject to the approval of
the Company's shareholder. No Awards shall be exercisable until such shareholder
approval is obtained. In the event that the shareholder fails to approve the
Plan within twelve (12) months after its adoption by the Board, any Awards made
shall be null and void and no additional Awards shall be made after such date.
To the extent required by applicable law, the Plan shall terminate on the date
that is ten (10) years after its adoption by the Board and may be terminated on
any earlier date pursuant to Section 16(b).

          (b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board may amend or
terminate the Plan at any time and for any reason. The termination of the Plan,
or any amendment thereof, shall not affect any Award previously granted under
the Plan. No Awards shall be granted under the Plan after the Plan's
termination. An amendment of the Plan shall be subject to the approval of the
Company's shareholder(s) only to the extent required by applicable laws,
regulations or rules.

SECTION 17.   EXECUTION.

          To record the adoption of the Plan by the Board, the Company has
caused its duly authorized officer to execute this Plan.

                                   VIALTA.COM

                                   By:
                                      ------------------------------------------
                                      Fred S. L. Chan
                                      President