Document:

<PAGE>

                                                                  EXHIBIT 10.3

                                  TVIA, INC.

                       2000 EMPLOYEE STOCK PURCHASE PLAN

                   (Adopted by the Board on March 20, 2000)
<PAGE>

                               Table of Contents
                               -----------------

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
SECTION 1. Purpose Of The Plan...........................................     1

SECTION 2. Definitions...................................................     1
   (A)   "Accumulation Period............................................     1
   (B)   "Board".........................................................     1
   (C)   "Code"..........................................................     1
   (D)   "Committee".....................................................     1
   (E)   "Company".......................................................     1
   (F)   "Compensation"..................................................     1
   (G)   "Corporate reorganization"......................................     1
   (H)   "Eligible Employee".............................................     1
   (I)   "Exchange Act"..................................................     2
   (J)   "Fair Market VAlue".............................................     2
   (K)   "IPO"...........................................................     2
   (L)   "Offering Period"...............................................     2
   (M)   "Participant"...................................................     2
   (N)   "Participating Company".........................................     2
   (O)   "Plan"..........................................................     2
   (P)   "Plan Account"..................................................     2
   (Q)   "Purchase Price"................................................     2
   (R)   "Stock".........................................................     2
   (S)   "Subsidiary"....................................................     3

SECTION 3. Administration of the Plan....................................     3
   (A)   Committee Composition...........................................     3
   (B)   Committee Responsibilities......................................     3

Section 4. Enrollment And Participation..................................     3
   (A)   Offering Periods................................................     3
   (B)   Accumulation Periods............................................     3
   (C)   Enrollment......................................................     3
   (D)   Duration of Participation.......................................     3
   (E)   Applicable Offering Period......................................     3

SECTION 5. Employee Contributions........................................     4
   (A)   Frequency of Payroll Deductions.................................     4
   (B)   Amount of Payroll Deductions....................................     4
   (C)   Changing Withholding Rate.......................................     4
   (D)   Discontinuing Payroll Deductions................................     4
   (E)   Limit on Number of Elections....................................     4

Section 6. Withdrawal From The Plan......................................     5
   (A)   Withdrawal......................................................     5
   (B)   Re-enrollment After Withdrawal..................................     5

SECTION 7. Change In Employment Status...................................     5
   (A)   Termination of Employment.......................................     5
   (B)   Leave of Absence................................................     5
   (C)   Death...........................................................     5
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                         <C>
SECTION 8. Plan Accounts And Purchase Of Shares..........................     5
   (A)   Plan Accounts...................................................     5
   (B)   Purchase Price..................................................     5
   (C)   Number of Shares Purchased......................................     6
   (D)   Available Shares Insufficient...................................     6
   (E)   Issuance of Stock...............................................     6
   (F)   Unused Cash Balances............................................     6
   (G)   Stockholder Approval............................................     6

SECTION 9. Limitations On Stock Ownership................................     7
   (A)   Five Percent Limit..............................................     7
   (B)   Dollar Limit....................................................     7

SECTION 10. Rights Not Transferable......................................     7

SECTION 11. No Rights As An Employee.....................................     7

SECTION 12. No Rights As A Stockholder...................................     8

SECTION 13. Securities Law Requirements..................................     8

SECTION 14. Stock Offered Under The Plan.................................     8
   (A)   Authorized Shares...............................................     8
   (B)   Antidilution Adjustments........................................     8
   (C)   Reorganizations.................................................     8

SECTION 15. Amendment Or Discontinuance..................................     8

SECTION 16. Execution....................................................     9
</TABLE>

                                      ii
<PAGE>

                                  TVIA, INC.

                       2000 EMPLOYEE STOCK PURCHASE PLAN

SECTION 1.     Purpose Of The Plan.
---------      -------------------

     The Plan was adopted by the Board on March 20, 2000, effective as of the
date of the IPO. The purpose of the Plan is to provide Eligible Employees with
an opportunity to increase their proprietary interest in the success of the
Company by purchasing Stock from the Company on favorable terms and to pay for
such purchases through payroll deductions.  The Plan is intended to qualify
under section 423 of the Code.

SECTION 2.     Definitions.
---------      -----------

     (a)  "Accumulation Period " means a six-month period during which
           -------------------
contributions may be made toward the purchase of Stock under the Plan, as
determined pursuant to Section 4(b).

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

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

     (d)  "Committee" means a committee of the Board, as described in Section 3.
           ---------

     (e)  "Company" means Tvia, Inc., a Delaware Corporation.
           -------

     (f)  "Compensation" means (i) the total compensation paid in cash to a
           ------------
Participant by a Participating Company, including salaries, wages, bonuses,
incentive compensation, commissions, overtime pay and shift premiums, plus (ii)
any pre-tax contributions made by the Participant under section 401(k) or 125 of
the Code. "Compensation" shall exclude all non-cash items, moving or relocation
allowances, cost-of-living equalization payments, car allowances, tuition
reimbursements, imputed income attributable to cars or life insurance, severance
pay, fringe benefits, contributions or benefits received under employee benefit
plans, income attributable to the exercise of stock options, and similar items.
The Committee shall determine whether a particular item is included in
Compensation.

     (g)  "Corporate Reorganization" means:
           ------------------------

          (i)  The consummation of a merger or consolidation of the Company with
or into another entity, or any other corporate reorganization; or

          (ii) The sale, transfer or other disposition of all or substantially
all of the Company's assets or the complete liquidation or dissolution of the
Company.

     (h)  "Eligible Employee" means any employee of a Participating Company
           -----------------
customary employment is for more than five months per calendar year and for more
than 20 hours per week.
<PAGE>

     The foregoing notwithstanding, an individual shall not be considered an
Eligible Employee if his or her participation in the Plan is prohibited by the
law of any country which has jurisdiction over him or her or if he or she is
subject to a collective bargaining agreement that does not provide for
participation in the Plan.

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

     (j)  "Fair Market Value" means the market price of Stock, determined by the
           -----------------
Committee as follows:

          (i)   If Stock was traded on The Nasdaq National Market on the date in
question, then the Fair Market Value shall be equal to the last-transaction
price quoted for such date by The Nasdaq National Market;

          (ii)  If Stock was 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; or

          (iii) 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 Wall Street Journal or as reported
                                             -------------------
directly to the Company by Nasdaq or a stock exchange. Such determination shall
be conclusive and binding on all persons.

     (k)  "IPO" means the initial offering of Stock to the public pursuant to a
           ---
registration statement filed by the Company with the Securities and Exchange
Commission.

     (l)  "Offering Period" means a 24-month period with respect to which the
           ---------------
right to purchase Stock may be granted under the Plan, as determined pursuant to
Section 4(a).

     (m)  "Participant" means an Eligible Employee who elects to participate in
           -----------
the Plan, as provided in Section 4(c).

     (n)  "Participating Company" means (i) the Company and (ii) each present or
           ---------------------
future Subsidiary designated by the Committee as a Participating Company.

     (o)  "Plan" means this Tvia, Inc. 2000 Employee Stock Purchase Plan, as it
           ----
may be amended from time to time.

     (p)  "Plan Account" means the account established for each Participant
           ------------
pursuant to Section 8(a).

     (q)  "Purchase Price" means the price at which Participants may purchase
           --------------
Stock under the Plan, as determined pursuant to Section 8(b).

     (r)  "Stock" means the Common Stock of the Company.

                                       2
<PAGE>

     (s)  "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 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

SECTION 3.  Administration of the Plan.
--------------------------------------

     (a)  Committee Composition. The Plan shall be administered by the
Committee. The Committee shall consist exclusively of one or more directors of
the Company, who shall be appointed by the Board.

     (b)  Committee Responsibilities. The Committee shall interpret the Plan and
make all other policy decisions relating to the operation of the Plan. The
Committee may adopt such rules, guidelines and forms as it deems appropriate to
implement the Plan. The Committee's determinations under the Plan shall be final
and binding on all persons.

SECTION 4.  Enrollment And Participation.
----------------------------------------

     (a)  Offering Periods. While the Plan is in effect, two Offering Periods
          ----------------
shall commence in each calendar year. The Offering Periods shall consist of the
24-month periods commencing on each January 1 and July 1, except that the first
Offering Period shall commence on the date of the IPO and end on December 31,
2001.

     (b)  Accumulation Periods. While the Plan is in effect, two Accumulation
          --------------------
Periods shall commence in each calendar year. The Accumulation Periods shall
consist of the six-month periods commencing on January 1 and July 1, except that
the first Accumulation Period shall commence on the date of the IPO and end on
June 30, 2000.

     (c)  Enrollment. Any individual who, on the day preceding the first day of
          ----------
an Offering Period, qualifies as an Eligible Employee may elect to become a
Participant in the Plan for such Offering Period by executing the enrollment
form prescribed for this purpose by the Committee. The enrollment form shall be
filed with the Company at the prescribed location not later than 15 days prior
to the commencement of such Offering Period.

     (d)  Duration of Participation. Once enrolled in the Plan, a Participant
          -------------------------
shall continue to participate in the Plan until he or she ceases to be an
Eligible Employee, withdraws from the Plan under Section 5(a) or reaches the end
of the Offering Period in which his or her employee contributions were
discontinued under Section 5(d) or 9(b). A Participant who discontinued employee
contributions under Section 5(d) or 9(b) or withdrew from the Plan under Section
6(a) may again become a Participant, if he or she then is an Eligible Employee,
by following the procedure described in Subsection (c) above. A Participant
whose employee contributions were discontinued automatically under Section 9(b)
shall automatically resume participation at the beginning of the earliest
Offering Period ending in the next calendar year, if he or she then is an
Eligible Employee.

     (e)  Applicable Offering Period. For purposes of calculating the purchase
          --------------------------
price under Section 8(b), the applicable Offering Period shall be determined as
follows:

                                       3
<PAGE>

          (i)   Once a Participant is enrolled in the Plan for an Offering
Period, such Offering Period shall continue to apply to him or her until the
earliest of: (A) the end of such Offering Period; (B) the end of his or her
participation under Subsection (d) above; or (C) re-enrollment in a subsequent
Offering Period under Paragraph (ii) below.

          (ii)  In the event that the Fair Market Value of Stock on the last
trading day before the commencement of the Offering Period in which the
Participant is enrolled is higher than on the last trading day before the
commencement of any subsequent Offering Period, the Participant shall
automatically be re-enrolled for such subsequent Offering Period.

          (iii) When a Participant reaches the end of an Offering Period but his
or her participation is to continue, then such Participant shall automatically
be re-enrolled for the Offering Period that commences immediately after the end
of the prior Offering Period.

SECTION 5.  Employee Contributions.
----------------------------------

     (a)  Frequency of Payroll Deductions. A Participant may purchase shares of
          -------------------------------
Stock under the Plan solely by means of payroll deductions. Payroll deductions,
as designated by the Participant pursuant to Subsection (b) below, shall occur
on each payday during participation in the Plan.

     (b)  Amount of Payroll Deductions. An Eligible Employee shall designate on
          ----------------------------
the enrollment form the portion of his or her Compensation that he or she elects
to have withheld for the purchase of Stock. Such portion shall be a whole
percentage of the Eligible Employee's Compensation, but not less than 1% nor
more than 15%.

     (c)  Changing Withholding Rate. If a Participant wishes to change the rate
          -------------------------
of payroll withholding, he or she may do so by filing a new enrollment form with
the Company at the prescribed location at any time. The new withholding rate
shall be effective as soon as reasonably practicable after such form has been
received by the Company. The new withholding rate shall be a whole percentage of
the Eligible Employee's Compensation, but not less than 1% nor more than 15%.

     (d) Discontinuing Payroll Deductions. If a Participant wishes to
         --------------------------------
discontinue employee contributions entirely, he or she may do so by filing a new
enrollment form with the Company at the prescribed location at any time. Payroll
withholding shall cease as soon as reasonably practicable after such form has
been received by the Company. (In addition, employee contributions may be
discontinued automatically pursuant to Section 9(b)). A Participant who has
discontinued employee contributions may resume such contributions by filing a
new enrollment form with the Company at the prescribed location. Payroll
withholding shall resume as soon as reasonably practicable after such form has
been received by the Company.

     (e)  Limit on Number of Elections. No Participant shall make more than two
          ----------------------------
elections under Subsection (c) or (d) above during any Offering Period.

                                       4
<PAGE>

SECTION 6.  Withdrawal From The Plan.
------------------------------------

     (a)  Withdrawal. A Participant may elect to withdraw from the Plan by
          ----------
filing the prescribed form with the Company at the prescribed location at any
time before the last day of an Accumulation Period. As soon as reasonably
practicable thereafter, payroll deductions shall cease and the entire amount
credited to the Participant's Plan Account shall be refunded to him or her in
cash, without interest. No partial withdrawals shall be permitted.

     (b) Re-enrollment After Withdrawal. A former Participant who has withdrawn
         ------------------------------
from the Plan shall not be a Participant until he or she re-enrolls in the Plan
under Section 4(c). Re-enrollment may be effective only at the commencement of
an Offering Period.

SECTION 7.  Change In Employment Status.
---------------------------------------

     (a)  Termination of Employment. Termination of employment as an Eligible
          -------------------------
Employee for any reason, including death, shall be treated as an automatic
withdrawal from the Plan under Section 6(a). (A transfer from one Participating
Company to another shall not be treated as a termination of employment.)

     (b)  Leave of Absence. For purposes of the Plan, employment shall not be
          ----------------
deemed to terminate when the Participant goes on a military leave, a sick leave
or another bona fide leave of absence, if the leave was approved by the Company
in writing. Employment, however, shall be deemed to terminate ninety (90) days
after the Participant goes on a leave, unless a contract or statute guarantees
his or her right to return to work. Employment shall be deemed to terminate in
any event when the approved leave ends, unless the Participant immediately
returns to work.

     (c)  Death. In the event of the Participant's death, the amount credited to
          -----
his or her Plan Account shall be paid to a beneficiary designated by him or her
for this purpose on the prescribed form or, if none, to the Participant's
estate. Such form shall be valid only if it was filed with the Company at the
prescribed location before the Participant's death.

SECTION 8.  Plan Accounts And Purchase Of Shares.
------------------------------------------------

     (a)  Plan Accounts. The Company shall maintain a Plan Account on its books
          -------------
in the name of each Participant. Whenever an amount is deducted from the
Participant's Compensation under the Plan, such amount shall be credited to the
Participant's Plan Account. Amounts credited to Plan Accounts shall not be trust
funds and may be commingled with the Company's general assets and applied to
general corporate purposes. No interest shall be credited to Plan Accounts.

     (b)  Purchase Price. The Purchase Price for each share of Stock purchased
          --------------
on the last trading day of the month in which the Accumulation Period expired
shall be the lower of:

          (i)  85% of the Fair Market Value of such share on the last trading
day of the month in which the Accumulation Period expired; or

          (ii) 85% of the Fair Market Value of such share on the last trading
day before the commencement of the applicable Offering Period (as determined
under Section 4(e)) or, in

                                       5
<PAGE>

the case of the first Offering Period under the Plan, 85% of the price at which
one share of Stock is offered to the public in the IPO.

     (c)  Number of Shares Purchased. As of the last trading day of each month
          --------------------------
in which the Accumulation Period expired, each Participant shall be deemed to
have elected to purchase the number of shares of Stock calculated in accordance
with this Subsection (c), unless the Participant has previously elected to
withdraw from the Plan in accordance with Section 6(a). The amount then in the
Participant's Plan Account shall be divided by the Purchase Price, and the
number of shares that results shall be purchased from the Company with the funds
in the Participant's Plan Account. The foregoing notwithstanding, no Participant
shall purchase more than 1,000 shares of Stock with respect to any Accumulation
Period nor more than the amounts of Stock set forth in Sections 9(b) and 14(a).
The Committee may determine with respect to all Participants that any fractional
share, as calculated under this Subsection (c), shall be (i) rounded down to the
next lower whole share or (ii) credited as a fractional share.

     (d)  Available Shares Insufficient. In the event that the aggregate number
          -----------------------------
of shares that all Participants elect to purchase during an Accumulation Period
exceeds the maximum number of shares remaining available for issuance under
Section 14(a), then the number of shares to which each Participant is entitled
shall be determined by multiplying the number of shares available for issuance
by a fraction, the numerator of which is the number of shares that such
Participant has elected to purchase and the denominator of which is the number
of shares that all Participants have elected to purchase.

     (e)  Issuance of Stock. Certificates representing the shares of Stock
          -----------------
purchased by a Participant under the Plan shall be issued to him or her as soon
as reasonably practicable after the close of the applicable Accumulation Period,
except that the Committee may determine that such shares shall be held for each
Participant's benefit by a broker designated by the Committee (unless the
Participant has elected that certificates be issued to him or her). Shares may
be registered in the name of the Participant or jointly in the name of the
Participant and his or her spouse as joint tenants with right of survivorship or
as community property.

     (f)  Unused Cash Balances. An amount remaining in the Participant's Plan
          --------------------
Account that represents the Purchase Price for any fractional share shall be
carried over in the Participant's Plan Account to the next Accumulation Period.
Any amount remaining in the Participant's Plan Account that represents the
Purchase Price for whole shares that could not be purchased by reason of
Subsection (c) above, Section 9(b) or Section 14(a) shall be refunded to the
Participant in cash, without interest.

     (g)  Stockholder Approval. Any other provision of the Plan notwithstanding,
          --------------------
no shares of Stock shall be purchased under the Plan unless and until the
Company's stockholders have approved the adoption of the Plan.

                                       6
<PAGE>

SECTION 9.  Limitations On Stock Ownership.
------------------------------------------

     (a)  Five Percent Limit. Any other provision of the Plan notwithstanding,
          ------------------
no Participant shall be granted a right to purchase Stock under the Plan if such
Participant, immediately after his or her election to purchase such Stock, would
own stock possessing more than 5% of the total combined voting power or value of
all classes of stock of the Company or any parent or Subsidiary of the Company.
For purposes of this Subsection (a), the following rules shall apply:

          (i)   Ownership of stock shall be determined after applying the
attribution rules of section 424(d) of the Code;

          (ii)  Each Participant shall be deemed to own any stock that he or she
has a right or option to purchase under this or any other plan; and

          (iii) Each Participant shall be deemed to have the right to purchase
1,000 shares of Stock under this Plan with respect to each Accumulation Period.

     (b)  Dollar Limit. Any other provision of the Plan notwithstanding, no
          ------------
Participant shall purchase Stock with a Fair Market Value in excess of the
following limit:

     Any other provision of the Plan notwithstanding, no Participant shall
purchase Stock with a Fair Market Value in excess of $25,000 per calendar year
(under this Plan and all other employee stock purchase plans of the Company or
any parent or Subsidiary of the Company).

     For purposes of this Subsection (b), the Fair Market Value of Stock shall
be determined in each case as of the beginning of the Offering Period in which
such Stock is purchased. Employee stock purchase plans not described in section
423 of the Code shall be disregarded. If a Participant is precluded by this
Subsection (b) from purchasing additional Stock under the Plan, then his or her
employee contributions shall automatically be discontinued and shall resume at
the beginning of the earliest Accumulation Period ending in the next calendar
year (if he or she then is an Eligible Employee).

SECTION 10.  Rights Not Transferable.
------------------------------------

     The rights of any Participant under the Plan, or any Participant's interest
in any Stock or moneys to which he or she may be entitled under the Plan, shall
not be transferable by voluntary or involuntary assignment or by operation of
law, or in any other manner other than by beneficiary designation or the laws of
descent and distribution. If a Participant in any manner attempts to transfer,
assign or otherwise encumber his or her rights or interest under the Plan, other
than by beneficiary designation or the laws of descent and distribution, then
such act shall be treated as an election by the Participant to withdraw from the
Plan under Section 6(a).

SECTION 11.  No Rights As An Employee.
-------------------------------------

     Nothing in the Plan or in any right granted under the Plan shall confer
upon the Participant any right to continue in the employ of a Participating
Company for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Participating

                                       7
<PAGE>

Companies or of the Participant, which rights are hereby expressly reserved by
each, to terminate his or her employment at any time and for any reason, with or
without cause.

SECTION 12.  No Rights As A Stockholder.
---------------------------------------

     A Participant shall have no rights as a stockholder with respect to any
shares of Stock that he or she may have a right to purchase under the Plan until
such shares have been purchased on the last day of the applicable Offering
Period.

SECTION 13.  Securities Law Requirements.
----------------------------------------

     Shares of Stock shall not be issued under the Plan unless the issuance and
delivery of such shares comply with (or are exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange or other
securities market on which the Company's securities may then be traded.

SECTION 14.  Stock Offered Under The Plan.
-----------------------------------------

     (a)  Authorized Shares. The maximum aggregate number of shares of Stock
          -----------------
available for purchase under the Plan is one million (1,000,000), plus an annual
increase to be added on the first day of the Company's fiscal year beginning in
2001 equal to the lesser of (i) two hundred fifty thousand (250,000) shares,
(ii) three percent (3%) of the outstanding shares on such date or (iii) a lesser
amount determined by the Board. The aggregate number of Shares available for
purchase under the Plan shall at all times be subject to adjustment pursuant to
Section 14.

     (b)  Antidilution Adjustments. The aggregate number of shares of Stock
          ------------------------
offered under the Plan, the 1,000 share limitation described in Section 8(c) and
the price of shares that any Participant has elected to purchase shall be
adjusted proportionately by the Committee for any increase or decrease in the
number of outstanding shares of Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, any other increase
or decrease in such shares effected without receipt or payment of consideration
by the Company, the distribution of the shares of a Subsidiary to the Company's
stockholders or a similar event.

     (c)  Reorganizations. Any other provision of the Plan notwithstanding,
          ---------------
immediately prior to the effective time of a Corporate Reorganization, the
Offering Period then in progress shall terminate and shares shall be purchased
pursuant to Section 8, unless the Plan is assumed by the surviving corporation
or its parent corporation pursuant to the plan of merger or consolidation. The
Plan shall in no event be construed to restrict in any way the Company's right
to undertake a dissolution, liquidation, merger, consolidation or other
reorganization.

SECTION 15.  Amendment Or Discontinuance.
----------------------------------------

     The Board shall have the right to amend, suspend or terminate the Plan at
any time and without notice. Except as provided in Section 14, any increase in
the aggregate number of shares of Stock to be issued under the Plan shall be
subject to approval by a vote of the stockholders of the Company. In addition,
any other amendment of the Plan shall be subject to approval by a

                                       8
<PAGE>

vote of the stockholders of the Company to the extent required by an applicable
law or regulation.

SECTION 16.  Execution.
----------------------

     To record the adoption of the Plan by the Board on Marh 20, 2000, the
Company has caused its authorized officer to execute the same.

                                    Tvia, Inc.

                                    By: /s/ Kenny Liu
                                       _____________________________

                                    Title: CEO
                                          __________________________

                                    Title:__________________________

                                       9
<PAGE>

                                  TVIA, INC.

                                 Common Stock

                        ______________________________

                       2000 Employee Stock Purchase Plan

                            SUMMARY AND PROSPECTUS

                        ______________________________

     Tvia, Inc., a Delaware corporation (the "Company"), has established a stock
purchase program. This program allows eligible employees to acquire shares of
the Company's Common Stock (the "Stock") at periodic intervals. The shares may
be purchased at a discount, and the purchase price may be paid through payroll
deductions. The program is officially called the Tvia, Inc. 2000 Employee Stock
Purchase Plan (the "Plan").

     The phrases "accumulation period" and offering period" are used throughout
this document and are important to your understanding of the Plan. An
"accumulation period" is a six-month period during which payroll deductions are
made, and following which shares are purchased. An "offering period" is a 24-
month period comprised of four accumulation periods.

     THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

                        ______________________________

           The date of this Summary and Prospectus is ______, 2000.
<PAGE>

                          QUESTIONS AND ANSWERS ABOUT
                                   THE PLAN

     This Summary and Prospectus sets forth in question and answer format the
principal features of the Plan and the principal rights and benefits available
to the participating employees. This document is only intended to be a summary
of the Plan. Some rules are described in abbreviated form and others are not
mentioned at all. If there is any ambiguity in the Plan Summary and Prospectus
or if there is a conflict between this Plan Summary and Prospectus and the
official Plan text, then the Plan text will govern. You may request a copy of
the Plan from the Company. The Company has its principal executive offices at
4001 Burton Drive, Santa Clara, CA 95054. The Company's telephone number is
(408) 982-8588.

                            GENERAL PLAN PROVISIONS
       ________________________________________________________________

1.   What is the purpose of the Plan?

     The purpose of the Plan is to provide eligible employees with the
opportunity to increase their stake in the success of the Company by buying
Stock from the Company on favorable terms and paying for the purchases through
periodic payroll deductions. These payroll deductions will be applied at semi-
annual intervals to purchase shares of Stock at a discount from the then current
market price.

2.   When was the Plan adopted?

     The Plan was adopted by the Company's Board of Directors (the "Board") on
March 20, 2000 and subsequently approved by the Company's stockholders on
_________, 2000.

3.   Who administers the Plan?

     The Plan is administered by a committee of the Board consisting of one or
more directors of the Company appointed by the Board (the "Committee"). The
members of the Committee will serve for as long as the Board deems appropriate
and may be removed by the Board at any time. The Committee in its capacity as
administrator of the Plan will be referred to in this document as the "Plan
Administrator."

     The Committee has full authority to interpret the Plan and make all
decisions relating to the operation and administration of the Plan. The
Committee may also adopt such rules and regulations for carrying out the Plan's
purposes. Decisions of the Committee are final and binding.

                                      -2-
<PAGE>

4.   How many shares of Stock may be issued under the Plan?

     A total of one million (1,000,000) shares of Stock are reserved for
issuance under the Plan, plus an annual increase in accordance with the terms of
the Plan. The number of shares of Stock that are reserved for issuance under the
Plan is subject to adjustments described in Question 24. Under the Plan, shares
are purchased directly from the Company. These shares will be made available
either from the Company's authorized but unissued shares of Stock or from
treasury shares, including shares repurchased on the open market.

5.   Who is eligible to participate in the Plan?

     You will be eligible to participate in the Plan if you are employed by the
Company or any participating subsidiary on a basis that requires you to work
more than twenty (20) hours per week for more than five (5) months per calendar
year.

     However, you will not be granted a right to purchase Stock under the Plan
if you own stock possessing more than 5% of the total combined voting power or
value of all classes of stock of the Company or any parent or subsidiary of the
Company. You will be considered to own any stock that you have a right or option
to purchase under this or any other plan, and you will be considered to own any
stock owned by your spouse, sister, brother, ancestors and lineal descendants.

6.   When may I become a participant?

     If you are an eligible employee at the time of the initial public offering
of the Stock (the "IPO"), you may join the Plan at that time or at the start of
any subsequent offering period (the January 1 and July 1 of each year). If you
are not an eligible employee on the start date of an offering period, you may
enter on the start date of the next offering period on which you are an eligible
employee or at the start of any subsequent offering period, provided you remain
an eligible employee.

7.   How do I become a participant?

     In order to participate in a particular offering period, you must complete
and file the appropriate forms with the Plan Administrator at least fifteen (15)
days prior to the commencement of the offering period. The forms include an
Enrollment/Change Form and a Beneficiary Designation. These forms may be
obtained from Michael Hoberg.

                                      -3-
<PAGE>

8.   How much can I invest through the Plan?

     You may authorize payroll deductions in 1% multiples of your cash
compensation, up to a maximum of 15%. Your cash compensation includes salaries,
wages, bonuses, incentive compensation, commissions and overtime pay plus any
pretax contributions you may make to any 401(k) plan or cafeteria benefit plan
now or hereafter maintained by the Company. Cash compensation excludes moving or
relocation allowances, car allowances, imputed income attributable to a company
car or life insurance, fringe benefits, contributions to employee benefit plans
(other than your own pretax contributions to 401(k) or cafeteria plans), and
similar items.

     Your contributions to the Plan are made on an after-tax basis. In other
words, your payroll deductions that are contributed to the Plan do not reduce
your taxable income (unlike contributions to a 401(k) plan).

9.   How will the Stock be made available for purchase?

     Shares of Stock will be offered for purchase through a series of
overlapping 24-month offering periods. New offering periods start on each
January 1 and July 1, except that the initial offering period is expected to
begin at the time the IPO takes place and will end on December 31, 2001.

     Each offering period will be comprised of four successive six-month
accumulation periods. The start date for the first accumulation period will be
the same as the start date of the initial offering period. Subsequent
accumulation periods will begin on each January 1 and July 1.

     For example, an offering period which starts on July 1, 2000 will end on
June 30, 2002. Within such offering period, there are four accumulation periods:

               ------------------------------------------------------------
                First Accumulation Period:         July 1, 2000 through
                                                   December 31, 2000
               ------------------------------------------------------------
                Second Accumulation Period:        January 1, 2001 through
                                                   June 30, 2001
               ------------------------------------------------------------
                Third Accumulation Period:         July 1, 2001 through
                                                   December 31, 2001
               ------------------------------------------------------------
                Fourth Accumulation Period:        January 1, 2002 through
                                                   June 30, 2002
               ------------------------------------------------------------

                                      -4-
<PAGE>

     However, if the price of the Stock is lower at the start of a new offering
period than it was at the start of the open offering period, you will
automatically be enrolled in the new offering period. See Question 13 for
details.

     For each offering period in which you participate, you will be granted a
right to purchase stock.

10.  When will my purchase right be exercised?

     Your purchase right will be exercised on the last trading day of the month
in which each accumulation period expires. Therefore, these purchase dates will
occur every six months on the last trading day in June and December.

11.  What is the purchase price of the Stock?

     The purchase price per share of Stock will be 85% of the lower of (a) the
fair market value per share of Stock on the last trading day of the month in
which each accumulation period expires or (b) the fair market value per share on
the last trading day before the commencement of the applicable offering period
(or, in the case of the first offering period, the price at which one share of
Stock is offered to the public in the IPO). In any event, your purchases of
Stock will always be at a discount of at least 15% of fair market value on the
purchase date.

     For example, assume that June 30, 2000, was the last trading day before the
applicable offering period started and that the closing price on that day was
$10 per share. Assume also that December 31, 2000, is the last trading day in
the month in which the accumulation period expired and that the Company's Stock
closes on that day at $12. The contributions made during this accumulation
period are used on December 31, 2000, to buy shares for $8.50 (85% of $10, which
is the lower of $12 and $10). In this example, the discount is approximately 29%
from the market value at the time of the purchase.

     On the other hand, assume that the Stock closes at $10 per share on June
30, 2000, and at $8 on December 31, 2000. In this case, the shares would be
purchased on December 31, 2000, for $6.80 each (85% of $8, which is the lower of
$10 and $8). This represents a discount of 15% from the market value at the time
of the purchase.

     These examples illustrate that the discount from market value will never be
less than 15% on the date the shares are purchased. If the value of the shares
rises during the offering period, then the discount will be greater than 15% on
the date of the purchase. (The value of the shares may, of course, decline after
they are purchased.)

12.  How is the fair market value of the Stock determined?

     In general, the fair market value per share on any relevant date under the
Plan will be equal to the closing price quoted for such date by Nasdaq. Whenever
possible, the determination

                                      -5-
<PAGE>

of fair market value will be based on the prices reported in the Wall Street
                                                                 -----------
Journal or reported directly to the Company by Nasdaq.
-------

13.  How do I determine which offering period I am participating in?

     Once you are enrolled in the Plan for a two-year offering period, you will
continue in that offering period until the earliest of (a) the end of that
offering period, (b) the end of your participation in the Plan or (c) automatic
re-enrollment in a subsequent offering period as described in the next
paragraph.

     In the event that the closing price on the last trading day before the
start of the offering period in which you are enrolled (the "First Offering
Period") is higher than on the last trading day before the start of any
subsequent offering period (the "Subsequent Offering Period"), you will
automatically be re-enrolled in the Subsequent Offering Period. Your
participation in the First Offering Period will automatically end with the
purchase that occurs immediately before the Subsequent Offering Period starts.
In other words, a new two-year offering period starts for you and becomes your
"applicable offering period," and you will receive the benefit of the lower
price for purchases during that new period.

     When you have reached the end of a two-year offering period but your
participation is to continue, then you will automatically be re-enrolled in the
offering period that starts immediately after the end of the prior offering
period.

     For example, assume that you enroll in the Plan on July 1, 2000. Your
initial offering period is the two-year period ending June 30, 2002. If the
market price on December 31, 2000, June 30, 2001 and December 31, 2001 is higher
than it was on June 30, 2000, then you will remain in the same offering period
until it ends (or until you stop participating). The purchase price for your
purchases on December 31, 2000, June 30, 2001, December 31, 2001 and June 30,
2002, will be based on the June 30, 2000 market value. But if, for instance, the
market price on December 31, 2000 is lower than it was on June 30, 2000, then
you will automatically be re-enrolled in a two-year offering period starting on
January 1, 2001. This means that the purchase price for your purchases on June
31, 2001, December 31, 2001, June 30, 2002, and December 31, 2002, will be based
on the December 31, 2000 market value--unless another automatic re-enrollment
occurs. Of course, your purchase on December 31, 2000 will also be based on the
December 31, 2000 market value.

14.  Can I change the rate of my payroll deductions?

     You may change your rate of payroll deduction at any time, but you may not
make more than two changes during the same accumulation period. The new
withholding rate will become effective as soon as reasonably practicable
following the filing of your Enrollment/Change Form with the Plan Administrator.
Your new rate may not be in excess of 15% of your cash compensation.

                                      -6-
<PAGE>

15.  What happens to my payroll deductions?

     Your payroll deductions will be credited to an account established in your
name on the Company's books. No interest will be paid on the balance credited to
your account. Since the Company pays all administrative expenses of the Plan,
the full amount of your payroll deductions will be applied to the purchase of
Stock. No commissions are charged on purchases. Your payroll deductions may be
commingled with the general assets of the Company and used for general corporate
purposes.

16.  How will my purchase right be exercised?

     Your purchase right will be exercised by applying the amount credited to
your account to the purchase of whole shares of Stock on each purchase date. If
a balance remains in your account because it is less than the price of one whole
share, it will be carried over to the next accumulation period. However, any
payroll deductions that are not applied to the purchase of Stock by reason of
the limitations on the number of shares purchasable per participant will be
refunded promptly after the purchase date, without interest. (See Question 18.)

17.  Will I receive a report indicating the amount and status of my account?

     After each purchase date, you will receive a report indicating the number
of shares purchased on your behalf and the purchase price paid per share.

18.  Are there any limitations on the number of shares I may purchase?

     Yes. The following limitations will apply:

     (a)  The total number of shares of Stock available for purchase by all
participants is limited to one million (1,000,000) shares, plus an annual
increase to be added determined in accordance with the Plan (subject to the
adjustments described in Question 24). The share reserve can be increased with
Board and stockholder approval.

     (b)  The maximum number of shares of Stock that you may purchase in any
accumulation period is one thousand (1,000) shares (subject to the adjustments
described in Question 24).

     (c)  You may not purchase shares with a value in excess of $25,000.00
(determined on the basis of the fair market value of the Stock on the start date
of the offering period) in any calendar year. In certain situations, unused
amounts may be carried over from one year to the next.

     Any payroll deductions collected from you that cannot be applied to the
purchase of Stock as a result of one or more of these limitations will be
refunded.

                                      -7-
<PAGE>

19.  What if there are not enough shares available to cover all of the exercised
purchase rights on a particular purchase date?

     If the total number of shares for which purchase rights are to be exercised
on any purchase date exceeds the number of shares at the time available for
issuance under the Plan, then the Plan Administrator will prorate the available
shares. Any payroll deductions not applied to the purchase of the available
shares will be refunded to you.

20.  Can I withdraw from the Plan or discontinue payroll deductions?

     You may withdraw from the Plan by filing an Enrollment/Change Form with the
Plan Administrator at any time before the last day of any accumulation period.
As soon as reasonably practicable thereafter, payroll deductions will cease. Any
payroll deductions already collected for that period will be refunded to you
without interest. No shares will be purchased on the last trading day of the
month in which the accumulation period expired. Once you have withdrawn from the
Plan, you may not rejoin the Plan until the next offering period.

     You may also discontinue your contributions under the Plan by filing an
Enrollment/Change Form with the Company at any time.  Payroll deductions will
cease as soon as reasonably practicable after the form is received by the
Company.  However, the contributions that you already made will not be refunded
and will be applied to purchase Stock at the end of the accumulation period.  In
addition, your contributions will be discontinued automatically if you would
otherwise exceed the limit described in Question 18(c).

21.  How do I rejoin the Plan if I have withdrawn from the Plan or discontinued
payroll deductions?

     Individuals who withdraw from the Plan may resume participation in the Plan
by filing a new Enrollment/Change Form prior to the next scheduled offering
period. Individuals who discontinue payroll deductions may resume participation
in the Plan by filing a new Enrollment/Change Form at any time. Payroll
withholding will resume as soon as reasonably practicable after the form has
been received by the Company.

22.  What happens if my employment terminates or my eligibility status changes?
/i/

     Should your employment terminate for any reason (including death or
disability) or should you otherwise lose your status as an eligible employee,
then all of your payroll deductions for the accumulation period in which your
employment terminates or you lose your eligibility will automatically be
refunded to you (or to your designated beneficiary in the event of your death,
as described in the next paragraph).

     You may designate a beneficiary on the Beneficiary Designation Form and may
change that designation at any time by filing a new Beneficiary Designation
Form.  The form will be

                                      -8-
<PAGE>

valid only if it was filed with the Company before your death. Should you die,
unused cash contributed to the Plan will be distributed to the beneficiary whom
you have designated for this purpose or, if there is no surviving beneficiary,
to your estate. (This beneficiary designation applies only to the cash in your
account; the disposition of shares already purchased is governed by your will or
applicable law.)

23.  What happens if there is a merger?

     In the event of a merger or acquisition of the Company, the accumulation
period and offering period will terminate early and all payroll deductions for
the accumulation period in which the transaction occurs will automatically be
applied to the purchase of Stock immediately prior to the effective time of the
transaction, subject to the share limitations summarized in Question 18. The
purchase price for your shares will be 85% of the lower of (a) the fair market
value per share on the last trading day before the commencement of the
applicable offering period or (b) the fair market value per share on the last
trading day before the effective time of the transaction. However, if the Plan
is assumed and continued by the surviving corporation (or its parent), then the
accumulation and offering periods will continue and your right to purchase Stock
will be converted into an equivalent right to purchase shares of the surviving
corporation (or its parent) at the end of the accumulation period.

24.  What happens if there is a change in the Company's capital structure?

     In the event of a stock split, a reverse stock split or the payment of a
stock dividend or any other increase or decrease in the shares of Stock without
the Company's receipt or payment of consideration, appropriate adjustments will
be made to (a) the maximum number and class of securities issuable under the
Plan, (b) the maximum number of securities purchasable per participant on each
purchase date and (c) the number and class of securities and the price per share
in effect under each outstanding purchase right. Such adjustments will prevent
any dilution or enlargement of the rights and benefits of Plan participants.

25.  Can I assign or transfer my purchase rights under the Plan?

     Your purchase rights cannot be assigned or transferred.

26.  When will I receive the stock certificate for my purchased shares?

     As soon as reasonably practicable after each purchase date, you will be
issued a stock certificate for the shares purchased on your behalf or the shares
will be credited to a brokerage account in your name.

27.  After becoming a stockholder, can I vote my shares?

                                      -9-
<PAGE>

     Yes, even if you do not have physical possession of a stock certificate.

28.  When can I sell my purchased shares?

     Individuals who purchase Stock under the Plan may resell such shares
without restriction, subject to the Company's insider trading policy. However,
the Federal and state income tax treatment of the sale proceeds may be more
favorable if you hold your shares for a certain period of time prior to sale.
See "Questions and Answers on Federal Tax Consequences" below.

     At the time you sell your purchased shares, you must inform the Company of
the date of purchase, the date of sale, the number of shares sold and the
selling price per share. You will be required to satisfy any applicable income
and employment tax withholding requirements at the time of the sale.

29.  Can the Company terminate the Plan?

     The Plan Administrator has the discretion to terminate the Plan at any time
without notice. If the Plan Administrator exercises this discretion, the Plan
will terminate in its entirety. No further purchase rights will thereafter be
granted or exercised, and no further payroll deductions will be collected under
the terminated plan. Unless the Plan is terminated, it continues indefinitely.

30.  Can the Plan be amended?

     The Board may amend or suspend the Plan at any time and without notice.
However, certain amendments may require the approval of the Company's
stockholders.

31.  Does the Plan have any impact on the terms of my employment?

     Neither the Plan nor any outstanding purchase right is intended to give you
the right to remain in the Company's employ for any specific period, and both
you and the Company will each have the right to terminate your employment at any
time and for any reason, with or without cause.

32.  Is the Plan subject to ERISA?

     The Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA) or Section 401(a) of the Internal Revenue Code.

33.  What restrictions apply because I am a Section 16 Insider?

                                      -10-
<PAGE>

     Section 16(b) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company to recover any profit realized by a Section 16 Insider from
any purchase and sale, or sale and purchase, of shares of Stock made within a
period of less than six (6) months.  A "Section 16 Insider" is generally an
executive officer or director of the Company or a stockholder who beneficially
owns more than 10% of the Company's outstanding securities.

     The Securities and Exchange Commission (the "SEC") has issued rules under
Section 16(b) of the 1934 Act that govern the short-swing liability treatment of
certain transactions effected by a Section 16 Insider under employee stock
purchase plans such as the Plan.  The receipt of a purchase right under the Plan
is not considered the purchase of a security, and the purchase of shares under
the Plan is exempt from Section 16(b).  However, the sale of shares acquired
under the Plan will be treated as a "sale" transaction for short-swing liability
purposes and will be matched with any non-exempt purchases of shares made by the
Section 16 Insider within six (6) months before or after the date of the sale.
The sale of shares acquired under the Plan must be reported to the SEC on a Form
4, which must be filed within ten (10) days after the close of the calendar
month in which the sale is made.

34.  What restrictions apply if I am an affiliate?

     In general, executive officers and other persons with power to manage and
direct the policies of the Company, relatives of these persons and trusts,
estates, corporations or other entities controlled by any of these persons or
their relatives may be deemed to be affiliates of the Company. Affiliates of the
Company are obligated to resell their shares of Stock in compliance with SEC
Rule 144. This rule requires such sales to be effected in "broker's
transactions," as defined in the rule, and a written notice of each sale must be
filed with the SEC at the time of the sale. The rule also limits the number of
shares that may be sold in any three-month period to the greater of (a) 1% of
the outstanding shares of Stock or (b) the average weekly reported volume of
trading in Stock during the four (4) calendar weeks preceding the filing of the
required notice of proposed sale. However, the holding period requirement of
Rule 144 will not be applicable to any shares of Stock acquired under the Plan.

35.  Are there any restrictions on resale that apply even if I am not an
affiliate or Section 16 Insider?

     Your purchases and sales of shares of Stock are subject to Rule 10b-5 under
the 1934 Act, which makes it unlawful to trade when you are in possession of
material information about the Company that is not yet known to the general
public.  In addition, your transactions in shares of Stock must comply with the
Company's insider trading policy.

     If you are an officer or director of the Company or a stockholder who owns
more than 10% of the Company's outstanding securities, you should consult with
counsel before offering for sale any shares of Stock acquired under the Plan in
order to ensure your compliance with Rule 144, Section 16 and all other
applicable provisions of Federal and state securities laws.

                                      -11-
<PAGE>

                       QUESTIONS AND ANSWERS ON FEDERAL
                               TAX CONSEQUENCES

     The following is a description of the federal income tax consequences of
participation in the Plan.  State and local tax treatment, which is not
discussed below, may vary from the federal income tax treatment.  You should
consult your own tax advisor as to the tax consequences of your particular
transactions under the Plan.

T1.  Will the receipt of a purchase right or the purchase of shares on my behalf
under the Plan result in taxable income?

     The Plan is intended to be an "employee stock purchase plan" within the
meaning of Section 423 of the Internal Revenue Code.  Under such a plan, no
taxable income is recognized by the participant either when the purchase right
is granted at the beginning of the offering period or when the shares are
purchased at the end of each accumulation period.

T2.  When will I be subject to federal income tax on the purchased shares?

     Generally, you will recognize income in the year in which you make a
disposition of the purchased shares.  The term "disposition" generally includes
any transfer of legal title, whether by sale, exchange or gift.  It does not
include a transfer to your spouse, a transfer into joint ownership if you remain
one of the joint owners or a transfer into your brokerage account.

T3.  How is my federal income tax liability determined when I sell my shares?

     Your federal income tax liability will depend on whether you make a
qualifying or disqualifying disposition of the purchased shares.  A qualifying
disposition will occur if the sale or other disposition of those shares is made
after you have held the shares for (a) more than two (2) years after the start
date of the applicable offering period and (b) more than one (1) year after the
actual purchase date.  A disqualifying disposition is any sale or other
disposition which is made before either of these two holding periods is
satisfied.

                                      -12-
<PAGE>

T4.  What if I make a qualifying disposition?

     You will recognize ordinary income in the year of the qualifying
disposition equal to the lesser of (a) the amount by which the fair market value
of the shares on the date of the qualifying disposition exceeds the purchase
price paid for those shares or (b) 15% of the fair market value of the shares on
the start date of the offering period during which those shares were purchased.
The Company is not entitled to an income tax deduction with respect to such
disposition. Any additional gain recognized upon the qualifying disposition will
be a capital gain. The capital gain will be long-term if you held the shares
more than 12 months. In general, the maximum federal income tax rate on long-
term capital gains is 20%.

     If the fair market value of the shares on the date of the qualifying
disposition is less than the purchase price you paid for the shares, there will
be no ordinary income, and any loss recognized will generally be a long-term
capital loss.

     Example:  On the July 1, 2000 start date of the offering period, the fair
market value of the Stock is $10.00 per share.  On the December 31, 2000
purchase date, Stock is purchased on your behalf at a price of $8.50 per share
when the fair market value is $15.00 per share.  On January 1, 2003, you sell
the shares for $20.00 per share in a qualifying disposition.  The income tax
treatment of your $11.50 profit per share will be as follows:

                    Ordinary       The lower of (a) 15% of the
                    Income Per     $10.00 fair market value on the
                    Share          start date of the offering
                                   period or (b) the excess of the
                                   $20.00 per share selling price
                                   over the $8.50 purchase price.
                                   The lower of the two is 15% of
                                   $10 = $1.50 per share.

                    Long-Term      $20.00 per share selling price
                    Capital Gain   less $10.00 ($8.50 purchase
                    Per Share      price plus $1.50 ordinary
                                   income) = $10.00 per share
                                   (at a capital gain tax rate of
                                   up to 20%).

T5.    What if I make a disqualifying disposition?

     You will recognize ordinary income in the year of the disqualifying
disposition equal to the excess of (a) the fair market value of the shares on
the purchase date over (b) the purchase

                                      -13-
<PAGE>

price paid for the shares. The Company is entitled to an income tax deduction
equal in amount to such excess for the taxable year in which such disposition
occurs. Any additional gain recognized upon the disqualifying disposition will
be capital gain. The capital gain will be long-term if you held the shares more
than 12 months and short-term if you held the shares not more than 12 months.
The maximum federal income tax rate on long-term capital gains generally is 20%.
Short-term capital gains generally are taxed at the same rate as ordinary
income.

     The amount of ordinary income you recognize upon such a disqualifying
disposition will be reported by the Company on your W-2 wage statement for the
year of such disposition, and any applicable withholding taxes which arise in
connection with such disqualifying disposition will be collected from your wages
or through your separate payment.

     Example:  On December 31, 2000 you purchase Stock at a price of $10.00 per
share when the fair market value is assumed to be $15.00 per share.  On November
30, 2001, you sell the shares for $18.00 per share in a disqualifying
disposition.  The income tax treatment of your $8.00 per share profit will be as
follows:

                    Ordinary       $15.00 fair market value on
                    Income Per     the purchase date less
                    Share          $10.00 per share purchase
                                   price = $5.00 per share.

                    Short-Term     $18.00 per share selling
                    Capital        price less $15.00 fair
                    Gain Per       market value on the
                    Share          purchase date = $3.00 per
                                   share.

T6.  What if I die before disposing of the shares?

     The personal representative of your estate must report as ordinary income
in the year of your death the lesser of (a) the amount by which the fair market
value of the shares on the date of your death exceeds the purchase price paid
for such shares or (b) 15% of the fair market value of the shares on the start
date of the offering period during which those shares were purchased.

                              COMPANY INFORMATION

     The Company is a Delaware corporation that maintains its principal
executive offices at 4000 Burton Drive, Santa Clara, California  95054.  The
telephone number at the executive offices is (408) 982-8588.  You may contact
the Company at this address or telephone number for further information
concerning the Plan and its administration.

                                      -14-
<PAGE>

     A copy of the Company's Annual Report to Stockholders for the most recent
fiscal year will be furnished to each participant in the Plan, and additional
copies will be furnished to you without charge upon written or oral request to
the Corporate Secretary of the Company at its principal executive offices at
4000 Burton Drive, Santa Clara, California  95054, or upon telephoning the
Company at its principal executive offices at (408) 982-8588.  In addition, you
may obtain without charge, upon written or oral request to the Corporate
Secretary, a copy of any of the documents listed below, which are hereby
incorporated by reference into this Summary and Prospectus, other than certain
exhibits to such documents:

     (a)  The Company's prospectus filed with the Securities and Exchange
Commission (the "SEC") pursuant to Rule 424(b) under the Securities Act of 1933,
as amended, in connection with Registration Statement No. 333-34024 on Form S-1
filed with the SEC on April 4, 2000, together with amendments thereto, in
which there are set forth audited financial statements for the Company's fiscal
year ended March 31, 2000;

     (b)  All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), since the end of
the year covered by the document referred to in (a) above;

     (c)  The description of the Company's outstanding Common Shares contained
in the Company's Registration Statement No. 000-30539 on Form 8-A filed with the
SEC on May 1, 2000 pursuant to Section 12 of the 1934 Act, including any
amendment or report filed for the purpose of updating such description; and

     (d)  All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Summary and Prospectus and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold.

     The Company will also deliver to each participant in the Plan who does not
otherwise receive such materials a copy of all reports, proxy statements and
other communications distributed to the Company's stockholders.

_____________________________

                                      -15-<PAGE>

                                                                    Exhibit 10.4

                          FORM OF INDEMNIFICATION AGREEMENT
                          ---------------------------------

     This Indemnification Agreement (the "Agreement"), dated as of _________
___, 2000, between Tvia, Inc., a Delaware corporation (the "Corporation"), and
_____________ ("Indemnitee"),

                             W I T N E S S E T H:

     WHEREAS, Indemnitee is either a member of the board of directors of the
Corporation (the "Board of Directors") or an officer of the Corporation, or
both, and in such capacity or capacities, or otherwise as an Agent (as
hereinafter defined) of the Corporation, is performing a valuable service for
the Corporation; and

     WHEREAS, Indemnitee is willing to serve, continue to serve and to take on
additional service for or on behalf of the Corporation on the condition that he
or she be indemnified as herein provided; and

     WHEREAS, it is intended that Indemnitee shall be paid promptly by the
Corporation all amounts necessary to effectuate in full the indemnity provided
herein:

     NOW, THEREFORE, in consideration of the premises and the covenants in this
Agreement, and of Indemnitee continuing to serve the Corporation as an Agent and
intending to be legally bound hereby, the parties hereto agree as follows:

     1.   Services by Indemnitee. Indemnitee agrees to serve (a) as a director
          ----------------------
or an officer of the Corporation, or both, so long as Indemnitee is duly
appointed or elected and qualified in accordance with the applicable provisions
of the Certificate of Incorporation and bylaws of the Corporation, and until
such time as Indemnitee resigns or fails to stand for election or is removed
from Indemnitee's position, or (b) otherwise as an Agent (as hereinafter
defined) of the Corporation. Indemnitee may from time to time also perform other
services at the request or for the convenience of, or otherwise benefiting the
Corporation. Indemnitee may at any time and for any reason resign or be removed
from such position (subject to any other contractual obligation or other
obligation imposed by operation of law), in which event the Corporation shall
have no obligation under this Agreement to continue Indemnitee in any such
position.

     2.   Indemnification. Subject to the limitations set forth herein and in
          ---------------
Section 6 hereof, the Corporation hereby agrees to indemnify Indemnitee as
follows:

     The Corporation shall, with respect to any Proceeding (as hereinafter
defined) associated with Indemnitee's being an Agent of the Corporation,
indemnify Indemnitee to the fullest extent permitted by applicable law and the
Certificate of Incorporation of the Corporation in effect on the date hereof or
as such law or Certificate of Incorporation may from time to time be amended
(but, in the case of any such amendment, only to the extent such amendment
permits the Corporation to provide broader indemnification rights than the law
or Certificate of Incorporation permitted the Corporation to provide before such
amendment).  The right to indemnification conferred herein and in the
Certificate of

                                      -1-
<PAGE>

Incorporation shall be presumed to have been relied upon by Indemnitee in
serving or continuing to serve the Corporation as an Agent and shall be
enforceable as a contract right. Without in any way diminishing the scope of the
indemnification provided by this Section 2, the Corporation will indemnify
Indemnitee to the full extent permitted by law if and wherever Indemnitee is or
was a party or is threatened to be made a party to any Proceeding, including any
such Proceeding brought by or in the right of the Corporation, by reason of the
fact that Indemnitee is or was an Agent or by reason of anything done or not
done by Indemnitee in such capacity, against Expenses (as hereinafter defined)
and Liabilities (as hereinafter defined) actually and reasonably incurred by
Indemnitee or on his or her behalf in connection with the investigation,
defense, settlement or appeal of such Proceeding. In addition to, and not as a
limitation of, the foregoing, the rights of indemnification of Indemnitee
provided under this Agreement shall include those rights set forth in Sections 3
and 8 below. Notwithstanding the foregoing, the Corporation shall be required to
indemnify Indemnitee in connection with a Proceeding commenced by Indemnitee
(other than a Proceeding commenced by Indemnitee to enforce Indemnitee's rights
under this Agreement) only if the commencement of such Proceeding was authorized
by the Board of Directors.

     3.   Advancement of Expenses; Letter of Credit.
          ------------------------------------------

     (a)  Advancement of Expenses. All reasonable Expenses incurred by or on
          -----------------------
behalf of Indemnitee (including costs of enforcement of this Agreement) shall be
advanced from time to time by the Corporation to Indemnitee within thirty (30)
days after the receipt by the Corporation of a written request for an advance of
Expenses, whether prior to or after final disposition of a Proceeding (except to
the extent that there has been a Final Adverse Determination (as hereinafter
defined) that Indemnitee is not entitled to be indemnified for such Expenses),
including without limitation any Proceeding brought by or in the right of the
Corporation. The written request for an advancement of any and all expenses
under this paragraph shall contain reasonable detail of the Expenses incurred by
Indemnitee. In the event that such written request shall be accompanied by an
affidavit of counsel to Indemnitee to the effect that such counsel has reviewed
such expenses and that such expenses are reasonable in such counsel's view, then
such expenses shall be deemed reasonable in the absence of clear and convincing
evidence to the contrary. By execution of this Agreement, Indemnitee shall be
deemed to have made whatever undertaking may be required by law at the time of
any advancement of Expenses with respect to repayment to the Corporation of such
Expenses. In the event that the Corporation shall breach its obligation to
advance Expenses under this Section 3, the parties hereto agree that
Indemnitee's remedies available at law would not be adequate and that Indemnitee
would be entitled to specific performance.

     (b)  Letter of Credit.  In order to secure the obligations of the
          ----------------
Corporation to indemnify and advance Expenses to Indemnitee pursuant to this
Agreement, the Corporation shall obtain at the time of any Change in Control (as
hereinafter defined) an irrevocable standby letter of credit naming Indemnitee
as the sole beneficiary (the "Letter of Credit"). The Letter of Credit shall be
in an appropriate amount not less than one million dollars ($1,000,000), shall
be issued by a commercial bank headquartered in the United States having assets
in excess of $10 billion and capital according to its most recent published
reports equal to or greater than the then applicable minimum capital standards
promulgated by such bank's primary federal regulator and shall contain terms and
conditions reasonably acceptable to

                                      -2-
<PAGE>

Indemnitee. The Letter of Credit shall provide that Indemnitee may from time to
time draw certain amounts thereunder, upon written certification by Indemnitee
to the issuer of the Letter of Credit that (i) Indemnitee has made written
request upon the Corporation for an amount not less than the amount Indemnitee
is drawing under the Letter of Credit and that the Corporation has failed or
refused to provide Indemnitee with such amount in full within thirty (30) days
after receipt of the request, and (ii) Indemnitee believes that he or she is
entitled under the terms of this Agreement to the amount that Indemnitee is
drawing upon under the Letter of Credit. The issuance of the Letter of Credit
shall not in any way diminish the Corporation's obligation to indemnify
Indemnitee against Expenses and Liabilities to the full extent required by this
Agreement.

     (c)  Term of Letter of Credit.  Once the Corporation has obtained the
          ------------------------
Letter of Credit, the Corporation shall maintain and renew the Letter of Credit
or a substitute letter of credit meeting the criteria of Section 3(b) during the
term of this Agreement so that the Letter of Credit shall have an initial term
of five (5) years, be renewed for successive five-year terms, and always have at
least one (1) year of its term remaining.

     4.   Presumptions and Effect of Certain Proceedings.  Upon making a request
          ----------------------------------------------
for indemnification, Indemnitee shall be presumed to be entitled to
indemnification under this Agreement and the Corporation shall have the burden
of proof to overcome that presumption in reaching any contrary determination.
The termination of any Proceeding by judgment, order, settlement, arbitration
award or conviction, or upon a plea of nolo contendere or its equivalent shall
not affect this presumption or, except as determined by a judgment or other
final adjudication adverse to Indemnitee, establish a presumption with regard to
any factual matter relevant to determining Indemnitee's rights to
indemnification hereunder. If the person or persons so empowered to make a
determination pursuant to Section 5 hereof shall have failed to make the
requested determination within ninety (90) days after any judgment, order,
settlement, dismissal, arbitration award, conviction, acceptance of a plea of
nolo contendere or its equivalent, or other disposition or partial disposition
of any Proceeding or any other event that could enable the Corporation to
determine Indemnitee's entitlement to indemnification, the requisite
determination that Indemnitee is entitled to indemnification shall be deemed to
have been made.

     5.   Procedure for Determination of Entitlement to Indemnification.
          -------------------------------------------------------------

     (a)  Whenever Indemnitee believes that Indemnitee is entitled to
indemnification pursuant to this Agreement, Indemnitee shall submit a written
request for indemnification to the Corporation. Any request for indemnification
shall include sufficient documentation or information reasonably available to
Indemnitee for the determination of entitlement to indemnification. In any
event, Indemnitee shall submit Indemnitee's claim for indemnification within a
reasonable time, not to exceed five (5) years after any judgment, order,
settlement, dismissal, arbitration award, conviction, acceptance of a plea of
nolo contendere or its equivalent, or final termination, whichever is the later
date for which Indemnitee requests indemnification. The Secretary or other
appropriate officer shall, promptly upon receipt of Indemnitee's request for
indemnification, advise the Board of Directors in writing that Indemnitee has
made such request. Determination of Indemnitee's entitlement to indemnification
shall be made not later than ninety (90) days after the Corporation's receipt of

                                      -3-
<PAGE>

Indemnitee's written request for such indemnification, provided that any request
for indemnification for Liabilities, other than amounts paid in settlement,
shall have been made after a determination thereof in a Proceeding.

     (b)  The Corporation shall be entitled to select the forum in which
Indemnitee's entitlement to indemnification will be heard; provided, however,
that if there is a Change in Control of the Corporation, Independent Legal
Counsel (as hereinafter defined) shall determine whether Indemnitee is entitled
to indemnification. The forum shall be any one of the following:

          (i)    the stockholders of the Corporation;

          (ii)   a majority vote of Disinterested Directors (as hereinafter
     defined), even though less than a quorum;

          (iii)  Independent Legal Counsel, whose determination shall be made in
     a written opinion; or

          (iv)   a panel of three arbitrators, one selected by the Corporation,
     another by Indemnitee and the third by the first two arbitrators; or if for
     any reason three arbitrators are not selected within thirty (30) days after
     the appointment of the first arbitrator, then selection of additional
     arbitrators shall be made by the American Arbitration Association. If any
     arbitrator resigns or is unable to serve in such capacity for any reason,
     the American Arbitration Association shall select such arbitrator's
     replacement. The arbitration shall be conducted pursuant to the commercial
     arbitration rules of the American Arbitration Association now in effect.

     6.   Specific Limitations on Indemnification.  Notwithstanding anything in
          ---------------------------------------
this Agreement to the contrary, the Corporation shall not be obligated under
this Agreement to make any payment to Indemnitee with respect to any Proceeding:

     (a)  To the extent that payment is actually made to Indemnitee under any
insurance policy, or is made to Indemnitee by the Corporation or an affiliate
otherwise than pursuant to this Agreement.  Notwithstanding the availability of
such insurance, Indemnitee also may claim indemnification from the Corporation
pursuant to this Agreement by assigning to the Corporation any claims under such
insurance to the extent Indemnitee is paid by the Corporation;

     (b)  Provided there has been no Change in Control, for Liabilities in
connection with Proceedings settled without the Corporation's consent, which
consent, however, shall not be unreasonably withheld;

     (c)  For an accounting of profits made from the purchase or sale by
Indemnitee of securities of the Corporation within the meaning of section 16(b)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
similar provisions of any state statutory or common law; or

                                      -4-
<PAGE>

     (d)  To the extent it would be otherwise prohibited by law, if so
established by a judgment or other final adjudication adverse to Indemnitee.

     7.   Fees and Expenses of Independent Legal Counsel.  The Corporation
          ----------------------------------------------
agrees to pay the reasonable fees and expenses of Independent Legal Counsel or a
panel of three arbitrators should such Independent Legal Counsel or such
arbitrators be retained to make a determination of Indemnitee's entitlement to
indemnification pursuant to Section 5(b) of this Agreement, and to fully
indemnify such Independent Legal Counsel or arbitrators against any and all
expenses and losses incurred by any of them arising out of or relating to this
Agreement or their engagement pursuant hereto.

     8.   Remedies of Indemnitee.
          -----------------------

     (a)  In the event that (i) a determination pursuant to Section 5 hereof is
made that Indemnitee is not entitled to indemnification, (ii) advances of
Expenses are not made pursuant to this Agreement, (iii) payment has not been
timely made following a determination of entitlement to indemnification pursuant
to this Agreement, or (iv) Indemnitee otherwise seeks enforcement of this
Agreement, Indemnitee shall be entitled to a final adjudication in the Court of
Chancery of the State of Delaware of the remedy sought.  Alternatively, unless
(i) the determination was made by a panel of arbitrators pursuant to Section
5(b)(iv) hereof, or (ii) court approval is required by law for the
indemnification sought by Indemnitee, Indemnitee at Indemnitee's option may seek
an award in arbitration to be conducted by a single arbitrator pursuant to the
commercial arbitration rules of the American Arbitration Association now in
effect, which award is to be made within ninety (90) days following the filing
of the demand for arbitration.  The Corporation shall not oppose Indemnitee's
right to seek any such adjudication or arbitration award.  In any such
proceeding or arbitration Indemnitee shall be presumed to be entitled to
indemnification and advancement of Expenses under this Agreement and the
Corporation shall have the burden of proof to overcome that presumption.

     (b)  In the event that a determination that Indemnitee is not entitled to
indemnification, in whole or in part, has been made pursuant to Section 5
hereof, the decision in the judicial proceeding or arbitration provided in
paragraph (a) of this Section 8 shall be made de novo and Indemnitee shall not
be prejudiced by reason of a determination that Indemnitee is not entitled to
indemnification.

     (c)  If a determination that Indemnitee is entitled to indemnification has
been made pursuant to Section 5 hereof, or is deemed to have been made pursuant
to Section 4 hereof or otherwise pursuant to the terms of this Agreement, the
Corporation shall be bound by such determination in the absence of a
misrepresentation or omission of a material fact by Indemnitee in connection
with such determination.

     (d)  The Corporation shall be precluded from asserting that the procedures
and presumptions of this Agreement are not valid, binding and enforceable.  The
Corporation shall stipulate in any such court or before any such arbitrator that
the Corporation is bound by all the provisions of this Agreement and is
precluded from making any assertion to the contrary.

                                      -5-
<PAGE>

     (e)  Expenses reasonably incurred by Indemnitee in connection with
Indemnitee's request for indemnification under, seeking enforcement of or to
recover damages for breach of this Agreement shall be borne by the Corporation
when and as incurred by Indemnitee irrespective of any Final Adverse
Determination (as hereinafter defined) that Indemnitee is not entitled to
indemnification.

     9.   Contribution.  To the fullest extent permissible under applicable law,
          ------------
if the indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason whatsoever, the Corporation, in lieu of indemnifying
Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for
judgments, fines, penalties, excise taxes, amounts paid or to be paid in
settlement and/or for Expenses, in connection with any claim relating to an
indemnifiable event under this Agreement, in such proportion as is deemed fair
and reasonable in light of all of the circumstances of such Proceeding in order
to reflect (i) the relative benefits received by the Corporation and Indemnitee
as a result of the event(s) and/or transaction(s) giving cause to such
Proceeding; and/or (ii) the relative fault of the Corporation (and its
directors, officers, employees and agents) and Indemnitee in connection with
such event(s) and/or transaction(s).

     10.  Maintenance of Insurance. The Corporation represents that it presently
          ------------------------
has in place certain directors' and officers' liability insurance policies
covering its directors and officers. Subject only to the provisions within this
Section 10, the Corporation agrees that so long as Indemnitee shall have
consented to serve or shall continue to serve as a director or officer of the
Corporation or both, or as an Agent of the Corporation, and thereafter so long
as Indemnitee shall be subject to any possible Proceeding (such periods being
hereinafter sometimes referred to as the "Indemnification Period"), the
Corporation will use all reasonable efforts to maintain in effect for the
benefit of Indemnitee one or more valid, binding and enforceable policies of
directors' and officers' liability insurance providing, in all respects,
coverage both in scope and amount which is no less favorable than that presently
provided. Notwithstanding the foregoing, the Corporation shall not be required
to maintain said policies of directors' and officers' liability insurance if
such insurance is not reasonably available or if it is in good faith determined
by the then directors of the Corporation either that:

          (i)    The premium cost of maintaining such insurance is substantially
     disproportionate to the amount of coverage provided thereunder; or

          (ii)   The protection provided by such insurance is so limited by
     exclusions, deductions or otherwise that there is insufficient benefit to
     warrant the cost of maintaining such insurance.

     Anything in this Agreement to the contrary notwithstanding, to the extent
that and for so long as the Corporation shall choose to continue to maintain any
policies of directors' and officers' liability insurance during the
Indemnification Period, the Corporation shall maintain similar and equivalent
insurance for the benefit of Indemnitee during the Indemnification Period
(unless such insurance shall be less favorable to Indemnitee than the
Corporation's existing policies).

                                      -6-
<PAGE>

     11.  Modification, Waiver, Termination and Cancellation.  No supplement,
          --------------------------------------------------
modification, termination, cancellation or amendment of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver.

     12.  Subrogation.  In the event of payment under this Agreement, the
          -----------
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Corporation effectively to
bring suit to enforce such rights.

     13.  Notice by Indemnitee and Defense of Claim.  Indemnitee shall promptly
          -----------------------------------------
notify the Corporation in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
matter, whether civil, criminal, administrative or investigative, but the
omission so to notify the Corporation will not relieve it from any liability
that it may have to Indemnitee if such omission does not prejudice the
Corporation's rights. If such omission does prejudice the Corporation's rights,
the Corporation will be relieved from liability only to the extent of such
prejudice; nor will such omission relieve the Corporation from any liability
that it may have to Indemnitee otherwise than under this Agreement. With respect
to any Proceeding as to which Indemnitee notifies the Corporation of the
commencement thereof:

     (a)  The Corporation will be entitled to participate therein at its own
expense; and

     (b)  The Corporation jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Indemnitee; provided, however, that the Corporation shall not be
entitled to assume the defense of any Proceeding if there has been a Change in
Control or if Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Corporation and Indemnitee with respect to such
Proceeding.  After notice from the Corporation to Indemnitee of its election to
assume the defense thereof, the Corporation will not be liable to Indemnitee
under this Agreement for any Expenses subsequently incurred by Indemnitee in
connection with the defense thereof, other than reasonable costs of
investigation or as otherwise provided below.  Indemnitee shall have the right
to employ Indemnitee's own counsel in such Proceeding, but the fees and expenses
of such counsel incurred after notice from the Corporation of its assumption of
the defense thereof shall be at the expense of Indemnitee unless:

          (i)    the employment of counsel by Indemnitee has been authorized by
     the Corporation;

          (ii)   Indemnitee shall have reasonably concluded that counsel engaged
     by the Corporation may not adequately represent Indemnitee; or

          (iii)  the Corporation shall not in fact have employed counsel to
     assume the defense in such Proceeding or shall not in fact have assumed
     such defense and be

                                      -7-
<PAGE>

     acting in connection therewith with reasonable diligence; in each of which
     cases the fees and expenses of such counsel shall be at the expense of the
     Corporation.

     (c)  The Corporation shall not settle any Proceeding in any manner that
would impose any penalty or limitation on Indemnitee without Indemnitee's
written consent; provided, however, that Indemnitee will not unreasonably
withhold his or her consent to any proposed settlement.

     14.  Notices.  All notices, requests, demands and other communications
          -------
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:

     (a)  If to Indemnitee, to:

          ___________________
          Tvia, Inc.
          4001 Burton Drive
          Santa Clara, CA 95054

     (b)  If to the Corporation, to:
          Tvia, Inc.
          4001 Burton Drive
          Santa Clara, CA 95054
          Attn: Michael Hoberg

or to such other address as may have been furnished to Indemnitee by the
Corporation or to the Corporation by Indemnitee, as the case may be.

     15.  Nonexclusivity.  The rights of Indemnitee hereunder shall not be
          --------------
deemed exclusive of any other rights to which Indemnitee may be entitled under
applicable law, the Corporation's Certificate of Incorporation or bylaws, or any
agreements, vote of stockholders, resolution of the Board of Directors or
otherwise, and to the extent that during the Indemnification Period the rights
of the then existing directors and officers are more favorable to such directors
or officers than the rights currently provided to Indemnitee thereunder or under
this Agreement, Indemnitee shall be entitled to the full benefits of such more
favorable rights.

     16.  Certain Definitions.
          -------------------

     (a)  "Agent" shall mean any person who is or was, or who has consented to
           -----
serve as, a director, officer, employee, agent, fiduciary, joint venturer,
partner, manager or other official of the Corporation or a subsidiary or an
affiliate of the Corporation, or any other entity (including without limitation,
an employee benefit plan) either at the request of, for the convenience of, or
otherwise to benefit the Corporation or a subsidiary of the Corporation.

                                      -8-
<PAGE>

     (b) "Change in Control" shall mean the occurrence of any of the following:
          -----------------

          (i)    Both (A) any "person" (as defined below) is or becomes the
     "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
     directly or indirectly, of securities of the Corporation representing at
     least 20% of the total voting power represented by the Corporation's
     then outstanding voting securities; and (b) the beneficial ownership by
     such person of securities representing such percentage has not been
     approved by a majority of the "continuing directors" (as defined below);

          (ii)   Any "person" is or becomes the "beneficial owner" (as defined
     in Rule 13d-3 under the Exchange Act), directly or indirectly, of
     securities of the Corporation representing at least 50% of the total voting
     power represented by the Corporation's then outstanding voting securities;

          (iii)  A change in the composition of the Board occurs, as a result of
     which fewer than two-thirds of the incumbent directors are directors who
     either (A) had been directors of the Corporation on the "look-back date"
     (as defined below) (the "Original Directors") or (B) were elected, or
     nominated for election, to the Board with the affirmative votes of at least
     a majority in the aggregate of the Original Directors who were still in
     office at the time of the election or nomination and directors whose
     election or nomination was previously so approved (the "continuing
     directors");

          (iv)   The stockholders of the Corporation approve a merger or
     consolidation of the Corporation with any other corporation, if such merger
     or consolidation would result in the voting securities of the Corporation
     outstanding immediately prior thereto representing (either by remaining
     outstanding or by being converted into voting securities of the surviving
     entity) 50% or less of the total voting power represented by the voting
     securities of the Corporation or such surviving entity outstanding
     immediately after such merger or consolidation; or

          (v)    The stockholders of the Corporation approve (A) a plan of
     complete liquidation of the Corporation or (B) an agreement for the sale or
     disposition by the Corporation of all or substantially all of the
     Corporation's assets.

     For purposes of Subsection (i) above, the term "person" shall have the same
meaning as when used in sections 13(d) and 14(d) of the Exchange Act, but shall
exclude (x) a trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation or of a parent or subsidiary of the Corporation
or (y) a corporation owned directly or indirectly by the stockholders of the
Corporation in substantially the same proportions as their ownership of the
common stock of the Corporation.

     For purposes of Subsection (iii) above, the term "look-back date" shall
mean the later of (x) April 28, 2000 or (y) the date 24 months prior to the date
of the event that may constitute a "Change in Control. "

                                      -9-
<PAGE>

     Any other provision of this Section 17(b) notwithstanding, the term "Change
in Control" shall not include a transaction, if undertaken at the election of
the Corporation, the result of which is to sell all or substantially all of the
assets of the Corporation to another corporation (the "surviving corporation");
provided that the surviving corporation is owned directly or indirectly by the
stockholders of the Corporation immediately following such transaction in
substantially the same proportions as their ownership of the Corporation's
common stock immediately preceding such transaction; and provided, further, that
the surviving corporation expressly assumes this Agreement.

     (c)  "Disinterested Director" shall mean a director of the Corporation who
           ----------------------
is not or was not a party to or otherwise involved in the Proceeding in respect
of which indemnification is being sought by Indemnitee.

     (d)  "Expenses" shall include all direct and indirect costs (including,
           --------
without limitation, attorneys' fees, retainers, court costs, transcripts, fees
of experts, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees, all other
disbursements or out-of-pocket expenses and reasonable compensation for time
spent by Indemnitee for which Indemnitee is otherwise not compensated by the
Corporation or any third party) actually and reasonably incurred in connection
with either the investigation, defense, settlement or appeal of a Proceeding or
establishing or enforcing a right to indemnification under this Agreement,
applicable law or otherwise; provided, however, that "Expenses" shall not
include any Liabilities.

     (e)  "Final Adverse Determination" shall mean that a determination that
           ---------------------------
Indemnitee is not entitled to indemnification shall have been made pursuant to
Section 5 hereof and either (1) a final adjudication in the Court of Chancery of
the State of Delaware or decision of an arbitrator pursuant to Section 8(a)
hereof shall have denied Indemnitee's right to indemnification hereunder, or (2)
Indemnitee shall have failed to file a complaint in a Delaware court or seek an
arbitrator's award pursuant to Section 8(a) for a period of one hundred twenty
(120) days after the determination made pursuant to Section 5 hereof.

     (f)  "Independent Legal Counsel" shall mean a law firm or a member of a
           -------------------------
firm selected by the Corporation and approved by Indemnitee (which approval
shall not be unreasonably withheld) or, if there has been a Change in Control,
selected by Indemnitee and approved by the Corporation (which approval shall not
be unreasonably withheld), that neither is presently nor in the past five (5)
years has been retained to represent: (i) the Corporation or any of its
subsidiaries or affiliates, or Indemnitee or any corporation of which Indemnitee
was or is a director, officer, employee or agent, or any subsidiary or affiliate
of such a corporation, in any material matter, or (ii) any other party to the
Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term "Independent Legal Counsel" shall not include any person
who, under the applicable standards of professional conduct then prevailing,
would have a conflict of interest in representing either the Corporation or
Indemnitee in an action to determine Indemnitee's right to indemnification under
this Agreement.

     (g)  "Liabilities" shall mean liabilities of any type whatsoever including,
           -----------
but not limited to, any judgments, fines, ERISA excise taxes and penalties,
penalties and amounts

                                      -10-
<PAGE>

paid in settlement (including all interest assessments and other charges paid or
payable in connection with or in respect of such judgments, fines, penalties or
amounts paid in settlement) of any Proceeding.

     (h)  "Proceeding" shall mean any threatened, pending or completed action,
           ----------
claim, suit, arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or any other proceeding whether civil, criminal,
administrative or investigative, that is associated with Indemnitee's being an
Agent of the Corporation.

     17.  Binding Effect; Duration and Scope of Agreement.  This Agreement shall
          -----------------------------------------------
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Corporation), spouses, heirs
and personal and legal representatives. This Agreement shall continue in effect
during the Indemnification Period, regardless of whether Indemnitee continues to
serve as an Agent.

     18.  Severability.  If any provision or provisions of this Agreement (or
          ------------
any portion thereof) shall be held to be invalid, illegal or unenforceable for
any reason whatsoever:

     (a)  the validity, legality and enforceability of the remaining provisions
of this Agreement shall not in any way be affected or impaired thereby; and

     (b)  to the fullest extent legally possible, the provisions of this
Agreement shall be construed so as to give effect to the intent of any provision
held invalid, illegal or unenforceable.

     19.  Governing Law.  This Agreement shall be governed by and construed and
          -------------
enforced in accordance with the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within the State of Delaware, without regard to conflict of laws rules.

     20.  Consent to Jurisdiction.  The Corporation and Indemnitee each
          -----------------------
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding that arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of Delaware.

     21.  Entire Agreement.  This Agreement represents the entire agreement
          ----------------
between the parties hereto, and there are no other agreements, contracts or
understandings between the parties hereto with respect to the subject matter of
this Agreement, except as specifically referred to herein or as provided in
Section 15 hereof.

     22.  Counterparts.  This Agreement may be executed in one or more
          ------------
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement.

                                      -11-
<PAGE>

     Executed as of the ____ day of _________, 2000.

                              TVIA, INC., a Delaware
                              corporation

                              By _________________________________

                              INDEMNITEE

                              ____________________________________

                                      -12-

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