Document:

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                                                                    EXHIBIT 10.2

                                  TVIA, INC.

                           2000 STOCK INCENTIVE PLAN

                         (Effective ________ __, 2000)
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                                  TVIA, INC.

                           2000 STOCK INCENTIVE PLAN

                         (Effective ________ __, 2000)

                               TABLE OF CONTENTS
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SECTION 1. PURPOSE.....................................................     1

SECTION 2. DEFINITIONS.................................................     1

   (a)   "Award".......................................................     1
   (b)   "Board".......................................................     1
   (c)   "Change in Control"...........................................     1
   (d)   "Code"........................................................     1
   (e)   "Committee"...................................................     1
   (f)   "Common-Law Employee".........................................     2
   (g)   "Common Stock"................................................     2
   (h)   "Company".....................................................     2
   (i)   "Consultant"..................................................     2
   (j)   "Exchange Act"................................................     2
   (k)   "Exercise Price"..............................................     2
   (l)   "Fair Market Value"...........................................     2
   (m)   "Incentive Stock Option"......................................     3
   (n)   "Key Contributor".............................................     3
   (o)   "Non-Employee Director".......................................     3
   (p)   "Nonstatutory Option".........................................     3
   (q)   "Offeree".....................................................     3
   (r)   "Option"......................................................     3
   (s)   "Optionee"....................................................     3
   (t)   "Parent"......................................................     3
   (u)   "Participant".................................................     3
   (v)   "Plan"........................................................     3
   (w)   "Purchase Price"..............................................     3
   (x)   "Restricted Share"............................................     3
   (y)   "Service".....................................................     3
   (z)   "Stock Award Agreement".......................................     3
   (aa)  "Stock Option Agreement"......................................     3
   (bb)  "Stock Purchase Agreement"....................................     3
   (cc)  "Subsidiary"..................................................     4
   (dd)  "10% Stockholder".............................................     4
   (ee)  "Total and Permanent Disability"..............................     4
   (ff)  "W-2 Payroll".................................................     4

SECTION 3. ADMINISTRATION..............................................     4

   (a)   Committees of the Board.......................................     4
   (b)   Committee Procedures..........................................     4
   (c)   Authority of the Committee....................................     5
   (d)   Committee Liability...........................................     5

SECTION 4. ELIGIBILITY.................................................     5

SECTION 5. STOCK SUBJECT TO PLAN.......................................     5
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                                  TVIA, INC.

                           2000 STOCK INCENTIVE PLAN

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   (a)   Basic Limitation.............................................      5
   (b)   Additional Shares............................................      5

SECTION 6. TERMS AND CONDITIONS OF GRANTS OR SALES....................      6

   (a)   Stock Purchase Agreement.....................................      6
   (b)   Duration of Offers...........................................      6
   (c)   Purchase Price...............................................      6
   (d)   Restrictions on Transfer of Common Stock.....................      6

SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES.......      6

   (a)   Form and Amount of Award.....................................      6
   (b)   Exercisability...............................................      6
   (c)   Effect of Change in Control..................................      7
   (d)   Voting Rights................................................      7

SECTION 8. TERMS AND CONDITIONS OF OPTIONS............................      7

   (a)   Stock Option Agreement.......................................      7
   (b)   Number of Shares.............................................      7
   (c)   Exercise Price...............................................      7
   (d)   Exercisability...............................................      7
   (e)   Effect of Change in Control..................................      7
   (f)   Term.........................................................      8
   (g)   Exercise of Options on Termination of Service................      8
   (h)   No Rights as a Stockholder...................................      8
   (i)   Modification, Extension and Assumption of Options............      8
   (j)   Restrictions on Transfer.....................................      8

SECTION 9. FORMS OF PAYMENT...........................................      9

   (a)   General Rule.................................................      9
   (b)   Surrender of Stock...........................................      9
   (c)   Promissory Notes.............................................      9
   (d)   Cashless Exercise............................................      9
   (e)   Other Forms of Payment.......................................      9

SECTION 10. ADJUSTMENTS UPON CHANGES IN COMMON STOCK..................      9

   (a)   General......................................................      9
   (b)   Mergers and Consolidations...................................     10
   (c)   Reservation of Rights........................................     10

SECTION 11. WITHHOLDING TAXES.........................................     10

   (a)   General......................................................     10
   (b)   Common Stock Withholding.....................................     10
   (c)   Cashless Exercise/Pledge.....................................     11
   (d)   Other Forms of Payment.......................................     11

SECTION 12. LEGAL REQUIREMENTS........................................     11

   (a)   Restrictions on Issuance.....................................     11
   (b)   Financial Reports............................................     11

SECTION 13. ASSIGNMENT OR TRANSFER OF AWARDS..........................     11

   (a)   General......................................................     11
   (b)   Trusts.......................................................     11
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                                  TVIA, INC.

                           2000 STOCK INCENTIVE PLAN

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SECTION 14. NO EMPLOYMENT RIGHTS.......................................     12

SECTION 15. DURATION AND AMENDMENTS....................................     12

   (a)   Term of the Plan..............................................     12
   (b)   Right to Amend or Terminate the Plan..........................     12
   (c)   Effect of Amendment or Termination............................     12

SECTION 16. EXECUTION..................................................     13
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                                  TVIA, INC.

                           2000 STOCK INCENTIVE PLAN

SECTION 1.   PURPOSE.

     The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such persons to remain
in the employ of the Company and to attract new employees with outstanding
qualifications. The Plan seeks to achieve this purpose by providing for the
direct grant or sale of Common Stock and for the grant of Options to purchase
Common Stock. Options granted under the Plan may include Nonstatutory Options as
well as Incentive Stock Options intended to qualify under section 422 of the
Internal Revenue Code. While this Plan is intended to satisfy federal Rule 701
and Section 25102(o) of the California Corporations Code, Awards may be granted
under this Plan in reliance upon other federal and state securities law
exemptions and to the extent another exemption is relied upon, the terms of this
Plan which are required only because of Rule 701 or Section 25102(o) need not
apply to the extent provided by the Board in the award agreement.

SECTION 2.   DEFINITIONS.

     (a)  "Award" shall mean any award of an Option, Restricted Share or other
right under the Plan.

     (b)  "Board" shall mean the Board of the Company, as constituted from time
to time.

     (c)  "Change in Control" shall mean:

          (i)  The consummation of a merger or consolidation of the Company with
     or into another entity or any other corporate reorganization, if more than
     50% of the combined voting power of the continuing or surviving entity's
     securities outstanding immediately after such merger, consolidation or
     other reorganization is owned by persons who were not stockholders of the
     Company immediately prior to such merger, consolidation or other
     reorganization; or

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

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

     (d)  "Code" shall mean the Internal Revenue Code of 1986, as amended.

     (e)  "Committee" shall mean a committee consisting of one or more members
of the Board that is appointed by the Board to administer the Plan under Section
3.
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     (f)  "Common-Law Employee" shall mean an individual paid from W-2 Payroll
of the Company or a Subsidiary. If, during any period, the Company (or
Subsidiary, as applicable) has not treated an individual as a Common-Law
Employee and, for that reason, has not paid such individual in a manner which
results in the issuance of a Form W-2 and withheld taxes with respect to him or
her, then that individual shall not be an eligible Common-Law Employee for that
period, even if any person, court or government agency determines,
retroactively, that that individual is or was a Common-Law Employee during all
or any portion of that period.

     (g)  "Common Stock" shall mean the Company's common stock.

     (h)  "Company" shall mean Tvia, Inc., a Delaware corporation.

     (i)  "Consultant" shall mean an individual who performs bona fide services
to the Company, a Parent or a Subsidiary other than as a Common-Law Employee, or
a member of the Board, or a member of the board of directors of a Subsidiary.

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

     (k)  "Exercise Price" shall mean the amount for which one share of Common
Stock may be purchased upon exercise of an Option, as specified by the Board in
the applicable Stock Option Agreement.

     (l)  "Fair Market Value" shall mean the market price of Common Stock,
determined by the Board as follows:

          (i)  If the Shares were traded over-the-counter on the date in
     question but were not traded on the Nasdaq Stock Market or the Nasdaq
     National Market System, then the Fair Market Value shall be equal to the
     mean between the last reported representative bid and asked prices quoted
     for such date by the principal automated inter-dealer quotation system on
     which the Shares are quoted or, if the Shares are not quoted on any such
     system, by the "Pink Sheets" published by the National Quotation Bureau,
     Inc.;

          (ii) If the Shares were traded over-the-counter on the date in
     question and were traded on the Nasdaq Stock Market or the Nasdaq National
     Market System, then the Fair Market Value shall be equal to the last-
     transaction price quoted for such date by the Nasdaq Stock Market or the
     Nasdaq National Market;

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

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

     In all cases, the determination of Fair Market Value by the Board shall be
conclusive and binding on all persons.

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     (m)  "Incentive Stock Option" or "ISO" shall mean an incentive stock option
described in Code section 422(b).

     (n)  "Key Contributor" shall mean (i) any individual who is a Common-Law
Employee of the Company, a Parent or a Subsidiary, (ii) a member of the Board,
including (without limitation) a Non-Employee Director, or an affiliate of a
member of the Board; (iii) a member of the board of directors of a Subsidiary,
or (iv) a Consultant. Service as a member of the Board, a member of the board of
directors of a Subsidiary or a Consultant shall be considered employment for all
purposes of the Plan except the second sentence of Section 4(a).

     (o)  "Non-Employee Director" shall mean a member of the Board who is not a
Common-Law Employee of the Company or a Subsidiary.

     (p)  "Nonstatutory Option" or "NSO" shall mean a stock option that is not
an ISO.

     (q)  "Offeree" shall mean an individual to whom the Board has offered the
right to acquire Common Stock under the Plan (other than upon exercise of an
Option).

     (r)  "Option" shall mean an ISO or NSO granted under the Plan entitling the
holder to purchase Common Stock.

     (s)  "Optionee" shall mean an individual who holds an Option.

     (t)  "Parent" shall have the meaning set forth in Section 424(e) of the
Code.

     (u)  "Participant" shall mean an individual or estate who holds an Award.

     (v)  "Plan" shall mean this 2000 Stock Incentive Plan of Tvia, Inc.

     (w)  "Purchase Price" shall mean the consideration for which one share of
Common Stock may be acquired under the Plan (other than upon exercise of an
Option) pursuant to a grant or sale under Section 6, as specified by the Board.

     (x)  "Restricted Share" shall mean a share of Common Stock sold or granted
to an eligible Key Contributor which is nontransferable and subject to
substantial risk of forfeiture until restrictions lapse.

     (y)  "Service" shall mean service as a Key Contributor.

     (z)  "Stock Award Agreement" shall mean the agreement between the Company
and the recipient of a Restricted Share which contains the terms, conditions and
restrictions pertaining to such Restricted Share.

     (aa) "Stock Option Agreement" shall mean the agreement between the Company
and an Optionee that contains the terms, conditions and restrictions pertaining
to an Option.

     (bb) "Stock Purchase Agreement" shall mean the agreement between the
Company and an Offeree who acquires Common Stock under the Plan (other than
pursuant to an Option)

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that contains the terms, conditions and restrictions pertaining to the
acquisition of such Common Stock.

     (cc) "Subsidiary" shall have the meaning set forth in Section 424(f) of the
Code.

     (dd) "10% Stockholder" shall mean an individual who owns more than 10% of
the total combined voting power of all classes of outstanding stock of the
Company, its Parent or any of its Subsidiaries. For purposes of this Subsection
(dd), in determining stock ownership, the attribution rules of Section 424(d) of
the Code shall be applied. For purposes of this Subsection (dd), "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding stock" shall not include Common Stock authorized for
issuance under outstanding Options held by the Key Contributor or by any other
person.

     (ee) "Total and Permanent Disability" shall mean that the Optionee is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment.

     (ff) "W-2 Payroll" shall mean whatever mechanism or procedure that the
Company or a Subsidiary utilizes to pay any individual which results in the
issuance of Form W-2 to the individual. "W-2 Payroll" does not include any
mechanism or procedure which results in the issuance of any form other than a
Form W-2 to an individual, including, but not limited to, any Form 1099 which
may be issued to an independent contractor, an agency employee or a consultant.
Whether a mechanism or procedure qualifies as a "W-2 Payroll" shall be
determined in the absolute discretion of the Company (or Subsidiary, as
applicable), and the Company or Subsidiary determination shall be conclusive and
binding on all persons.

SECTION 3.   ADMINISTRATION.

     (a)  Committees of the Board. The Plan shall be administered by the Board.
However, any or all administrative functions otherwise exercisable by the Board
may be delegated to a Committee. Members of the Committee shall serve for such
period of time as the Board may determine and shall be subject to removal by the
Board at any time. The Board may also at any time terminate the functions of the
Committee and reassume all powers and authority previously delegated to the
Committee. Any reference to the Board in the Plan shall be construed as a
reference to the Committee (if any) to whom the Board has assigned a particular
function.

     In the event that the Company's Common Stock becomes publicly traded, the
Board may appoint a Committee which, if appointed, shall be comprised solely of
two or more Non-Employee Directors (although Committee functions may be
delegated to officers to the extent the Awards relate to persons who are not
subject to the reporting requirements of Section 16 of the Exchange Act).

     (b)  Committee Procedures. The Board shall designate one of the members of
the Committee as chairperson. The Committee may hold meetings at such times and
places as it shall determine. The acts of a majority of the Committee members
present at meetings at which

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a quorum exists, or acts reduced to or approved in writing by all Committee
members, shall be valid acts of the Committee.

     (c)  Authority of the Committee. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take any actions it
deems necessary or advisable for the administration of the Plan. The Committee
has authority in its discretion to determine eligible Key Contributors to whom,
and the time or times at which, Awards may be granted and the number of Shares
subject to each Award. Subject to the express provisions of the respective Award
agreements (which need not be identical) and to make all other determinations
necessary or advisable for Plan administration, the Committee has authority to
prescribe, amend and rescind rules and regulations relating to the Plan. All
decisions, interpretations and other actions of the Committee shall be final,
conclusive and binding on all parties who have an interest in the Plan or any
option or shares issued thereunder.

     (d)  Committee Liability. No member of the Board or the Committee will be
liable for any action or determination made in good faith by the Committee with
respect to the Plan or any Award made under the Plan.

SECTION 4.   ELIGIBILITY.

     Only Key Contributors shall be eligible for designation as Participants by
the Board. In addition, only individuals who are employed as Common-Law
Employees by the Company or a Subsidiary shall be eligible for the grant of
ISOs.

SECTION 5.   STOCK SUBJECT TO PLAN.

     (a)  Basic Limitation. The stock issuable under the Plan shall be shares
of authorized but unissued or reacquired Common Stock. The maximum number of
shares of Common Stock which may be issued under the Plan shall not exceed
2,000,000 shares, subject to adjustment pursuant to Section 9.

     In any event, (i) the number of Shares which are subject to Awards or other
rights outstanding at any time under the Plan shall not exceed the number of
Shares which then remain available for issuance under the Plan; and (ii) to the
extent an award is made in reliance upon the exemption available under Section
25102(o) of the California Corporations Code, the number of Shares which are
subject to Awards or other rights outstanding at any time under the Plan or
otherwise shall not exceed the limitation imposed by Section 260.140.45 of Title
10 of the California Code of Regulations. The Company, during the term of the
Plan, shall at all times reserve and keep available sufficient Shares to satisfy
the requirements of the Plan.

     (b)  Additional Shares. If any outstanding Option or other right to acquire
Common Stock for any reason expires or is canceled, forfeited or otherwise
terminated, the Common Stock allocable to the unexercised portion of such Option
or other right shall again be available for the purposes of the Plan. If shares
of Common Stock issued under the Plan are reacquired by the Company pursuant to
any right of repurchase or right of first refusal, such shares of Common Stock
shall again be available for the purposes of the Plan, except that the aggregate
number of shares of Common Stock that may be issued upon the exercise of ISOs
shall in no event exceed

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the number of shares of Common Stock reserved for issuance pursuant to paragraph
(a) above plus the number of previously optioned shares returned to the Plan
pursuant to the first sentence of this paragraph, as adjusted pursuant to
Section 9.

SECTION 6.   TERMS AND CONDITIONS OF GRANTS OR SALES.

     (a)  Stock Purchase Agreement. Each grant or sale of Common Stock under
the Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Offeree and the Company. Such grant or sale shall
be subject to all applicable terms and conditions of the Plan and may be subject
to any other terms and conditions that are not inconsistent with the Plan and
that the Board deems appropriate for inclusion in a Stock Purchase Agreement.
The provisions of the various Stock Purchase Agreements entered into under the
Plan need not be identical.

     (b)  Duration of Offers. Any right to acquire Common Stock under the Plan
other than an Option shall automatically expire if not exercised by the Offeree
within thirty (30) days after the grant of such right was communicated by the
Board to the Offeree.

     (c)  Purchase Price. The Purchase Price of Common Stock offered under the
Plan shall be established by the Board and set forth in the Stock Purchase
Agreement and, to the extent required by applicable law, including the
California Corporations Code or the regulations thereunder, shall not be less
than 85% of Fair Market Value (100% for 10% Stockholders). The Purchase Price
shall be payable in a form described in Section 9 or, in the discretion of the
Board, in consideration for past services rendered to the Company or for its
benefit.

     (d)  Restrictions on Transfer of Common Stock. No Common Stock granted or
sold under the Plan may be sold or otherwise transferred or disposed of by the
Offeree during the one hundred eighty (180) day period following the effective
date of a registration statement covering securities of the Company filed under
the Securities Act of 1933 (unless such restriction is consented to or waived by
the managing underwriter). Subject to the preceding sentence, any Common Stock
granted or sold under the Plan shall be subject to such special conditions,
rights of repurchase, rights of first refusal and other transfer restrictions as
the Board may determine. Such restrictions shall apply in addition to any
general restrictions that may apply to all holders of Common Stock.

SECTION 7.   ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES.

     (a)  Form and Amount of Award. Each Stock Award Agreement shall specify
the number of shares of Common Stock that are subject to the Award. Restricted
Shares may be awarded in combination with NSOs and such an Award may provide
that the Restricted Shares will be forfeited in the event that the related NSOs
are exercised.

     (b)  Exercisability. Each Stock Award Agreement shall specify the
conditions upon which Restricted Shares shall become vested, in full or in
installments. To the extent required by applicable law, each Stock Award shall
become exercisable no less rapidly than the rate of 20% per year for each of the
first five years from the date of grant. Subject to the preceding sentence, the
exercisability of any Stock Award shall be determined by the Board in its sole
discretion.

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      c)  Effect of Change in Control. The Board may determine at the time of
making an Award or thereafter, that such Award shall become fully vested, in
whole or in part, in the event that a Change in Control occurs with respect to
the Company.

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

SECTION 8.   TERMS AND CONDITIONS OF OPTIONS.

     (a)  Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions that are not inconsistent
with the Plan and that the Board deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.

     (b)  Number of Shares. Each Stock Option Agreement shall specify the
number of shares of Common Stock that are subject to the Option and shall
provide for the adjustment of such number in accordance with Section 10. The
Stock Option Agreement shall also specify whether the Option is an ISO or an
NSO.

     (c)  Exercise Price. An Option's Exercise Price shall be established by
the Board and set forth in a Stock Option Agreement. The Exercise Price of an
ISO shall not be less than 100% of the Fair Market Value (110% for 10%
Stockholders) on the date of grant. The Exercise Price of a Nonstatutory Option
shall not be less than 85% of the Fair Market Value (110% for 10% Stockholders)
on the date of grant. The Exercise Price shall be payable in a form described in
Section 9. Notwithstanding the foregoing, an Option may be granted with an
exercise price lower than that set prescribed in this paragraph if the Option
grant is attributable to the issuance or assumption of an option in a
transaction to which Code section 424(a) applies.

     (d)  Exercisability. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to vest or become exercisable. To
the extent required by applicable law, including the California Corporations
Code or the regulations thereunder, an Option granted to Key Contributors who
are not officers shall vest and become exercisable no less rapidly than the rate
of 20% per year for each of the first five (5) years from the date of grant.
Subject to the preceding sentence, the vesting of any Option shall be determined
by the Board in its sole discretion. A Stock Option Agreement may permit an
Optionee to exercise an Option before it is vested, subject to the Company's
right of repurchase over any shares acquired under the unvested portion of the
Option (an "early exercise"), which right of repurchase shall lapse at the same
rate the Option would have vested had there been no early exercise.

     (e)  Effect of Change in Control. The Board may determine, at the time of
granting an Option or thereafter, that such Option shall become fully
exercisable as to all shares of

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Common Stock subject to such Option in the event that a Change in Control occurs
with respect to the Company.

     (f)  Term. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten (10) years from the date of grant (5 years
in the case of an ISO granted to a Ten Percent Stockholder). Subject to the
preceding sentence, the Board at its sole discretion shall determine when an
Option is to expire.

     (g)  Exercise of Options on Termination of Service. Each Option shall set
forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's Service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Board, need not be uniform among all Options issued pursuant to the Plan, and
may reflect distinctions based on the reasons for termination of Service.
Notwithstanding the foregoing in this Section 8(h), to the extent required by
applicable law, including the California Corporations Code or the regulations
thereunder, each Stock Option Agreement shall provide that the Optionee shall
have the right to exercise the Option following termination of the Optionee's
Service, during the Option's term, for at least thirty (30) days following
termination of Service for any reason except cause, death or disability, and for
at least six (6) months following termination of Service due to death or
disability.

     (h)  No Rights as a Stockholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Common Stock
covered by an Option until such person becomes entitled to receive such Common
Stock by filing a notice of exercise and paying the Exercise Price pursuant to
the terms of such Option.

     (i)  Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Board may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of shares of Common Stock and at the same or a
different Exercise Price. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Optionee, impair the Optionee's rights
or increase the Optionee's obligations under such Option.

     (j)  Restrictions on Transfer. No shares of Common Stock issued upon
exercise of an Option may be sold or otherwise transferred or disposed of by the
Optionee during the one hundred eighty (180) day period following the effective
date of a registration statement covering securities of the Company filed under
the Securities Act of 1933 (unless such restriction is consented to or waived by
the managing underwriter). Subject to the preceding sentence, any Common Stock
issued upon exercise of an Option shall be subject to such rights of repurchase,
rights of first refusal and other transfer restrictions as the Board may
determine. Such restrictions shall apply in addition to any restrictions that
may apply to holders of Common Stock generally. Any right to repurchase an
Optionee's Common Stock at the original Exercise Price upon termination of the
Optionee's Service shall lapse at least as rapidly as the schedule set forth in
Subsection (d) above. Any such repurchase right may be exercised only within
ninety (90) days after the termination of the Optionee's Service for cash or for
cancellation of indebtedness incurred in purchasing the Common Stock.

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SECTION 9.   FORMS OF PAYMENT.

     (a)  General Rule. The entire Purchase Price or Exercise Price shall be
payable in cash or cash equivalents acceptable to the Company at the time of
exercise or purchase, except as otherwise provided in this Section 9.

     (b)  Surrender of Stock. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so provides, payment may be made all or in part with
Common Stock that has already been owned by the Optionee or the Optionee's
representative for any time period specified by the Board and that are
surrendered to the Company in good form for transfer. Such Common Stock shall be
valued at Fair Market Value on the date when the new Common Stock is purchased
under the Plan.

     (c)  Promissory Notes. To the extent that a Stock Option Agreement or
Stock Purchase agreement so provides, payment may be made all or in part with a
full recourse promissory note executed by the Optionee of Offeree. The interest
rate and other terms and conditions of such note shall be determined by the
Board. The Board may require that the Optionee pledge his or her Common Stock to
the Company for the purpose of securing the payment of such note. In no event
shall the stock certificate(s) representing such Common Stock be released to the
Optionee or Offeree until such note is paid in full, unless otherwise provided
in the Stock Option Agreement or Stock Purchase Agreement.

     (d)  Cashless Exercise. To the extent that a Stock Option Agreement so
provides and a public market for the Common Stock exists, payment may be made
all or in part by delivery (on a form acceptable to the Board) of an irrevocable
direction to a securities broker to sell Common Stock and to deliver all or part
of the sale proceeds to the Company in payment of the aggregate Exercise Price.

     (e)  Other Forms of Payment. To the extent provided in the Stock Option
Agreement, payment may be made in any other form that is consistent with
applicable laws, regulations and rules.

SECTION 10.  ADJUSTMENTS UPON CHANGES IN COMMON STOCK.

     (a)  General. In the event of a subdivision of the outstanding Common
Stock, a declaration of a dividend payable in Common Stock, a declaration of an
extraordinary dividend payable in a form other than Common Stock in an amount
that has a material effect on the value of Common Stock, a combination or
consolidation of the outstanding Common Stock into a lesser number of shares, a
recapitalization, a reclassification or a similar occurrence, the Board shall
make appropriate adjustments, subject to the limitations set forth in Section
10(c), in one or more of (i) the number of shares of Common Stock available for
future grants of Options or other rights to acquire Common Stock under Section
5, (ii) the number of shares of Common Stock covered by each outstanding Option
or other right to acquire Common Stock or (iii) the Exercise Price of each
outstanding Option or the Purchase Price of each other right to acquire Common
Stock.

                                      -9-
<PAGE>

     (b)  Mergers and Consolidations. In the event that the Company is a party
to a merger or consolidation, outstanding Options or other rights to acquire
Common Stock shall be subject to the agreement of merger or reorganization. Such
agreement, without an Optionee's consent, may provide for:

          (i)   The continuation of such outstanding Options by the Company (if
     the Company is the surviving corporation);

          (ii)  The assumption of the Plan and such outstanding Options by the
     surviving corporation or its parent;

          (iii) The substitution by the surviving corporation or its parent of
     options with substantially the same terms for such outstanding Options; or

          (iv)  The cancellation of such outstanding Options without payment of
     any consideration, provided that in such event vesting of Options will
     accelerate in full.

     (c)  Reservation of Rights. Except as provided in this Section 10, an
Optionee or Offeree shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend,
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Common Stock subject to an Option, or the number of shares subject to any
other right to acquire Common Stock and/or the Exercise Price or Purchase Price.
The grant of an Option or other right to acquire Common Stock pursuant to the
Plan shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure, to merge or consolidate or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.

SECTION 11.  WITHHOLDING TAXES.

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

     (b)  Common Stock Withholding.  The Committee may permit a Participant to
satisfy all or part of his or her withholding or income tax obligations by
having the Company withhold all or a portion of any shares of Common Stock that
otherwise would be issued to him or her or by surrendering all or a portion of
any shares of Common Stock that he or she previously acquired. Notwithstanding
the previous sentence in this Section 11(b), the maximum amount that may be
subject to common stock withholding under this Section 11(b) shall be determined
by the Committee based upon the minimum rates of federal, state and employment
withholding applicable under the circumstances. Shares of Common Stock that are
withheld or surrendered pursuant to this Section 11 shall be valued at their
Fair Market Value on the date

                                      -10-
<PAGE>

when taxes otherwise would be withheld in cash. Any payment of taxes by
assigning shares of Common Stock to the Company may be subject to restrictions,
including any restrictions required by rules of any federal or state regulatory
body or other authority.

     (c)  Cashless Exercise/Pledge. The Committee may provide that if Company
shares of Common Stock are publicly traded at the time of exercise, arrangements
may be made to meet the Optionee's withholding obligation by cashless exercise
or pledge.

     (d)  Other Forms of Payment. The Committee may permit such other means of
tax withholding as it deems appropriate.

SECTION 12.  LEGAL REQUIREMENTS.

     (a)  Restrictions on Issuance. Common Stock shall not be issued under the
Plan unless the issuance and delivery of such Common Stock complies with (or is
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 on which the Company's securities may then be listed, and the
Company has obtained the approval or favorable ruling from any governmental
agency that the Company determines is necessary or advisable.

     (b)  Financial Reports. To the extent required to comply with the
California Corporations Code or the regulations thereunder, not less often than
annually the Company shall furnish to Optionees and Offerees Company summary
financial information including a balance sheet regarding the Company's
financial condition and results of operations, unless such Optionees or Offerees
have duties with the Company that assure them access to equivalent information.
Such financial statements need not be audited.

SECTION 13.  ASSIGNMENT OR TRANSFER OF AWARDS.

     (a)  General. An Award granted under the Plan shall not be anticipated,
assigned, attached, garnished, optioned, transferred or made subject to any
creditor's process, whether voluntarily, involuntarily or by operation of law,
except as approved by the Committee. Notwithstanding the foregoing, ISOs may not
be transferable. Also notwithstanding the foregoing, while the shares of Common
Stock are subject to California Corporations Code (S) 25102(o), (i) Offerees and
Optionees may not transfer their rights hereunder except by will, beneficiary
designation or the laws of descent and distribution, and (ii) any rights of
repurchase in favor of the Company shall take into account the provisions of
Sections 260.140.41 or 260.140.42 of Title 10 of the California Code of
Regulations, as applicable.

     (b)  Trusts. Neither this Section 13 nor any other provision of the Plan
shall preclude a Participant from transferring or assigning Restricted Shares to
(a) the trustee of a trust that is revocable by such Participant alone, both at
the time of the transfer or assignment and at all times thereafter prior to such
Participant's death, or (b) the trustee of any other trust to the extent
approved by the Committee in writing. A transfer or assignment of Restricted
Shares from such trustee to any other person than such Participant shall be
permitted only to the extent approved in advance by the Committee in writing,
and Restricted Shares held by such trustee shall be subject

                                      -11-
<PAGE>

to all the conditions and restrictions set forth in the Plan and in the
applicable Stock Award Agreement, as if such trustee were a party to such
Agreement.

SECTION 14.  NO EMPLOYMENT RIGHTS.

     No provision of the Plan, nor any Option granted or other right to acquire
Common Stock granted under the Plan, shall be construed to give any person any
right to become, to be treated as, or to remain a Key Contributor. The Company
and its Subsidiaries reserve the right to terminate any person's Service at any
time and for any reason.

SECTION 15.  DURATION AND AMENDMENTS.

     (a)  Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board, subject to the approval of
the Company's stockholders. In the event that the stockholders fail to approve
the Plan within twelve (12) months after its adoption by the Board, any Option
grants or other right to acquire Common Stock already made shall be null and
void, and no additional Option grants or other right to acquire Common Stock
shall be made after such date. The Plan shall terminate automatically ten (10)
years after its adoption by the Board and may be terminated on any earlier date
pursuant to Subsection (b) below.

     (b)  Right to Amend or Terminate the Plan. The Board may amend or
terminate the Plan at any time. Rights under any Option granted or other right
to acquire Common Stock granted before amendment of the Plan shall not be
materially impaired by any amendment or termination, except with consent of the
Optionee or Offeree. An amendment of the Plan shall be subject to the approval
of the Company's stockholders only to the extent required by applicable laws,
regulations or rules.

     (c)  Effect of Amendment or Termination. No Common Stock shall be issued
or sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Common Stock previously issued or Option
previously granted under the Plan.

                                      -12-
<PAGE>

SECTION 16.  EXECUTION.

     To record the adoption of the Plan, the Company has caused its authorized
officer to execute the same.

                              TVIA, INC.

                              By    ________________________________________
                              Title  _______________________________________

                                      -13-
<PAGE>

                                  TVIA, INC.

                           2000 Stock Incentive Plan

                            STOCK OPTION AGREEMENT

                       (without exercise before vesting)

     Tvia, Inc., a Delaware corporation (the "Company"), hereby grants an Option
to purchase its Common Stock to the Optionee named below. The terms and
conditions of the Option are set forth in this Stock Option Agreement and in the
Company's 2000 Stock Incentive Plan (the "Plan").

I.   GRANT INFORMATION

Date of Grant:                          __________, 20___

Name of Optionee:                       _________________________________

Optionee's Social Security Number:      ________-______-________

Type of Option:                         __ Incentive ("ISO")

                                        __ Nonstatutory ("NSO")

Number of Shares of Common Stock Covered by the Option: ____________

Exercise Price per Share:               $__________

Vesting Start Date:                     __________, 20__

Vesting Schedule:                       Subject to attached Terms and
                                        Conditions, the Option shall vest as to
                                        12/48ths of the shares of Common Stock
                                        on the first anniversary of the Vesting
                                        Start Date and 1/48th of the shares of
                                        Common Stock each full month thereafter.

     By signing below, you agree to all of the terms and conditions
     described in this Stock Option Agreement, including the
     attached Terms and Conditions, Notice of Exercise and Common
     Stock Purchase Agreement and the Plan.

Optionee:_______________________________________________________________________
                                      (Signature)

Company:________________________________________________________________________
                                      (Signature)

Title:__________________________________________________________________________
<PAGE>

     THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.

                 Stock Option Agreement - Terms and Conditions

                           2000 Stock Incentive Plan

                                  Tvia, Inc.

                  (does not include early exercise provision)

II.  TERMS AND CONDITIONS

     1.   Vesting. Your Option vests during your Service on the dates specified
in the first page of this Stock Option Agreement. Vesting will cease if your
Service terminates for any reason.

     2.   Service; Leaves of Absence. Your Service shall cease when you cease to
be actively employed by, or a consultant or adviser to, the Company (or any
subsidiary) as determined in the sole discretion of the Board. For purposes of
your Option, your Service does not terminate when you go on a bona fide leave of
absence, that was approved by the Company in writing, if the terms of the leave
provide for continued service crediting, or when continued service crediting is
required by applicable law. However, for purposes of determining whether your
Option is entitled to ISO status, your Service will be treated as terminating
ninety (90) days after you went on leave, unless your right to return to active
work is guaranteed by law or by a contract. Your Service terminates in any event
when the approved leave ends, unless you immediately return to active work. The
Company determines which leaves count toward Service, and when your Service
terminates for all purposes under the Plan.

     3.   Term of Option. Your Option expires on the day before the 10th
anniversary of the Date of Grant (fifth anniversary for a 10% owner), and will
expire earlier if your Service terminates as follows:

          (a)  Regular Termination. If your Service terminates for any reason
     except death or Disability, then your Option will expire at the close of
     business at Company headquarters on the date three (3) months after your
     termination date. During that three-month period, you may exercise that
     portion of your Option that was vested on the date that your Service
     terminated.

          (b)  Cause. If your Service terminates for Cause, your Option will
     expire immediately.

                                      -2-
<PAGE>

     For purposes of this Section, "Cause" means (i) continued failure to
perform substantially his or her duties, which standard of duties shall be
referenced to the standards set by the Company at the date of this Agreement
(other than as a result of sickness, accident or similar cause beyond your
reasonable control) after receipt of a written warning and given thirty (30)
days to improve, (ii) willful and material misconduct, which is demonstrably and
materially injurious to the Company or any of its subsidiaries, including
willful and material failure to perform your duties as an officer or employee of
the Company or any of its subsidiaries or a material breach of this Agreement,
(iii) conviction of or plea of nolo contendere to a felony; (iv) conviction of
an act of fraud against, or the misappropriation of property belonging to the
Company or any of its subsidiaries, or any employee, customer, or supplier of
the Company or any of its subsidiaries.

          (c)  Death.  If you die while in Service, then your Option will expire
     at the close of business at Company headquarters on the date six (6) months
     after the date of death.  During that six-month period, your estate or
     heirs may exercise that portion of your Option that was vested on the date
     of death.

          (d)  Disability.  If your Service terminates because of your
     Disability, then your Option will expire at the close of business at
     Company headquarters on the date six (6) months after your termination
     date.  (However, if your Disability is not expected to result in death or
     to last for a continuous period of at least twelve (12) months, your Option
     will be eligible for ISO tax treatment only if it is exercised within three
     (3) months following the termination of your Service.)  During that six-
     month period, you may exercise that portion of your Option that was vested
     on the date of your Disability.

          "Disability" means that you are unable to engage in any substantial
     gainful activity by reason of any medically determinable physical or mental
     impairment.

     4.   Exercise of Option.

          (a)  Legal Restrictions. By signing this Agreement, you agree not to
     exercise this Option or sell any Common Stock acquired upon exercise of
     this Option at a time when applicable laws, regulations or Company or
     underwriter trading policies prohibit exercise or sale.  In particular, the
     Company shall have the right to designate one or more periods of time, each
     of which shall not exceed 180 days in length, during which this Option
     shall not be exercisable if the Company determines (in its sole discretion)
     that such limitation on exercise could in any way facilitate a lessening of
     any restriction on transfer pursuant to the Securities Act or any state
     securities laws with respect to any issuance of securities by the Company,
     facilitate the registration or qualification of any securities by the
     Company under the Securities Act or any state securities laws, or
     facilitate the perfection of any exemption from the registration or
     qualification requirements of the Securities Act or any applicable state
     securities laws for the issuance or transfer of any securities.  Such
     limitation on exercise shall not alter the vesting schedule set forth in
     this Agreement other than to limit the periods during which this Option
     shall be exercisable.

                                      -3-
<PAGE>

          If the sale of Common Stock under the Plan is not registered under the
     Securities Act of 1933, as amended (the "Securities Act"), but an exemption
     is available which requires an investment or other representation, you
     shall represent and agree at the time of exercise that the Common Stock
     being acquired upon exercise of this Option are being acquired for
     investment, and not with a view to the sale or distribution thereof, and
     shall make such other representations as are deemed necessary or
     appropriate by the Company and its counsel.

          (b)  Method of Exercise. To exercise your Option, you must execute the
     Notice of Exercise and Common Stock Purchase Agreement, attached hereto as
     Exhibit A. You must submit this form, together with full payment, at the
     ---------
     address given on the form.  Your exercise will be effective when it is
     received by the Company.  If someone else wants to exercise your Option
     after your death, that person must prove to the Company's satisfaction that
     he or she is entitled to do so.

          (c) Form of Payment.  When you submit Exhibit A, you must include
                                                ---------
     payment of the aggregate Exercise Price for the Common Stock you are
     purchasing.  Payment may be made in one (or a combination) of the following
     forms.

          .    Your personal check, a cashier's check or a money order.

          .    Shares of Common Stock which you have owned for six months and
               which are surrendered to the Company. The value of such Common
               Stock, determined as of the effective date of the Option
               exercise, will be applied to the Exercise Price.

          .    To the extent that a public market for Common Stock exists as
               determined by the Company, by delivery (on a form approved by the
               Company) of an irrevocable direction to a securities broker to
               sell Common Stock and to deliver all or part of the sale proceeds
               to the Company in payment of the aggregate Exercise Price.

          .    Any other form of legal consideration approved by the Board.

          (d)  Withholding Taxes.  You will not be allowed to exercise your
     Option unless you make acceptable arrangements to pay any withholding or
     other taxes that may be due as a result of the Option exercise or the sale
     of Common Stock acquired upon exercise of your Option.

     5.   Exercise of Option Before Vesting ("Early Exercise").  You may not
exercise your Option before it is fully vested.

     6.   Resale Restrictions/Market Stand-Off.  In connection with any
underwritten public offering by the Company of its equity securities pursuant to
an effective registration statement filed under the Securities Act, including
the Company's initial public offering, you shall not, directly or indirectly,
engage in any transaction prohibited by the underwriter, nor shall you sell,
make any short sale of, contract to sell, transfer the economic risk of
ownership in, loan, hypothecate, pledge, grant any Option for the purchase of,
or otherwise dispose or transfer for

                                      -4-
<PAGE>

value or agree to engage in any of the foregoing transactions with respect to
any Common Stock without the prior written consent of the Company or its
underwriters, for such period of time after the effective date of such
registration statement as may be requested by the Company or such underwriters.
Such period of time shall not exceed one hundred eighty (180) days and may be
required by the underwriter as a market condition of the offering. By signing
this Agreement you agree to execute and deliver such other agreements as may be
reasonably requested by the Company or the underwriter which are consistent with
the foregoing or which are necessary to give further effect thereto. To enforce
the provisions of this paragraph, the Company may impose stop-transfer
instructions with respect to the Common Stock until the end of the applicable
stand-off period.

     7.   Right of First Refusal.  If you propose to sell, pledge or otherwise
transfer to a third party any Common Stock acquired under this Stock Option
Agreement, or any interest in such Common Stock, the Company shall have the
"Right of First Refusal" with respect to all (and not less than all) of such
Common Stock.  If you desire to transfer Common Stock acquired under this Stock
Option Agreement, you must give a written "Transfer Notice" to the Company
describing fully the proposed transfer, including the number of shares proposed
to be transferred, the proposed transfer price and the name and address of the
proposed transferee.  The Transfer Notice shall be signed both by you and by the
proposed new transferee and must constitute a binding commitment of both parties
to the transfer of the Common Stock.  The Company shall have the right to
purchase all, and not less than all, of the Common Stock on the terms of the
proposal described in the Transfer Notice (subject, however, to any change in
such terms permitted in the next paragraph) by delivery of a notice of exercise
of the Right of First Refusal within thirty (30) days after the date when the
Transfer Notice was received by the Company.

     If the Company fails to exercise its Right of First Refusal before or
within thirty (30) days after the date when it received the Transfer Notice, you
may, not later than ninety (90) days following receipt of the Transfer Notice by
the Company, conclude a transfer of the Common Stock subject to the Transfer
Notice on the terms and conditions described in the Transfer Notice.  Any
proposed transfer on terms and conditions different from those described in the
Transfer Notice, as well as any subsequent proposed transfer by you, shall again
be subject to the Right of First Refusal and shall require compliance with the
procedure described in the paragraph above.  If the Company exercises its Right
of First Refusal, the parties shall consummate the sale of the Common Stock on
the terms set forth in the Transfer Notice within sixty (60) days after the date
when the Company received the Transfer Notice (or within such longer period as
may have been specified in the Transfer Notice); provided, however, that if the
Transfer Notice provided that payment for the Common Stock was to be made in a
form other than lawful money paid at the time of transfer, the Company shall
have the Option of paying for the Common Stock with lawful money equal to the
present value of the consideration described in the Transfer Notice.

     The Company's Right of First Refusal shall inure to the benefit of its
successors and assigns, shall be freely assignable in whole or in part and shall
be binding upon any transferee of the Common Stock.

     The Company's Right of First Refusal shall terminate if the Company's
common stock is listed on an established stock exchange or is quoted regularly
on the Nasdaq Stock Market.

                                      -5-
<PAGE>

     8.   Transfer of Option.  Prior to your death, only you may exercise your
Option.  You cannot transfer or assign your Option.  For instance, you may not
sell your Option or use it as security for a loan.  If you attempt to do any of
these things, your Option will immediately become invalid.  You may, however,
dispose of your Option in your will.  Regardless of any marital property
settlement agreement, the Company is not obligated to honor a notice of exercise
from your spouse or former spouse, nor is the Company obligated to recognize
such individual's interest in your Option in any other way.

     9.   No Retention Rights.  Your Option does not give you the right to be
retained by the Company (or any subsidiaries) in any capacity.  The Company
reserves the right to terminate your Service at any time and for any reason.

     10.  Stockholder Rights.  You, or your estate or heirs, have no rights as a
stockholder of the Company until a certificate for your Common Stock has been
issued.  No adjustments are made for dividends or other rights if the applicable
record date occurs before your stock certificate is issued, except as described
in the Plan.

     11.  Adjustments to Common Stock.  In the event of a stock split, a stock
dividend or a similar change in the Company's Common Stock, the number of shares
covered by your Option and the exercise price per share may be adjusted pursuant
to the Plan.  Your Option shall be subject to the terms of the agreement of
merger, liquidation or reorganization in the event the Company is subject to
such corporate activity.

     12.  Legends.  All certificates representing the Common Stock issued upon
exercise of your Option shall, where applicable, have endorsed thereon the
following legends:

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH
THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE INITIAL HOLDER
HEREOF.  SUCH AGREEMENT PROVIDES FOR CERTAIN TRANSFER RESTRICTIONS, INCLUDING
RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SECURITIES AND RIGHTS
OF REPURCHASE.  THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A
COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED
PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF
THE COMPANY IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT
REQUIRED."

     13.  Applicable Law.  This Agreement will be interpreted and enforced under
the laws of the State of California.

                                      -6-
<PAGE>

     14.  Incorporation of Plan by Reference. The text of the Plan is
incorporated in this Agreement by reference. Certain capitalized terms used in
this Agreement are defined in the Plan.

     This Agreement and the Plan constitute the entire understanding between you
and the Company regarding your Option.  Any prior agreements, commitments or
negotiations concerning your Option are superseded.

     By signing the cover sheet of this Agreement, you agree to all
     of the terms and conditions described above and in the Plan.
     You also acknowledge that you have read Section 11, "Purchaser's
     Investment Representations" of Exhibit A and that you can and
                                    ---------
     hereby do make the same representations with respect to the grant
     of this Option.

                                      -7-
<PAGE>

                                  Tvia., INC.

                           2000 Stock Incentive Plan

                            STOCK OPTION AGREEMENT

                      (includes exercise before vesting)

     Tvia., Inc., a Delaware corporation (the "Company"), hereby grants an
Option to purchase its Common Stock to the Optionee named below. The terms and
conditions of the Option are set forth in this Stock Option Agreement and in the
Company's 2000 Stock Incentive Plan (the "Plan").

     1.   GRANT INFORMATION

Date of Grant:                          __________, 20___

Name of Optionee:                       ____________________________________

Optionee's Social Security Number:      ________-______-________

Type of Option:                         __ Incentive ("ISO")

                                        __ Nonstatutory ("NSO")

Number of Shares of Common Stock Covered by the Option: ____________

Exercise Price per Share:               $__________

Vesting Start Date:                     __________, 20__

Vesting Schedule:                       Subject to attached Terms and
                                        Conditions, the Option shall vest as to
                                        12/48ths of the shares of Common Stock
                                        on the first anniversary of the Vesting
                                        Start Date and 1/48th of the shares of
                                        Common Stock each full month thereafter.

     By signing below, you agree to all of the terms and conditions
     described in this Stock Option Agreement, including the attached
     Terms and Conditions, Notice of Exercise and Common Stock Purchase
     Agreement and the Plan.

Optionee:_______________________________________________________________________
                                      (Signature)

Company:________________________________________________________________________
                                      (Signature)

Title:__________________________________________________________________________

                                       1
<PAGE>

     THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.

                 Stock Option Agreement - Terms and Conditions

                           2000 Stock Incentive Plan

                                  Tvia., Inc.

                      (includes early exercise provision)

II.  TERMS AND CONDITIONS

     1.   Vesting. Your Option vests during your Service on the dates specified
in the first page of this Stock Option Agreement. Vesting will cease if your
Service terminates for any reason.

     2.   Service; Leaves of Absence. Your Service shall cease when you cease to
be actively employed by, or a consultant or adviser to, the Company (or any
subsidiary) as determined in the sole discretion of the Board. For purposes of
your Option, your Service does not terminate when you go on a bona fide leave of
absence, that was approved by the Company in writing, if the terms of the leave
provide for continued service crediting, or when continued service crediting is
required by applicable law. However, for purposes of determining whether your
Option is entitled to ISO status, your Service will be treated as terminating
ninety (90) days after you went on leave, unless your right to return to active
work is guaranteed by law or by a contract. Your Service terminates in any event
when the approved leave ends, unless you immediately return to active work. The
Company determines which leaves count toward Service, and when your Service
terminates for all purposes under the Plan.

     3.   Term of Option.  Your Option expires on the day before the 10th
anniversary of the Date of Grant (fifth anniversary for a 10% owner), and will
expire earlier if your Service terminates as follows:

          (a)  Regular Termination.  If your Service terminates for any reason
     except death or Disability, then your Option will expire at the close of
     business at Company headquarters on the date three (3) months after your
     termination date.  During that three-month period, you may exercise that
     portion of your Option that was vested on the date that your Service
     terminated.

          (b)  Cause. If your Service terminates for Cause, your Option will
     expire immediately.

                                       2
<PAGE>

     For purposes of this Section, "Cause" means (i) continued failure to
perform substantially his or her duties, which standard of duties shall be
referenced to the standards set by the Company at the date of this Agreement
(other than as a result of sickness, accident or similar cause beyond your
reasonable control) after receipt of a written warning and given thirty (30)
days to improve, (ii) willful and material misconduct, which is demonstrably and
materially injurious to the Company or any of its subsidiaries, including
willful and material failure to perform your duties as an officer or employee of
the Company or any of its subsidiaries or a material breach of this Agreement,
(iii) conviction of or plea of nolo contendere to a felony; (iv) conviction of
an act of fraud against, or the misappropriation of property belonging to the
Company or any of its subsidiaries, or any employee, customer, or supplier of
the Company or any of its subsidiaries.

          (c)  Death.  If you die while in Service, then your Option will expire
     at the close of business at Company headquarters on the date six (6) months
     after the date of death.  During that six-month period, your estate or
     heirs may exercise that portion of your Option that was vested on the date
     of death.

          (d)  Disability.  If your Service terminates because of your
     Disability, then your Option will expire at the close of business at
     Company headquarters on the date six (6) months after your termination
     date.  (However, if your Disability is not expected to result in death or
     to last for a continuous period of at least twelve (12) months, your Option
     will be eligible for ISO tax treatment only if it is exercised within three
     (3) months following the termination of your Service.)  During that six-
     month period, you may exercise that portion of your Option that was vested
     on the date of your Disability.

          "Disability" means that you are unable to engage in any substantial
     gainful activity by reason of any medically determinable physical or mental
     impairment.

     4.   Exercise of Option.

          (a)  Legal Restrictions. By signing this Agreement, you agree not to
     exercise this Option or sell any Common Stock acquired upon exercise of
     this Option at a time when applicable laws, regulations or Company or
     underwriter trading policies prohibit exercise or sale.  In particular, the
     Company shall have the right to designate one or more periods of time, each
     of which shall not exceed 180 days in length, during which this Option
     shall not be exercisable if the Company determines (in its sole discretion)
     that such limitation on exercise could in any way facilitate a lessening of
     any restriction on transfer pursuant to the Securities Act or any state
     securities laws with respect to any issuance of securities by the Company,
     facilitate the registration or qualification of any securities by the
     Company under the Securities Act or any state securities laws, or
     facilitate the perfection of any exemption from the registration or
     qualification requirements of the Securities Act or any applicable state
     securities laws for the issuance or transfer of any securities.  Such
     limitation on exercise shall not alter the vesting schedule set forth in
     this Agreement other than to limit the periods during which this Option
     shall be exercisable.

                                       3
<PAGE>

          If the sale of Common Stock under the Plan is not registered under the
     Securities Act of 1933, as amended (the "Securities Act"), but an exemption
     is available which requires an investment or other representation, you
     shall represent and agree at the time of exercise that the Common Stock
     being acquired upon exercise of this Option are being acquired for
     investment, and not with a view to the sale or distribution thereof, and
     shall make such other representations as are deemed necessary or
     appropriate by the Company and its counsel.

          (b)  Method of Exercise. To exercise your Option, you must execute the
     Notice of Exercise and Common Stock Purchase Agreement, attached hereto as
     Exhibit A. You must submit this form, together with full payment, at the
     ---------
     address given on the form.  Your exercise will be effective when it is
     received by the Company.  If someone else wants to exercise your Option
     after your death, that person must prove to the Company's satisfaction that
     he or she is entitled to do so.

          (c) Form of Payment.  When you submit Exhibit A, you must include
     payment of the aggregate Exercise Price for the Common Stock you are
     purchasing.  Payment may be made in one (or a combination) of the following
     forms.

          .    Your personal check, a cashier's check or a money order.

          .    Shares of Common Stock which you have owned for six months and
               which are surrendered to the Company. The value of such Common
               Stock, determined as of the effective date of the Option
               exercise, will be applied to the Exercise Price.

          .    To the extent that a public market for Common Stock exists as
               determined by the Company, by delivery (on a form approved by the
               Company) of an irrevocable direction to a securities broker to
               sell Common Stock and to deliver all or part of the sale proceeds
               to the Company in payment of the aggregate Exercise Price.

          .    Any other form of legal consideration approved by the Board.

          (d)  Withholding Taxes.  You will not be allowed to exercise your
     Option unless you make acceptable arrangements to pay any withholding or
     other taxes that may be due as a result of the Option exercise or the sale
     of Common Stock acquired upon exercise of your Option.

     5.   Exercise of Option Before Vesting ("Early Exercise").  You may
exercise your Option before it is fully vested, and the vesting provisions set
forth herein will apply to the Common Stock you acquire by exercising your
Option.  If you exercise this Option before vesting, you should consider making
an election under Section 83(b) of the Internal Revenue Code of 1986, as amended
(the "83(b) Election"), a form of which is attached as Exhibit E.  Please see
the Tax Summary attached as Exhibit F.  The 83(b) Election must be filed within
thirty (30) days after the date you exercise all or any portion of your Option
in which you are not vested.

                                       4
<PAGE>

     6.   Resale Restrictions/Market Stand-Off.  In connection with any
underwritten public offering by the Company of its equity securities pursuant to
an effective registration statement filed under the Securities Act, including
the Company's initial public offering, you shall not, directly or indirectly,
engage in any transaction prohibited by the underwriter, nor shall you sell,
make any short sale of, contract to sell, transfer the economic risk of
ownership in, loan, hypothecate, pledge, grant any Option for the purchase of,
or otherwise dispose or transfer for value or agree to engage in any of the
foregoing transactions with respect to any Common Stock without the prior
written consent of the Company or its underwriters, for such period of time
after the effective date of such registration statement as may be requested by
the Company or such underwriters.  Such period of time shall not exceed one
hundred eighty (180) days and may be required by the underwriter as a market
condition of the offering.  By signing this Agreement you agree to execute and
deliver such other agreements as may be reasonably requested by the Company or
the underwriter which are consistent with the foregoing or which are necessary
to give further effect thereto.  To enforce the provisions of this paragraph,
the Company may impose stop-transfer instructions with respect to the Common
Stock until the end of the applicable stand-off period.

     7.   Right of First Refusal.  If you propose to sell, pledge or otherwise
transfer to a third party any Common Stock acquired under this Stock Option
Agreement, or any interest in such Common Stock, the Company shall have the
"Right of First Refusal" with respect to all (and not less than all) of such
Common Stock.  If you desire to transfer Common Stock acquired under this Stock
Option Agreement, you must give a written "Transfer Notice" to the Company
describing fully the proposed transfer, including the number of shares proposed
to be transferred, the proposed transfer price and the name and address of the
proposed transferee.  The Transfer Notice shall be signed both by you and by the
proposed new transferee and must constitute a binding commitment of both parties
to the transfer of the Common Stock.  The Company shall have the right to
purchase all, and not less than all, of the Common Stock on the terms of the
proposal described in the Transfer Notice (subject, however, to any change in
such terms permitted in the next paragraph) by delivery of a notice of exercise
of the Right of First Refusal within thirty (30) days after the date when the
Transfer Notice was received by the Company.

     If the Company fails to exercise its Right of First Refusal before or
within thirty (30) days after the date when it received the Transfer Notice, you
may, not later than ninety (90) days following receipt of the Transfer Notice by
the Company, conclude a transfer of the Common Stock subject to the Transfer
Notice on the terms and conditions described in the Transfer Notice.  Any
proposed transfer on terms and conditions different from those described in the
Transfer Notice, as well as any subsequent proposed transfer by you, shall again
be subject to the Right of First Refusal and shall require compliance with the
procedure described in the paragraph above.  If the Company exercises its Right
of First Refusal, the parties shall consummate the sale of the Common Stock on
the terms set forth in the Transfer Notice within sixty (60) days after the date
when the Company received the Transfer Notice (or within such longer period as
may have been specified in the Transfer Notice); provided, however, that if the
Transfer Notice provided that payment for the Common Stock was to be made in a
form other than lawful money paid at the time of transfer, the Company shall
have the Option of paying for the Common Stock with lawful money equal to the
present value of the consideration described in the Transfer Notice.

                                       5
<PAGE>

     The Company's Right of First Refusal shall inure to the benefit of its
successors and assigns, shall be freely assignable in whole or in part and shall
be binding upon any transferee of the Common Stock.

     The Company's Right of First Refusal shall terminate if the Company's
common stock is listed on an established stock exchange or is quoted regularly
on the Nasdaq Stock Market.

     8.   Transfer of Option. Prior to your death, only you may exercise your
Option. You cannot transfer or assign your Option. For instance, you may not
sell your Option or use it as security for a loan. If you attempt to do any of
these things, your Option will immediately become invalid. You may, however,
dispose of your Option in your will. Regardless of any marital property
settlement agreement, the Company is not obligated to honor a notice of exercise
from your spouse or former spouse, nor is the Company obligated to recognize
such individual's interest in your Option in any other way.

     9.   No Retention Rights. Your Option does not give you the right to be
retained by the Company (or any subsidiaries) in any capacity. The Company
reserves the right to terminate your Service at any time and for any reason.

     10.  Stockholder Rights. You, or your estate or heirs, have no rights as a
stockholder of the Company until a certificate for your Common Stock has been
issued. No adjustments are made for dividends or other rights if the applicable
record date occurs before your stock certificate is issued, except as described
in the Plan.

     11.  Adjustments to Common Stock.  In the event of a stock split, a stock
dividend or a similar change in the Company's Common Stock, the number of shares
covered by your Option and the exercise price per share may be adjusted pursuant
to the Plan.  Your Option shall be subject to the terms of the agreement of
merger, liquidation or reorganization in the event the Company is subject to
such corporate activity.

     12.  Legends.  All certificates representing the Common Stock issued upon
exercise of your Option shall, where applicable, have endorsed thereon the
following legends:

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
     TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
     COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE
     COMPANY AND THE INITIAL HOLDER HEREOF. SUCH AGREEMENT PROVIDES FOR
     CERTAIN TRANSFER RESTRICTIONS, INCLUDING RIGHTS OF FIRST REFUSAL
     UPON AN ATTEMPTED TRANSFER OF THE SECURITIES AND RIGHTS OF
     REPURCHASE. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST
     FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
     REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS
     AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED
     AND SOLD ONLY IF REGISTERED AND QUALIFIED

                                       6
<PAGE>

     PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES
     LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL
     SATISFACTORY TO THE COMPANY THAT REGISTRATION AND QUALIFICATION
     UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT REQUIRED."

     13.  Applicable Law.  This Agreement will be interpreted and enforced under
the laws of the State of California.

     14.  Incorporation of Plan by Reference.  The text of the Plan is
incorporated in this Agreement by reference.  Certain capitalized terms used in
this Agreement are defined in the Plan.

     This Agreement and the Plan constitute the entire understanding between you
and the Company regarding your Option.  Any prior agreements, commitments or
negotiations concerning your Option are superseded.

     By signing the cover sheet of this Agreement, you agree to all of
     the terms and conditions described above and in the Plan. You also
     acknowledge that you have read Section 11, "Purchaser's Investment
     Representations" of Exhibit A and that you can and hereby do make the
                         ---------
     same representations with respect to the grant of this Option.

                                       7
<PAGE>

                                                                       EXHIBIT A
                                                           (to be attached to an
                                                               option agreement,
                                                              either ISO or NSO;
                                               allows exercise prior to vesting)

                                  Tvia, Inc.
                                  ----------

            Notice of Exercise and Common Stock Purchase Agreement
            ------------------------------------------------------

     THIS AGREEMENT is dated as of ___________, ____, between Tvia, Inc. (the
"Company"), and _________________ ("Purchaser").

                             W I T N E S S E T H:

     WHEREAS, the Company and Purchaser are parties to that certain _______
Incentive __________ Nonstatutory Stock Option Agreement dated as of
___________, ____ (the "Option Agreement") pursuant to which the Purchaser has
the right to purchase up to ______ shares of the Company's common stock (the
"Option Shares"); and

     WHEREAS, the Option is exercisable with respect to certain of the Option
Shares as of the date hereof; and

     WHEREAS, pursuant to the Option Agreement, Purchaser desires to purchase
shares of the Company as herein described, on the terms and conditions set forth
in this Agreement, the Option Agreement and the Tvia, Inc. 2000 Stock Incentive
Plan (the "Plan"). Certain capitalized terms used in this Agreement are defined
in the Plan.

     NOW, THEREFORE, it is agreed between the parties as follows:

SECTION 1: PURCHASE OF SHARES.
------------------------------

     (i)    Pursuant to the terms of the Option Agreement, Purchaser hereby
agrees to purchase from the Company and the Company agrees to sell and issue to
Purchaser _________ shares of the Company's common stock (the "Common Stock")
for the Exercise Price per share specified in the Option Agreement payable by
personal check, cashier's check or money order, if permitted by the Option
Agreement, as follows: _______________________________. Payment shall be
delivered at the Closing, as such term is hereinafter defined.

     (ii)   The closing hereunder (the "Closing") shall occur at the offices of
the Company on __________, ____, or such other time and place as may be
designated by the Company (the "Closing Date").

                                      A-1
<PAGE>

SECTION 2:     REPURCHASE OPTION
--------------------------------

     All unvested shares of the Common Stock purchased by the Purchaser pursuant
to this Agreement (sometimes referred to as the "Repurchase Option Stock") shall
be subject to the following option (the "Repurchase Option"):

     (i)    In the event the Purchaser terminates service with the Company
("Service") for any reason, with or without cause, the Company may exercise the
Repurchase Option.

     (ii)   Purchaser understands that the Common Stock is being sold in order
to induce Purchaser to become and/or remain associated with the Company and to
work diligently for the success of the Company and that the Repurchase Option
Stock will continue to vest in accordance with the schedule set forth in the
Option Agreement. Accordingly, the Company shall have the right at any time
within 90 days after the termination of Service to purchase from the Purchaser
all shares of Common Stock purchased hereunder which have not vested in
accordance with the terms of such vesting schedule in the Option Agreement. The
purchase price for such unvested shares of Repurchase Option Stock shall be the
Exercise Price per share paid by Purchaser for such shares pursuant to the
Option (the "Option Price"). The purchase price shall be paid by certified or
cashier's check or by cancellation of any indebtedness of Purchaser to the
Company.

     (iii)  Nothing in this Agreement shall be construed as a right by Purchaser
to be retained by the Company, or a parent or subsidiary of Company in any
capacity.  The Company reserves the right to terminate Purchaser's Service at
any time and for any reason.

SECTION 3:     EXERCISE OF REPURCHASE OPTION
--------------------------------------------

     The Repurchase Option shall be exercised by written notice signed by an
officer of the Company and delivered or mailed as provided in Section 16 of this
Agreement and to the Escrow Agent as provided in Section 16 of the Joint Escrow
Instructions attached as Exhibit B to the Option Agreement.
                         ---------

SECTION 4:     WAIVER, ASSIGNMENT, EXPIRATION OF REPURCHASE OPTION
------------------------------------------------------------------

     If the Company waives or fails to exercise the Repurchase Option as to all
of the shares subject thereto, the Company may, in the discretion of its Board
of Directors, assign the Repurchase Option to any other holder or holders of
preferred or common stock of the Company in such proportions as such Board of
Directors may determine.  In the event of such an assignment, the assignee shall
pay to the Company in cash an amount equal to the fair market value of the
Repurchase Option.  The Company shall promptly, upon expiration of the 90-day
period referred to in Section 2 above, notify Purchaser of the number of shares
subject to the Repurchase Option assigned to such stockholders and shall notify
both the Purchaser and the assignees of the time, place and date for settlement
of such purchase, which must be made within 90 days from the date of cessation
of continuous Service.  In the event that the Company and/or such assignees do
not elect to exercise the Repurchase Option as to all or part of the shares
subject to it, the Repurchase Option shall expire as to all shares which the
Company and/or such assignees have not elected to purchase.

                                      A-2
<PAGE>

SECTION 5:     ESCROW OF SHARES
-------------------------------

     (i)    As security for Purchaser's faithful performance of the terms of
this Agreement and to ensure the availability for delivery of Purchaser's shares
upon exercise of the Repurchase Option herein provided for, Purchaser agrees at
the Closing hereunder, to deliver to and deposit with the Escrow Agent named in
the Joint Escrow Instructions attached to the Option Agreement as Exhibit B, the
                                                                  ---------
certificate or certificates evidencing the Option Stock subject to the
Repurchase Option and two Assignments Separate from Certificate duly executed
(with date and number of shares in blank) in the form attached to the Option
Agreement as Exhibit D. Such documents are to be held by the Escrow Agent and
             ---------
delivered by the Escrow Agent pursuant to the Joint Escrow Instructions, which
instructions shall also be delivered to the Escrow Agent at the Closing
hereunder.

     (ii)   Within 30 days after the last day of each successive completed
calendar quarter after the Closing Date, if Purchaser so requests, the Escrow
Agent will deliver to Purchaser certificates representing so many shares of
Common Stock as are no longer subject to the Repurchase Option (less such shares
as have been previously delivered). Ninety days after cessation of Purchaser's
Service with the Company the Company will direct the Escrow Agent to deliver to
Purchaser a certificate or certificates representing the number of shares not
repurchased by the Company or its assignees pursuant to exercise of the
Repurchase Option (less such shares as have been previously delivered).

SECTION 6:     ADJUSTMENT OF SHARES
-----------------------------------

     Subject to the provisions of the Certificate of Incorporation of the
Company, if, from time to time during the term of the Repurchase Option:

     (i)    there is any stock dividend or liquidating dividend of cash and/or
property, stock split or other change in the character or amount of any of the
outstanding securities of the Company, or

     (ii)   there is any consolidation, merger or sale of all or substantially
all, of the assets of the Company,

then, in such event, any and all new, substituted or additional securities or
other property to which Purchaser is entitled by reason of Purchaser's ownership
of the shares shall be immediately subject to such Repurchase Option with the
same force and effect as the shares of Option Stock from time to time subject to
the Repurchase Option.  While the total Option Price shall remain the same after
each such event, the Option Price per share of Option Stock upon exercise of the
Repurchase Option shall be appropriately and equitably adjusted as determined by
the Board of Directors of the Company.

SECTION 7:     THE COMPANY'S RIGHT OF FIRST REFUSAL.
----------------------------------------------------

     Before any shares of Common Stock registered in the name of Purchaser and
not subject to the Repurchase Option may be sold or transferred, such shares
shall first be offered to the Company as set forth in the Option Agreement.

                                      A-3
<PAGE>

SECTION 8:     PURCHASER'S RIGHTS AFTER EXERCISE OF REPURCHASE
--------------------------------------------------------------
OPTION OR RIGHT OF FIRST REFUSAL.
---------------------------------

     If the Company makes available, at the time and place and in the amount and
form provided in this Agreement, the consideration for the Common Stock to be
repurchased in accordance with the provisions of Sections 2 and 7 of this
Agreement, then from and after such time the person from whom such shares are to
be repurchased shall no longer have any rights as a holder of such shares (other
than the right to receive payment of such consideration in accordance with this
Agreement).  Such shares shall be deemed to have been repurchased in accordance
with the applicable provisions hereof, whether or not the certificate(s)
therefor have been delivered as required by this Agreement.

SECTION 9:     TRANSFER BY PURCHASER TO CERTAIN TRUSTS.
-------------------------------------------------------

     Purchaser shall have the right to transfer all or any portion of
Purchaser's interest in the shares issued under this Agreement which have been
delivered to Purchaser under the provisions of Section 5 of this Agreement, to a
trust established by Purchaser for the benefit of Purchaser, Purchaser's spouse
or Purchaser's children, without being subject to the provisions of Section 7
hereof, provided that the trustee on behalf of the trust shall agree in writing
to be bound by the terms and conditions of this Agreement.  The transferee shall
execute a copy of Exhibit C attached to the Option Agreement and file the same
                  ---------
with the Secretary of the Company.

SECTION 10:    LEGEND OF SHARES.
--------------------------------

     All certificates representing the Common Stock purchased under this
Agreement shall, where applicable, have endorsed thereon the legends set forth
in the Option Agreement and any other legends required by applicable securities
laws.

SECTION 11:    PURCHASER'S INVESTMENT REPRESENTATIONS.
------------------------------------------------------

     (i)    This Agreement is made with Purchaser in reliance upon Purchaser's
representation to the Company, which by Purchaser's acceptance hereof Purchaser
confirms, that the Common Stock which Purchaser will receive will be acquired
with Purchaser's own funds for investment for an indefinite period for
Purchaser's own account, not as a nominee or agent, and not with a view to the
sale or distribution of any part thereof, and that Purchaser has no present
intention of selling, granting participation in, or otherwise distributing the
same, but subject, nevertheless, to any requirement of law that the disposition
of Purchaser's property shall at all times be within Purchaser's control.  By
executing this Agreement, Purchaser further represents that Purchaser does not
have any contract, understanding or agreement with any person to sell, transfer,
or grant participation, to such person or to any third person, with respect to
any of the Common Stock.

     (ii)   Purchaser understands that the Common Stock will not be registered
or qualified under federal or state securities laws on the ground that the sale
provided for in this Agreement is exempt from registration or qualification
under federal or state securities laws and that the Company's reliance on such
exemption is predicated on Purchaser's representations set forth herein.

                                      A-4
<PAGE>

     (iii)  Purchaser agrees that in no event will Purchaser make a disposition
of any of the Common Stock (including a disposition under Section 9 of this
Agreement), unless and until (i) Purchaser shall have notified the Company of
the proposed disposition and shall have furnished the Company with a statement
of the circumstances surrounding the proposed disposition and (ii) Purchaser
shall have furnished the Company with an opinion of counsel satisfactory to the
Company to the effect that (A) such disposition will not require registration or
qualification of such Common Stock under federal or state securities laws or (B)
appropriate action necessary for compliance with the federal or state securities
laws has been taken or (iii) the Company shall have waived, expressly and in
writing, its rights under clauses (i) and (ii) of this section.

     (iv)   With respect to a transaction occurring prior to such date as the
Plan and Common Stock thereunder are covered by a valid Form S-8 or similar
federal registration statement, this subsection shall apply unless the
transaction is covered by the exemption in California Corporations Code
(S)25102(o) or a similar broad based exemption. In connection with the
investment representations made herein, Purchaser represents that Purchaser is
able to fend for himself or herself in the transactions contemplated by this
Agreement, has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of Purchaser's investment,
has the ability to bear the economic risks of Purchaser's investment and has
been furnished with and has had access to such information as would be made
available in the form of a registration statement together with such additional
information as is necessary to verify the accuracy of the information supplied
and to have all questions answered by the Company.

     (v)    Purchaser understands that if the Company does not register with the
Securities and Exchange Commission pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or if a registration
statement covering the Common Stock (or a filing pursuant to the exemption from
registration under Regulation A of the Securities Act of 1933) under the
Securities Act of 1933 is not in effect when Purchaser desires to sell the
Common Stock, Purchaser may be required to hold the Common Stock for an
indeterminate period.  Purchaser also acknowledges that Purchaser understands
that any sale of the Common Stock which might be made by Purchaser in reliance
upon Rule 144 under the Securities Act of 1933 may be made only in limited
amounts in accordance with the terms and conditions of that Rule.

SECTION 12:    ASSISTANCE TO PURCHASER UNDER RULE 144.
------------------------------------------------------

     The Company covenants and agrees that (a) at all times after it first
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, it will use its best efforts to comply with the current public
information requirements of Rule 144(c)(1) under the Securities Act of 1933, and
that if prior to becoming subject to such reporting requirements an over-the-
counter market develops for the Common Stock, it will make publicly available
the information required by Rule 144(c)(2); (b) it will furnish Purchaser, upon
request, with all information required for the preparation and filing of Form
144; and (c) it will on a timely basis use its best efforts to file all reports
required to be filed and make all disclosures, including disclosures of
materially adverse information, required to permit Purchaser to make the
required representations in Form 144.

                                      A-5
<PAGE>

SECTION 13:    NO DUTY TO TRANSFER IN VIOLATION HEREUNDER.
----------------------------------------------------------

     The Company shall not be required (a) to transfer on its books any shares
of Common Stock of the Company which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement or (b) to treat
as owner of such shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such shares shall have been so transferred.

SECTION 14:    RIGHTS OF PURCHASER.
-----------------------------------

     Except as otherwise provided herein, Purchaser shall, during the term of
this Agreement, exercise all rights and privileges of a stockholder of the
Company with respect to the Common Stock.

SECTION 15:    OTHER NECESSARY ACTIONS.
---------------------------------------

     The parties agree to execute such further instruments and to take such
further action as may reasonably be necessary to carry out the intent of this
Agreement.

SECTION 16:    NOTICE.
----------------------

     Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon the earliest of personal delivery,
receipt or the third full day following deposit in the United States Post Office
with postage and fees prepaid, addressed to the other party hereto at the
address last known or at such other address as such party may designate by 10
days' advance written notice to the other party hereto.

SECTION 17:    SUCCESSORS AND ASSIGNS.
-------------------------------------

     This Agreement shall inure to the benefit of the successors and assigns of
the Company and, subject to the restrictions on transfer herein set forth, be
binding upon Purchaser and Purchaser's heirs, executors, administrators,
successors and assigns.  The failure of the Company in any instance to exercise
the Repurchase Option or rights of first offer described herein shall not
constitute a waiver of any other Repurchase Option or right of first offer that
may subsequently arise under the provisions of this Agreement.  No waiver of any
breach or condition of this Agreement shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of a like or different nature.

SECTION 18:    APPLICABLE LAW.
------------------------------

     This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California, as such laws are applied to contracts entered
into and performed in such state.

SECTION 19:    NO STATE QUALIFICATION.
--------------------------------------

     THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT
BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA
AND THE ISSUANCE OF SUCH

                                      A-6
<PAGE>

SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.

SECTION 20:    NO ORAL MODIFICATION.
------------------------------------

     No modification of this Agreement shall be valid unless made in writing and
signed by the parties hereto.

SECTION 21:    ENTIRE AGREEMENT.
--------------------------------

     This Agreement and the Option Agreement constitute the entire complete and
final agreement between the parties hereto with regard to the subject matter
hereof.

     IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first above written.

TVIA, INC.                          PURCHASER

By _________________________        _____________________________

                                      A-7
<PAGE>

                                   EXHIBIT B
                                   ---------

                           Joint Escrow Instructions
                           -------------------------

                                _________, _____

Secretary
Tvia, Inc.

Dear Sir or Madam:

     As Escrow Agent for both Tvia, Inc. (the "Company"), and
___________________ ("Purchaser"), you are hereby authorized and directed to
hold the documents delivered to you pursuant to the terms of that certain Common
Stock Purchase Agreement (the "Agreement") of even date herewith, to which a
copy of these Joint Escrow Instructions is attached as Exhibit B to a certain
                                                       ---------
Stock Option dated ________ ("Option Agreement"), in accordance with the
following instructions:

     1.   In the event the Company shall elect to exercise the Repurchase Option
set forth in the Agreement, the Company shall give to Purchaser and you a
written notice as provided in the Agreement.  Purchaser and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice, including prompt delivery of stock certificates.

     2.   At the closing, you are directed (a) to date the stock assignment form
or forms necessary for the transfer in question, (b) to fill in the number of
shares being transferred, and (c) to deliver same, together with the certificate
or certificates evidencing the shares to be transferred, to the Company against
the simultaneous delivery to you of the purchase price (by certified or bank
cashier's check) for the number of shares being purchased pursuant to the
exercise of the Repurchase Option.

     3.   Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares to be held by you hereunder and any additions and
substitutions to said shares as defined in the Agreement.  Purchaser does hereby
irrevocably constitute and appoint you as Purchaser's attorney-in-fact and agent
for the term of this escrow to execute with respect to such securities all
documents necessary or appropriate to make such securities negotiable and to
complete any transaction herein contemplated.  Subject to the provisions of this
Section 3, Purchaser shall exercise all rights and privileges, including but not
limited to, the right to vote and to receive dividends (if any), of a
stockholder of the Company while the shares are held by you.

     4.   In accordance with the terms of Section 5 of the Agreement, you may
from time to time deliver to Purchaser a certificate or certificates
representing so many shares as are no longer subject to the Repurchase Option.

     5.   This escrow shall terminate upon the release of all shares held under
the terms and provisions hereof.

                                      B-1
<PAGE>

     6.   If at the time of termination of this escrow you should have in your
possession any documents, securities or other property belonging to Purchaser,
you shall deliver all of same to Purchaser and shall be discharged from all
further obligations hereunder.

     7.   Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.

     8.   You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties.
You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact of Purchaser while acting in
good faith and in the exercise of your own good judgment, and any act done or
omitted by you pursuant to the advice of your own attorneys shall be conclusive
evidence of such good faith.

     9.   You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court.
In case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to any of the parties hereto or to any other person,
firm or corporation by reason of such compliance, notwithstanding any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.

     10.  You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

     11.  You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

     12.  You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder and may rely upon the advice of such counsel.

     13.  Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Secretary of the Company or if you shall resign by written
notice of each party.  In the event of any such termination, the Company shall
appoint any officer of the Company as successor Escrow Agent.

     14.  If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.

     15.  It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by mutual written agreement of

                                      B-2
<PAGE>

the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

     16.  Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled.

     17.  By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.

     18.  This instrument shall be governed by and construed in accordance with
the laws of the State of California.

     19.  This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.

                              Very truly yours,

                              Tvia, Inc.

                              By ___________________________

ESCROW AGENT:                 PURCHASER:

________________________      ______________________________

                                      B-3
<PAGE>

                                   EXHIBIT C
                                   ---------

                     ASSIGNMENT SEPARATE FROM CERTIFICATE
                     ------------------------------------

     FOR VALUE RECEIVED _________________________________ hereby sells, assigns
and transfers unto _________________________ ________________________ (________)
shares of the Common Stock of Tvia, Inc. (the "Company"), standing in __________
name on the books of the Company represented by Certificate No. ___________
herewith and hereby irrevocably constitutes and appoints ________________
Attorney to transfer said stock on the books of the Company with full power of
substitution in the premises.

     Dated:  ____________________, ____.

                                              __________________________________
                                                        Print Name

                                              __________________________________
                                                        (Signature)

                        Spousal Consent (if applicable)
                        -------------------------------

___________________ (Purchaser's spouse) indicates by the execution of this
Assignment his or her consent to be bound by the terms herein as to his or her
interests, whether as community property or otherwise, if any, in the Shares.

                                              __________________________________
                                              Signature

INSTRUCTIONS:  PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE.
------------
THE PURPOSE OF THIS ASSIGNMENT IS TO ENABLE THE COMPANY TO EXERCISE ITS
"REPURCHASE OPTION" SET FORTH IN THE STOCK PURCHASE AGREEMENT WITHOUT REQUIRING
ADDITIONAL SIGNATURES ON THE PART OF PURCHASER

                                      C-1
<PAGE>

                                   EXHIBIT D
                                   ---------

                  Acknowledgment of and Agreement to be Bound
                  -------------------------------------------

       By the Notice of Exercise and Common Stock Purchase Agreement of
       ----------------------------------------------------------------

                                  Tvia, Inc.
                                  ----------

     The undersigned, as transferee of shares of Tvia, Inc., hereby acknowledges
that he or she has read and reviewed the terms of the Notice of Exercise and
Common Stock Purchase Agreement of Tvia, Inc. and hereby agrees to be bound by
the terms and conditions thereof, as if the undersigned had executed said
Agreement as an original party thereto.

     Dated:  ____________________, ____.

                                           By ___________________________

                                      D-1
<PAGE>

                                   EXHIBIT E
                                   ---------

                        ELECTION UNDER SECTION 83(b) OF
                        -------------------------------
                           THE INTERNAL REVENUE CODE
                           -------------------------

This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.

     (i)      The taxpayer who performed the services is:

              Name:    _____________________________________

              Address: _____________________________________

                       _____________________________________

              Social Security No.: _________________________

     (ii)     The property with respect to which the election is being made is
              _____________ shares of common stock of Tvia, Inc., a Delaware
              corporation (the "Company").

     (iii)    The property was issued on _______________, 20____.

     (iv)     The taxable year in which the election is being made is the
              calendar year 20____.

     (v)      The property is subject to a repurchase right pursuant to which
              the issuer has the right to acquire the property at the original
              purchase price if for any reason taxpayer's service with the
              issuer is terminated. The issuer's repurchase right lapses in a
              series of annual and monthly installments over a ____ (__) year
              period ending on ___________.

     (vi)     The Fair Market Value of the property at the time of transfer
              (determined without regard to any restriction other than a
              restriction which by its terms will never lapse) is _________ per
              share.

     (vii)    The amount paid for such property is $_____________.

     (viii)   A copy of this statement was furnished to the Company for whom
              taxpayer rendered the service underlying the transfer of property.

     (ix)     This statement is executed as of ___________________, 20_____.

___________________________________     ________________________________________
Spouse (if any)     Taxpayer

This form must be filed with the Internal Revenue Service Center with which
taxpayer files his/her Federal income tax return.  The filing must be made
within thirty (30) days after the date of transfer of the property referenced
above.

Note:  The Special Protective Election form attached below should only be
included with the 83(b) Election if you are exercising an incentive stock
Option.

                                      E-1
<PAGE>

             SPECIAL PROTECTIVE ELECTION PURSUANT TO SECTION 83(b)
             -----------------------------------------------------
        OF THE INTERNAL REVENUE CODE WITH RESPECT TO PROPERTY ACQUIRED
        --------------------------------------------------------------
                  UPON EXERCISE OF AN INCENTIVE STOCK OPTION
                  ------------------------------------------

The property described in the above Section 83(b) election is comprised of
shares of common stock acquired pursuant to the exercise of an incentive stock
Option under Section 422 of the Code.  Accordingly, it is the intent of the
Taxpayer to utilize this election to achieve the following tax results:

1.   The purpose of this election is to have the alternative minimum taxable
income attributable to the purchased shares measured by the amount by which the
fair market value of such shares at the time of their transfer to the Taxpayer
exceeds the purchase price paid for the shares.  In the absence of this
election, such alternative minimum taxable income would be measured by the
spread between the fair market value of the purchased shares and the purchase
price which exists on the various lapse dates in effect for the forfeiture
restrictions applicable to such shares.  The election is to be effective to the
full extent permitted under the Internal Revenue Code.

2.   Section 421(a)(1) of the Code expressly excludes from income any excess of
the fair market value of the purchased shares over the amount paid for such
shares.  Accordingly, this election is also intended to be effective in the
event there is a "disqualifying disposition" of the shares, within the meaning
of Section 421(b) of the Code, which would otherwise render the provisions of
Section 83(a) of the Code applicable at that time.  Consequently, the Taxpayer
hereby elects to have the amount of disqualifying disposition income measured by
the excess of the fair market value of the purchased shares on the date of
transfer to the Taxpayer over the amount paid for such shares.  Since Section
421(a) presently applies to the shares which are the subject of this Section
83(b) election, no taxable income is actually recognized for regular tax
purposes at this time, and no income taxes are payable, by the Taxpayer as a
result of this election.

                                      E-2
<PAGE>

                                   EXHIBIT F
                                   ---------

                                  TAX SUMMARY
                                  -----------

                            EXERCISE BEFORE VESTING
                            -----------------------

If your Options are intended to be incentive stock Options, they qualify for
incentive stock Option ("ISO") treatment under the Internal Revenue Code
("Code").  Without such special tax treatment, they would be treated as regular,
or nonqualified stock Options ("NSOs").

Typically, under an NSO you are taxed at ordinary income tax rates at the time
you exercise an Option.  The amount taxed is equal to the difference between the
fair market value at exercise and the exercise price.  Subsequent appreciation,
if any, is taxed as a capital gain when you actually sell the shares.  To be
eligible for long-term capital gain treatment with a maximum rate of 20%,
             ---------
generally you must hold the shares at least one year after exercise.  You should
consult with a tax adviser on the effect of the tax laws.

With an ISO, however, you are not taxed on exercise.  Rather, if you meet the
required holding periods specially applicable to ISOs, you will not be taxed
until you actually sell the shares.  Another advantage to ISO treatment is that
at the time of sale of the stock the spread at exercise is taxed as a long term
capital gain rather than ordinary income.  However, the spread is considered as
a "preference" item in the year of exercise in computing your alternative
minimum tax.

The ISO holding period requirement is that you must not dispose of the shares
within two years of the grant date nor within one year of exercise.  If you do
not meet the ISO holding period requirement, the spread between fair market
value at exercise and the exercise price will be taxed as ordinary income in the
year of the disposition.

One way to avoid the inclusion of the spread in the alternative minimum tax
calculation is to exercise the Option at grant, pay the exercise price and make
an "83(b)" election within 30 days.

Immediate exercise also begins the various holding requirement for long-term
capital gain treatment and the one-year requirement that applies after the
                       ---
exercise of an ISO.  As noted above, the general rule is if you dispose of the
shares before the ISO holding period is met, you recognize the spread at
exercise as ordinary income at the time of the disposition.  However, if by
early exercise you have held the shares at least one year, your gain on
disposition will be taxed at long-term capital gains rates.

Assume you are granted an Option to exercise four shares at $.10 per share.  The
underlying shares vest annually over a four-year period.  At the end of year
one, the fair market value of a share is $.20.

Assume that after four years all shares become vested and are worth $10 per
share and you have not yet exercised the Option.  Then, in year 5, when the fair
market value of the stock is $10.10, you exercise all four shares.  Because the
Option is an incentive stock Option, you are not taxed at exercise.

                                      F-1
<PAGE>

The $10 spread will show up as an alternative minimum tax preference item with
potentially substantial adverse tax consequences to you in year 5.  By
purchasing at grant and making an 83(b) election, you avoid having to include
the spread as a minimum tax preference item.

But what if you do not qualify for ISO treatment?  That is, assume also that you
then sell the shares in year 5 when the value is $10.10.  Because you have not
met the part of the holding period requirement which prohibits disposition
within one year of exercise, you will recognize $10 per share in ordinary income
                                                              ------------------
(but you will not have to include the spread as a preference item).  However, if
you had previously exercised when the Option was granted and when the value was
$.10 and then made an 83(b) election within 30 days, you recognize no ordinary
income either at exercise or in year 5.  Rather, when you sell for $10.10 in
year 5 your $10 gain would be taxed entirely at favorable long-term capital
gains (assuming a favorable differential in ordinary income and capital gains
rates is still in effect at disposition).

To exercise the Options you do of course have to pay the exercise price.  If
your service with the Company terminates before the shares are vested, the
Company may repurchase the shares at your original exercise price.

If your Options are not ISOs but are nonqualified stock Options (NSOs), exercise
prior to vesting will accomplish two things: (1) it will start the capital gains
holding period sooner and (2) it will prevent you from being taxed (at ordinary
income tax rates) on a later date if you decide to exercise and if the fair
market value of the stock has increased from the date of grant.  Of course, when
you sell the shares, the gain will be taxed according to how long you have held
the shares.

This Tax Summary is general in nature and should not be relied upon by any
person in deciding whether or when to exercise an Option or to make an 83(b)
election.  Each person should consult his or her own tax advisor regarding these
matters.

                                      F-2
<PAGE>

                            SECTION 83(b) ELECTIONS
                            -----------------------

This memorandum briefly describes certain aspects of Internal Revenue Code
section 83 and section 83(b) elections as they exist under current law.  A form
of election is attached.  The effect of making the election is that it permits
the employee or consultant to include in his or her gross income, in his or her
taxable year in which unvested shares are transferred, the excess, if any, of
(i) the fair market value of such shares at the time of transfer (determined
without regard to restrictions other than those which will never lapse) over
(ii) the amount (if any) paid for such shares.

By making the section 83(b) election, subsequent appreciation in the value of
the shares generally will be taxed as a capital gain, rather than as
compensation.  Also, appreciation that occurs after the transfer but prior to
vesting will not be taxed until the shares are sold.  Finally, such subsequent
appreciation may be deferred if transfer occurs in a tax-free reorganization or
may go untaxed altogether if a stepped-up basis results from transfer by reason
of death.  However, if the shares are forfeited the employees or consultants who
made the election can only deduct a loss to the extent the amount received (if
any) on forfeiture is less than the amount paid (if any) for such shares.  Thus,
such employees or consultants are precluded from recovering the tax paid with
respect to any reported compensation income.  Moreover, any loss recognized will
generally be a capital loss which can only offset capital gains plus $3,000 of
ordinary income ($1,500 in the case of married individuals filing a separate
return).

In the absence of an election, the employee or consultant who receives unvested
shares does not recognize any income until such shares vest.  In the taxable
year in which any shares vest such employee or consultant will recognize
compensation income equal to the excess, if any, of (i) the fair market value of
the vested shares on the vesting date over (ii) the amount (if any) paid for
such shares.  If the shares are forfeited the employee or consultant will
recognize ordinary loss to the extent the amount received on forfeiture is less
than the amount paid for such shares.

The election must be made not later than 30 days after the date of transfer of
the shares to the employee or consultant.  The election is to be filed with the
Internal Revenue Service Center with which the employee or consultant files his
or her return.  Whether a filing is required with any state tax board depends on
applicable state law.  Therefore, consultants or employees should seek local tax
advice.  In general, the election is irrevocable.

Each filing should be made by certified mail with the sender's receipt
postmarked at the time of mailing to establish proof of filing.  Also, one copy
of the election should be filed with the Company.  Finally, one copy of the
election must be submitted with the employee's federal income tax returns for
the taxable year in which the shares are transferred.  Certain states may also
require a copy of the election to be submitted with state tax returns.
Consultants and employees should seek local tax advice.  Although the election
must be made within 30 days of the date of transfer of the shares, the tax, if
any, arising out of the election need not be paid until the employee or
consultant files his or her tax return for the tax year of transfer (subject to
the withholding rules discussed below).

The Company should be entitled to a tax deduction for federal income tax
purposes equal to the amount, if any, included in the gross income of the
employees or consultants receiving the

                                      F-3
<PAGE>

shares. The Company may also be entitled to a tax deduction for state income
tax purposes depending on the applicable state law. Deductibility is conditioned
on (i) satisfaction of the reasonable compensation requirements, and (ii)
compliance with withholding requirements with respect to employees. Also, the
compensatory amounts should be treated in the same manner as other bonus-wage
payments for purposes of the normal withholding requirements for FICA, FUTA and
applicable state employment taxes. Any deduction is allowed for the taxable year
of the Company in which or with which ends the taxable year in which the amount
was included in the gross income of the employee or consultant.

If the shares are not publicly traded, the per share fair market value at the
time of the election will likely be the value which the board of directors of
the Company attributes to the shares in its resolutions.  This will be based
upon the Company's current appraisal of the shares, as revised from time to
time.

While it may be desirable from a tax standpoint for employees and consultants to
make an 83(b) election at the time unvested shares are acquired, the matter
should be reviewed by each employee or consultant with his or her tax adviser.
The Company will not give tax advice to the employee or consultant.

                                      F-4
<PAGE>

                                                                       EXHIBIT A
                                                                       ---------
                                                           (to be attached to an
                                                               option agreement,
                                                              either ISO or NSO;
                                                         does not allow exercise
                                                               prior to vesting)

                                  Tvia, Inc.
                                  ----------

            Notice of Exercise and Common Stock Purchase Agreement
            ------------------------------------------------------

     THIS AGREEMENT is dated as of ___________, ____, between Tvia, Inc. (the
"Company"), and _________________ ("Purchaser").

                              W I T N E S S E T H:

     WHEREAS, the Company and Purchaser are parties to that certain _______
Incentive __________ Nonstatutory Stock Option Agreement dated as of
___________, ____ (the "Option Agreement") pursuant to which the Purchaser has
the right to purchase up to ______ shares of the Company's common stock (the
"Option Shares"); and

     WHEREAS, the Option is exercisable with respect to certain of the Option
Shares as of the date hereof; and

     WHEREAS, pursuant to the Option Agreement, Purchaser desires to purchase
shares of the Company as herein described, on the terms and conditions set forth
in this Agreement, the Option Agreement and the Tvia, Inc. 2000 Stock Incentive
Plan (the "Plan"). Certain capitalized terms used in this Agreement are defined
in the Plan.

     NOW, THEREFORE, it is agreed between the parties as follows:

SECTION 1:     PURCHASE OF SHARES.
---------------------------------

     (a)  Pursuant to the terms of the Option Agreement, Purchaser hereby agrees
to purchase from the Company and the Company agrees to sell and issue to
Purchaser _________ shares of the Company's common stock (the "Common Stock")
for the Exercise Price per share specified in the Option Agreement payable by
personal check, cashier's check or money order, if permitted by the Option
Agreement, as follows: _______________________________. Payment shall be
delivered at the Closing, as such term is hereinafter defined.

     (b)  The closing hereunder (the "Closing") shall occur at the offices of
the Company on __________, ____, or such other time and place as may be
designated by the Company (the "Closing Date").

                                      A-1
<PAGE>

SECTION 2:     THE COMPANY'S RIGHT OF FIRST REFUSAL.
----------------------------------------------------

     Before any shares of Common Stock registered in the name of Purchaser may
be sold or transferred, such shares shall first be offered to the Company as set
forth in the Option Agreement.

SECTION 3:     PURCHASER'S RIGHTS AFTER EXERCISE OF RIGHT OF FIRST REFUSAL.
---------------------------------------------------------------------------

     If the Company makes available, at the time and place and in the amount and
form provided in this Agreement, the consideration for the Common Stock to be
repurchased in accordance with the provisions of Section 2 of this Agreement,
then from and after such time the person from whom such shares are to be
repurchased shall no longer have any rights as a holder of such shares (other
than the right to receive payment of such consideration in accordance with this
Agreement).  Such shares shall be deemed to have been repurchased in accordance
with the applicable provision hereof, whether or not the certificate(s) therefor
have been delivered as required by this Agreement.

SECTION 4:     LEGEND OF SHARES.
--------------------------------

     All certificates representing the Common Stock purchased under this
Agreement shall, where applicable, have endorsed thereon the legends set forth
in the Option Agreement and any other legends required by applicable securities
laws.

SECTION 5:     PURCHASER'S INVESTMENT REPRESENTATIONS.
------------------------------------------------------

     (a)  This Agreement is made with Purchaser in reliance upon Purchaser's
representation to the Company, which by Purchaser's acceptance hereof Purchaser
confirms, that the Common Stock which Purchaser will receive will be acquired
with Purchaser's own funds for investment for an indefinite period for
Purchaser's own account, not as a nominee or agent, and not with a view to the
sale or distribution of any part thereof, and that Purchaser has no present
intention of selling, granting participation in, or otherwise distributing the
same, but subject, nevertheless, to any requirement of law that the disposition
of Purchaser's property shall at all times be within Purchaser's control.  By
executing this Agreement, Purchaser further represents that Purchaser does not
have any contract, understanding or agreement with any person to sell, transfer,
or grant participation, to such person or to any third person, with respect to
any of the Common Stock.

     (b)  Purchaser understands that the Common Stock will not be registered or
qualified under federal or state securities laws on the ground that the sale
provided for in this Agreement is exempt from registration or qualification
under federal or state securities laws and that the Company's reliance on such
exemption is predicated on Purchaser's representations set forth herein.

     (c)  Purchaser agrees that in no event will Purchaser make a disposition of
any of the Common Stock (including a disposition under Section 9 of this
Agreement), unless and until (i) Purchaser shall have notified the Company of
the proposed disposition and shall have

                                      A-2
<PAGE>

furnished the Company with a statement of the circumstances surrounding the
proposed disposition and (ii) Purchaser shall have furnished the Company with an
opinion of counsel satisfactory to the Company to the effect that (A) such
disposition will not require registration or qualification of such Common Stock
under federal or state securities laws or (B) appropriate action necessary for
compliance with the federal or state securities laws has been taken or (iii) the
Company shall have waived, expressly and in writing, its rights under clauses
(i) and (ii) of this section.

     (d)  With respect to a transaction occurring prior to such date as the Plan
and Common Stock thereunder are covered by a valid Form S-8 or similar federal
registration statement, this subsection shall apply unless the transaction is
covered by the exemption in California Corporations Code (S)25102(o) or a
similar broad based exemption. In connection with the investment representations
made herein, Purchaser represents that Purchaser is able to fend for himself or
herself in the transactions contemplated by this Agreement, has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of Purchaser's investment, has the ability to bear the
economic risks of Purchaser's investment and has been furnished with and has had
access to such information as would be made available in the form of a
registration statement together with such additional information as is necessary
to verify the accuracy of the information supplied and to have all questions
answered by the Company.

     (e)  Purchaser understands that if the Company does not register with the
Securities and Exchange Commission pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or if a registration
statement covering the Common Stock (or a filing pursuant to the exemption from
registration under Regulation A of the Securities Act of 1933) under the
Securities Act of 1933 is not in effect when Purchaser desires to sell the
Common Stock, Purchaser may be required to hold the Common Stock for an
indeterminate period.  Purchaser also acknowledges that Purchaser understands
that any sale of the Common Stock which might be made by Purchaser in reliance
upon Rule 144 under the Securities Act of 1933 may be made only in limited
amounts in accordance with the terms and conditions of that Rule.

SECTION 6:     ASSISTANCE TO PURCHASER UNDER RULE 144.
------------------------------------------------------

     The Company covenants and agrees that (a) at all times after it first
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, it will use its best efforts to comply with the current public
information requirements of Rule 144(c)(1) under the Securities Act of 1933, and
that if prior to becoming subject to such reporting requirements an over-the-
counter market develops for the Common Stock, it will make publicly available
the information required by Rule 144(c)(2); (b) it will furnish Purchaser, upon
request, with all information required for the preparation and filing of Form
144; and (c) it will on a timely basis use its best efforts to file all reports
required to be filed and make all disclosures, including disclosures of
materially adverse information, required to permit Purchaser to make the
required representations in Form 144.

                                      A-3
<PAGE>

SECTION 7:     NO DUTY TO TRANSFER IN VIOLATION HEREUNDER.
----------------------------------------------------------

     The Company shall not be required (a) to transfer on its books any shares
of Common Stock of the Company which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement or (b) to treat
as owner of such shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such shares shall have been so transferred.

SECTION 8:     RIGHTS OF PURCHASER.
-----------------------------------

     Except as otherwise provided herein, Purchaser shall, during the term of
this Agreement, exercise all rights and privileges of a stockholder of the
Company with respect to the Common Stock.

SECTION 9:     OTHER NECESSARY ACTIONS.
---------------------------------------

     The parties agree to execute such further instruments and to take such
further action as may reasonably be necessary to carry out the intent of this
Agreement.

SECTION 10:    NOTICE.
----------------------

     Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon the earliest of personal delivery,
receipt or the third full day following deposit in the United States Post Office
with postage and fees prepaid, addressed to the other party hereto at the
address last known or at such other address as such party may designate by 10
days' advance written notice to the other party hereto.

SECTION 11:    SUCCESSORS AND ASSIGNS.
--------------------------------------

     This Agreement shall inure to the benefit of the successors and assigns of
the Company and, subject to the restrictions on transfer herein set forth, be
binding upon Purchaser and Purchaser's heirs, executors, administrators,
successors and assigns.  The failure of the Company in any instance to exercise
rights of first offer described herein shall not constitute a waiver of any
other right of first offer that may subsequently arise under the provisions of
this Agreement.  No waiver of any breach or condition of this Agreement shall be
deemed to be a waiver of any other or subsequent breach or condition, whether of
a like or different nature.

SECTION 12:    APPLICABLE LAW.
------------------------------

     This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California, as such laws are applied to contracts entered
into and performed in such state.

SECTION 13:    NO STATE QUALIFICATION.
--------------------------------------

     THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT
BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA
AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE

                                      A-4
<PAGE>

CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE
OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105
OF THE CALIFORNIA CORPORATIONS CODE.  THE RIGHTS OF ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.

SECTION 14:    NO ORAL MODIFICATION.
------------------------------------

     No modification of this Agreement shall be valid unless made in writing and
signed by the parties hereto.

SECTION 15:    ENTIRE AGREEMENT.
--------------------------------

     This Agreement and the Option Agreement constitute the entire complete and
final agreement between the parties hereto with regard to the subject matter
hereof.

     IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first above written.

TVIA, INC.                          PURCHASER

By _________________________        _____________________________

                                      A-5
<PAGE>

                                   EXHIBIT B
                                   ---------

                  Acknowledgment of and Agreement to be Bound
                  -------------------------------------------

       By the Notice of Exercise and Common Stock Purchase Agreement of
       ----------------------------------------------------------------

                                  Tvia, Inc.
                                  ----------

     The undersigned, as transferee of shares of Tvia, Inc., hereby acknowledges
that he or she has read and reviewed the terms of the Notice of Exercise and
Common Stock Purchase Agreement of Tvia, Inc. and hereby agrees to be bound by
the terms and conditions thereof, as if the undersigned had executed said
Agreement as an original party thereto.

     Dated:  ____________________, ____.

                                             By ___________________________

                                      B-1<PAGE>

                                                                  EXHIBIT 10.3

                                  TVIA, INC.

                       2000 EMPLOYEE STOCK PURCHASE PLAN

                  (Adopted by the Board on  _______ __, 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 _______ __, 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 _____________ 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) ___________ (__________) shares, (ii) ___% 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 ________ __, 2000, the
Company has caused its authorized officer to execute the same.

                                    Tvia, Inc.

                                    By:_____________________________

                                    Title:__________________________

                                    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
________, 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 ___________.

                                      -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-____ on Form S-1
filed with the SEC on ___________, 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. 0-______ on Form 8-A filed with the
SEC on ___________, 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-

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