Document:

EXHIBIT 4.23

                                ESCROW AGREEMENT

      ESCROW AGREEMENT (the "ESCROW AGREEMENT") made as of the 28th day of May,
2004, by and among Vertex Interactive, Inc., a New Jersey corporation (the
"COMPANY"), the Purchasers listed on Schedule A attached hereto (each a
"PURCHASER" and collectively, the "PURCHASERS") and Owen Naccarato, Esq. (the
"ESCROW AGENT").

                              W I T N E S S E T H:

      WHEREAS, the Company desires to raise capital in order to finance the
growth of its business operations and for other general corporate purposes;

      WHEREAS, the Company and the Purchasers have agreed that, in order to
raise capital, the Company shall issue and sell to the Purchasers notes (the
"NOTES"), convertible into shares of the Company's common stock, $0.005 par
value per share (the "COMMON STOCK"), and Warrants to purchase shares of Common
Stock (the "Warrants") for an aggregate purchase price of $1,500,000;

      WHEREAS, the Company has entered into that certain Securities Purchase
Agreement dated as of April 28, 2004 (the "PURCHASE AGREEMENT") with the
Purchasers;

      WHEREAS, the parties have agreed that certain interest payments due and
payable through the Maturity Date (as defined in the Notes) shall be paid into
escrow and the Escrow Agent has agreed to receive, hold and pay such funds, upon
the terms and subject to the conditions hereinafter set forth.

      NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and legal sufficiency
of which is hereby acknowledged, the parties to this Escrow Agreement hereby
agree as follows:

      1. DEFINED TERMS. Capitalized terms used and not otherwise defined herein
shall have the meanings respectively assigned to them in the Purchase Agreement.

      2. ESCROW OF FUNDS. On the date hereof, the following shall occur: the
Company shall instruct the Purchasers to remit by wire transfer $112,500 to the
Escrow Agent pursuant to this Escrow Agreement (the "ESCROW AMOUNT"). The Escrow
Agent shall hold the Escrow Amount only in accordance with the terms and
conditions of this Escrow Agreement.

      3. INVESTMENT OF FUNDS. The Escrow Agent shall invest the monies in the
Escrow Amount in an interest bearing bank account with, or certificates of
deposit or time deposits with, maturities of no more than thirty (30) days
issued by, a domestic commercial bank or such other bank or other financial
institution as it normally holds such funds.

      4. RELEASE OF FUNDS.

            (a) So long as all or a portion of the aggregate principal amount of
the Notes remains outstanding, the Escrow Agent shall release the Escrow Amount,
or a portion thereof, to the Purchasers in an amount equal to the aggregate
outstanding principal amount of the Notes multiplied by 2.5% on March 31, June
30, September 30 and December 31 of each year (the "INTEREST PAYMENT DATES")
beginning on December 31, 2004. The Purchasers shall provide written
instructions regarding the aggregate outstanding principal amount of the Notes
and directing the manner in which the distribution of the Escrow Amount, or a
portion thereof, is to be made on or prior to each of the Interest Payment
Dates. Upon receipt of joint written instructions from the Purchasers and the
Company stating that that no portion of the aggregate principal amount of the
Notes remains outstanding, the Escrow Agent shall release any remaining portion
of the Escrow Amount to the Company in accordance with the written instructions
of the Company directing the manner in which the distribution of the remaining
portion of the Escrow Amount is to be made.

<PAGE>

            (b) Upon written notice from the Purchasers that the Company is in
default of its obligations under the Purchase Agreement, the Escrow Agent shall
immediately release all of the Escrow Amount to the Purchasers in accordance
with the written instruction provided by the Purchasers directing the manner in
which the distribution of the Escrow Amount is to be made.

      5. FURTHER ASSURANCES. The Company and the Purchasers agree to do such
further acts and to execute and deliver such statements, assignments,
agreements, instruments and other documents as the Escrow Agent from time to
time reasonably may request in connection with the administration, maintenance,
enforcement or adjudication of this Escrow Agreement in order (a) to give the
Escrow Agent confirmation and assurance of the Escrow Agent's rights, powers,
privileges, remedies and interests under this Escrow Agreement and applicable
law, (b) to better enable the Escrow Agent to exercise any such right, power,
privilege, remedy or interest, or (c) to otherwise effectuate the purpose and
the terms and provisions of this Escrow Agreement, each in such form and
substance as may be reasonably acceptable to the Escrow Agent.

      6. CONFLICTING DEMANDS. If conflicting or adverse claims or demands are
made or notices served upon the Escrow Agent with respect to the escrow provided
for herein, the Company and the Purchasers agree that the Escrow Agent shall
refuse to comply with any such claim or demand and withhold and stop all further
performance of this escrow so long as such disagreement shall continue. In so
doing, the Escrow Agent shall not be or become liable for damages, losses,
costs, expenses or interest to any or any other person for its failure to comply
with such conflicting or adverse demands. The Escrow Agent shall be entitled to
continue to so refrain and refuse to so act until such conflicting claims or
demands shall have been finally determined by a court or arbitrator of competent
jurisdiction or shall have been settled by agreement of the parties to such
controversy, in which case the Escrow Agent shall be notified thereof in a
notice signed by such parties. The Escrow Agent may also elect to commence an
interpleader or other action for declaratory judgment for the purpose of having
the respective rights of the claimants adjudicated, and may deposit with the
court all funds held hereunder pursuant to this Escrow Agreement; and if it so
commences and deposits, the Escrow Agent shall be relieved and discharged from
any further duties and obligations under this Escrow Agreement.

      7. DISPUTES. Each of the parties hereto hereby covenants and agrees that
the Federal or state courts located in the Borough of Manhattan, State of New
York shall have jurisdiction over any dispute with the Escrow Agent or relating
to this Escrow Agreement.

      8. EXPENSES OF THE ESCROW AGENT. The Company agrees to pay any and all
out-of-pocket costs and expenses incurred by the Escrow Agent in connection with
all waivers, releases, discharges, satisfactions, modifications and amendments
of this Escrow Agreement, the administration and holding of the Escrow Amount
and the investment of such funds, and the enforcement, protection and
adjudication of the Escrow Agent's rights hereunder by the Escrow Agent,
including, without limitation, the out-of-pocket disbursements of the Escrow
Agent itself and expenses and costs of other attorneys it may retain, if any.
The Company shall be liable to the Escrow Agent for any expenses payable by the
Escrow Agent.

                                      -2-
<PAGE>

      9. RELIANCE ON DOCUMENTS AND EXPERTS. The Escrow Agent shall be entitled
to rely upon any notice, consent, certificate, affidavit, statement, paper,
document, writing or communication (collectively, the "Certificate") (which to
the extent permitted hereunder may be by telegram, cable, telex, telecopier, or
telephone) reasonably believed by it to be genuine and to have been signed, sent
or made by the proper person or persons, and upon opinions and advice of legal
counsel (including itself or counsel for any party hereto), independent public
accountants and other experts selected by the Escrow Agent and mutually
acceptable to each of the Company and the Purchasers. The Escrow Agent shall not
be responsible to review the Certificate other than to confirm that it has been
signed or to determine the clearance of checks received for the Escrow Amount.

      10. STATUS OF THE ESCROW AGENT, ETC. The Escrow Agent is acting under this
Escrow Agreement as a stakeholder only. No term or provision of this Escrow
Agreement is intended to create, nor shall any such term or provision be deemed
to have created, any joint venture, partnership or attorney-client relationship
between or among the Escrow Agent and the Company or the Purchasers. This Escrow
Agreement shall not be deemed to prohibit or in any way restrict the Escrow
Agent's representation of the Company, who may be advised by the Escrow Agent on
any and all matters pertaining to this Escrow Agreement. To the extent the
Purchasers have been represented by the Escrow Agent, the Purchasers hereby
waive any conflict of interest and irrevocably authorize and direct the Escrow
Agent to carry out the terms and provisions of this Escrow Agreement fairly as
to all parties, without regard to any such representation and irrespective of
the impact upon the Purchasers. The Escrow Agent's only duties are those
expressly set forth in this Escrow Agreement, and each of the Company and the
Purchasers authorize the Escrow Agent to perform those duties in accordance with
its usual practices in holding funds of its own or those of other escrows. The
Escrow Agent may exercise or otherwise enforce any of its rights, powers,
privileges, remedies and interests under this Escrow Agreement and applicable
law or perform any of its duties under this Escrow Agreement by or through its
partners, employees, attorneys, agents or designees.

      11. EXCULPATION. The Escrow Agent and its designees, and their respective
partners, employees, attorneys and agents, shall not incur any liability
whatsoever for the investment or disposition of funds or the taking of any other
action in accordance with the terms and provisions of this Escrow Agreement, for
any mistake or error in judgment, for compliance with any applicable law or any
attachment, order or other directive of any court or other authority
(irrespective of any conflicting term or provision of this Escrow Agreement), or
for any act or omission of any other person selected with reasonable care and
engaged by the Escrow Agent in connection with this Escrow Agreement (other than
for such Escrow Agent's or such person's own acts or omissions breaching a duty
owed to the claimant under this Escrow Agreement and amounting to gross
negligence or willful misconduct as finally determined pursuant to applicable
law by a governmental authority having jurisdiction); and each of the Company
and the Purchasers hereby waive any and all claims and actions whatsoever
against the Escrow Agent and its designees, and their respective partners,
employees, attorneys and agents, arising out of or related directly or
indirectly to any and all of the foregoing acts, omissions and circumstances.
Furthermore, the Escrow Agent and its designees, and their respective partners,
employees, attorneys and agents, shall not incur any liability (other than for a
person's own acts or omissions breaching a duty owed to the claimant under this
Escrow Agreement and amounting to willful misconduct as finally determined
pursuant to applicable law by a governmental authority having jurisdiction) for
other acts and omissions arising out of or related directly or indirectly to
this Escrow Agreement or the Escrow Amount; and each of the Company and the
Purchasers hereby expressly waive any and all claims and actions (other than
those attributable to a person's own acts or omissions breaching a duty owed to
the claimant and amounting to gross negligence or willful misconduct as finally
determined pursuant to applicable law by a governmental authority having
jurisdiction) against the Escrow Agent and its designees, and their respective
partners, employees, attorneys and agents, arising out of or related directly or
indirectly to any and all of the foregoing acts, omissions and circumstances.
The Escrow Agent's designees excludes the Purchasers for purposes hereof.

                                      -3-
<PAGE>

      12. INDEMNIFICATION. The Escrow Agent and its designees (excluding the
Purchasers), and their respective partners, employees, attorneys and agents,
shall be indemnified, reimbursed, held harmless and, at the request of the
Escrow Agent, defended, by the Company from and against any and all claims,
liabilities, losses and expenses (including, without limitation, the reasonable
disbursements, expenses and fees of their respective attorneys) that may be
imposed upon, incurred by, or asserted against any of them, arising out of or
related directly or indirectly to this Escrow Agreement or the Escrow Amount,
except such as are occasioned by the indemnified person's own acts and omissions
breaching a duty owed to the claimant under this Escrow Agreement and amounting
to willful misconduct as finally determined pursuant to applicable law by a
governmental authority having jurisdiction.

      13. NOTICES. Any notice, request, demand or other communication permitted
or required to be given hereunder shall be in writing, shall be sent by one of
the following means to the addressee at the address set forth below (or at such
other address as shall be designated hereunder by notice to the other parties
and persons receiving copies, effective upon actual receipt) and shall be deemed
conclusively to have been given: (a) on the first business day following the day
timely deposited with Federal Express (or other equivalent national overnight
courier) or United States Express Mail, with the cost of delivery prepaid; (b)
on the fifth business day following the day duly sent by certified or registered
United States mail, postage prepaid and return receipt requested; or (c) when
otherwise actually delivered to the addressee.

            If to the Company:             Vertex Interactive, Inc.
                                           3619 Kennedy Road
                                           South Plainfield, NJ  07080
                                           Attention:  Chief Executive Officer
                                           Telephone:  (908) 756-2000
                                           Facsimile:   (908) 756-2332

            with a copy to:                Sichenzia Ross Friedman Ference LLP
                                           1065 Avenue of the Americas
                                           New York, NY  10018
                                           Attention:   Gregory Sichenzia, Esq.
                                           Telephone:  (212) 930-9700
                                           Facsimile:   (212) 930-9725

                                      -4-
<PAGE>

            If to any Purchaser:           At the address of such Purchaser set
                                           forth on Schedule A to the Escrow
                                           Agreement, with copies to such
                                           Purchaser's counsel as set forth on
                                           Schedule A or as specified in
                                           writing by such Purchaser.

            If to the Escrow Agent:        Owen Naccarato, Esq.
                                           Naccarato & Associates
                                           19600 Fairchild, Suite 260
                                           Irvine, CA  92612
                                           Telephone:  (949) 851-9261
                                           Facsimile:   (949) 851-9262

      14. SECTION AND OTHER HEADINGS. The section and other headings contained
in this Escrow Agreement are for convenience only, shall not be deemed a part of
this Escrow Agreement and shall not affect the meaning or interpretation of this
Escrow Agreement.

      15. GOVERNING LAW. This Escrow Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without regard to principles of conflicts of law. Each of the Company and the
Purchasers (i) hereby irrevocably submit to the jurisdiction of the United
States District Court sitting in the Southern District of New York for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement or the Purchase Agreement and (ii) hereby waive, and agree not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Purchasers consent
to process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this Section 15 shall affect
or limit any right to serve process in any other manner permitted by law.

      16. COUNTERPARTS. This Escrow Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original but all such counterparts shall together constitute one and
the same agreement.

      17. RESIGNATION OF ESCROW AGENT. The Escrow Agent may, at any time, at its
option, elect to resign its duties as Escrow Agent under this Escrow Agreement
by providing notice thereof to each of the Company and the Purchasers. In such
event, the Escrow Agent shall deposit the Escrow Amount with a successor
independent escrow agent to be appointed by (a) the Company and the Purchasers
within thirty (30) days following the receipt of notice of resignation from the
Escrow Agent, or (b) the Escrow Agent if the Company and the Purchasers shall
have not agreed on a successor escrow agent within the aforesaid 30-day period,
upon which appointment and delivery of the Escrow Amount the Escrow Agent shall
be released of and from all liability under this Escrow Agreement.

      18. SUCCESSORS AND ASSIGNS; ASSIGNMENT. Whenever in this Escrow Agreement
reference is made to any party, such reference shall be deemed to include the
successors, assigns and legal representatives of such party, and, without
limiting the generality of the foregoing, all representations, warranties,
covenants and other agreements made by or on behalf of each of the Company and
the Purchasers in this Escrow Agreement shall inure to the benefit of any
successor escrow agent hereunder; PROVIDED, HOWEVER, that nothing herein shall
be deemed to authorize or permit the Company or the Purchasers to assign any of
its rights or obligations hereunder to any other person (whether or not an
affiliate of the Company or the Purchasers) without the written consent of each
of the other parties nor to authorize or permit the Escrow Agent to assign any
of its duties or obligations hereunder except as provided in Section 17 hereof.

                                      -5-
<PAGE>

      19. NO THIRD PARTY RIGHTS. The representations, warranties and other terms
and provisions of this Escrow Agreement are for the exclusive benefit of the
parties hereto, and no other person, including the creditors of the Company or
the Purchasers, shall have any right or claim against any party by reason of any
of those terms and provisions or be entitled to enforce any of those terms and
provisions against any party.

      20. NO WAIVER BY ACTION, ETC. Any waiver or consent respecting any
representation, warranty, covenant or other term or provision of this Escrow
Agreement shall be effective only in the specific instance and for the specific
purpose for which given and shall not be deemed, regardless of frequency given,
to be a further or continuing waiver or consent. The failure or delay of a party
at any time or times to require performance of, or to exercise its rights with
respect to, any representation, warranty, covenant or other term or provision of
this Escrow Agreement in no manner (except as otherwise expressly provided
herein) shall affect its right at a later time to enforce any such term or
provision. No notice to or demand on either the Company or the Purchasers in any
case shall entitle such party to any other or further notice or demand in the
same, similar or other circumstances. All rights, powers, privileges, remedies
and interests of the parties under this Escrow Agreement are cumulative and not
alternatives, and they are in addition to and shall not limit (except as
otherwise expressly provided herein) any other right, power, privilege, remedy
or interest of the parties under this Escrow Agreement or applicable law.

      21. MODIFICATION, AMENDMENT, ETC. Each and every modification and
amendment of this Escrow Agreement shall be in writing and signed by all of the
parties hereto, and each and every waiver of, or consent to any departure from,
any covenant, representation, warranty or other provision of this Escrow
Agreement shall be in writing and signed by the party granting such waiver or
consent.

      22. ENTIRE AGREEMENT. This Escrow Agreement contains the entire agreement
of the parties with respect to the matters contained herein and supersedes all
prior representations, agreements and understandings, oral or otherwise, among
the parties with respect to the matters contained herein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -6-
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date first written above.

                              VERTEX INTERACTIVE, INC.

                              By: /S/ NICHOLAS R. TOMS
                                  ----------------------------------------
                                  Nicholas R. Toms
                                  Chief Executive Officer

                              By: /S/ OWN NACCARATO
                                  ----------------------------------------
                                  Owen Naccarato, Esquire, as escrow agent

                              AJW PARTNERS, LLC

                              By:  SMS Group, LLC

                              By: /S/ COREY S. RIBOTSKY
                                  ---------------------
                                  Corey S. Ribotsky
                                  Manager

                              AJW OFFSHORE, LTD.

                              By:  First Street Manager II, LLC

                              By: /S/ COREY S. RIBOTSKY
                                  ---------------------
                                  Corey S. Ribotsky
                                  Manager

                              AJW QUALIFIED PARTNERS, LLC

                              By:  AJW Manager, LLC

                              By: /S/ COREY S. RIBOTSKY
                                  ---------------------
                                  Corey S. Ribotsky
                                  Manager

                              NEW MILLENNIUM CAPITAL PARTNERS II, LLC

                              By:  First Street Manager II, LLC

                              By: /S/ COREY S. RIBOTSKY
                                  ---------------------
                                  Corey S. Ribotsky
                                  Manager

                                      -7-Exhibit 10.3

TVIA, INC.

2000 EMPLOYEE STOCK PURCHASE PLAN

(Amended and restated by the Board on May 13, 2004)

Table of Contents

	 
	    	    	    	 
	    	    	Page	   
	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	   

 

i

	 
	    	    	    	 
	    	    	Page	   
	Section
	    	    	    	7.
Change In Employment Status
	    	    	5	   
	(a)
	    	    	    	Termination Of Employment
	    	    	5	   
	(b)
	    	    	    	Leave
Of Absence
	    	    	5	   
	(c)
	    	    	    	Death
	    	    	5	   
	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	   

 

ii

TVIA, INC.

2000 EMPLOYEE STOCK PURCHASE PLAN
 (As amended and restated by the Board on
April 29, 2002)

SECTION 1. Purpose Of The Plan.

The Plan was adopted by the Board on March 20, 2000,
effective as of the date of the IPO. This document amends and restates the Plan effective as of April 29, 2002, subject to the approval of the
Company’s stockholders. The purpose of the Plan is to provide Eligible Employees with an opportunity to increase their proprietary interest in the
success of the Company by purchasing Stock from the Company on favorable terms and to pay for such purchases through payroll deductions. The Plan is
intended to qualify under section 423 of the Code.

SECTION 2. Definitions.

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

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

(c)  “Code” means the Internal
Revenue Code of 1986, as amended.

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

(e)  “Company” means Tvia, Inc.,
a Delaware corporation.

(f)  “Compensation” means (i)
the total compensation paid in cash to a Participant by a Participating Company, including salaries, wages, bonuses, incentive compensation,
commissions, overtime pay and shift premiums, plus (ii) any pre-tax contributions made by the Participant under section 401(k) or section 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 whose customary employment is for more than five months per calendar year and for more than 20 hours per
week.

1

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; or

(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.

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(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
April 1 and October 1, except that the first Offering Period shall commence on the date of the IPO and end on March 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 April 1 and October 1, except that the first Accumulation Period shall commence on the date of the IPO and end on September 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 6(a) or reaches the end of the Offering Period in which his or her employee contributions were discontinued under Section 5(d). 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:

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(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.

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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

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 4,000 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.

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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 Plan or any other; and

(iii)  Each Participant shall be deemed to
have the right to purchase 4,000 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 $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 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 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.

7

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 eight hundred thirty-three thousand three hundred thirty-three (833,333)
shares, plus an annual increase to be added on the first day of each of the Company’s fiscal year beginning in years 2000 through 2009, equal to
such amount as may be determined by the Board or, if less, the lesser of (i) eighty three thousand three hundred thirty three (83,333) shares or (ii)
three percent (3%) of the outstanding shares on such date. 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 333 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 vote of the stockholders of the Company to the extent required by an applicable law or regulation.

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