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                                                                    EXHIBIT 10.4

                                  VIALTA, INC.
                        2001 EMPLOYEE STOCK PURCHASE PLAN

     1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

          1.1 ESTABLISHMENT. The Vialta, Inc. 2001 Employee Stock Purchase Plan
(the "PLAN") is hereby established effective as of July 23, 2001, subject to
approval by the Company's stockholders.

          1.2 PURPOSE. The purpose of the Plan is to advance the interests of
the Company and its stockholders by providing an incentive to attract, retain
and reward Eligible Employees of the Participating Company Group and by
motivating such persons to contribute to the growth and profitability of the
Participating Company Group. The Plan provides such Eligible Employees with an
opportunity to acquire a proprietary interest in the Company through the
purchase of Stock. The Company intends that the Plan qualify as an "employee
stock purchase plan" under Section 423 of the Code (including any amendments or
replacements of such section), and the Plan shall be so construed.

          1.3 TERM OF PLAN. The Plan shall continue in effect until the earlier
of its termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued. However, all shares
shall be issued, if at all, within ten (10) years from the earlier of the date
the Plan is adopted by the Board or the date the Plan is duly approved by the
shareholders of the Company.

     2. DEFINITIONS AND CONSTRUCTION.

          2.1 DEFINITIONS. Any term not expressly defined in the Plan but
defined for purposes of Section 423 of the Code shall have the same definition
herein. Whenever used herein, the following terms shall have their respective
meanings set forth below:

               (a) "BOARD" means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).

               (b) "CODE" means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.

               (c) "COMMITTEE" means a committee of the Board duly appointed to
administer the Plan and having such powers as specified by the Board. Unless the
powers of the Committee have been specifically limited, the Committee shall have
all of the powers of the Board granted herein, including, without limitation,
the power to amend or terminate the Plan at any time, subject to the terms of
the Plan and any applicable limitations imposed by law.

               (d) "COMPANY" means Vialta, Inc., a Delaware corporation, or any
successor corporation thereto.

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               (e) "COMPENSATION" means, with respect to any Offering Period,
base salary and commissions, including any base salary or commissions deferred
under any program or plan established by a Participating Company, including,
without limitation, any plan described in Section 401(k) or Section 125 of the
Code. Compensation shall be limited to amounts actually payable in cash directly
to the Participant or deferred by the Participant during the Offering Period.
Compensation shall not include overtime, bonuses, annual awards, profit sharing,
other incentive payments, shift premiums, long-term disability, workers'
compensation, moving allowances, payments pursuant to a severance agreement,
termination pay, relocation payments, sign-on bonuses, expense reimbursements,
the cost of employee benefits paid by a Participating Company, tuition
reimbursements, imputed income arising under any benefit program, contributions
made by a Participating Company under any employee benefit plan, income directly
or indirectly received pursuant to the Plan or any other stock purchase or stock
option plan, or any other compensation not included in base salary and
commissions.

               (f) "ELIGIBLE EMPLOYEE" means an Employee who meets the
requirements set forth in Section 5 for eligibility to participate in the Plan.

               (g) "EMPLOYEE" means a person treated as an employee of a
Participating Company for purposes of Section 423 of the Code. A Participant
shall be deemed to have ceased to be an Employee either upon an actual
termination of employment or upon the corporation employing the Participant
ceasing to be a Participating Company. For purposes of the Plan, an individual
shall not be deemed to have ceased to be an Employee while on any military
leave, sick leave, or other bona fide leave of absence approved by the Company
of ninety (90) days or less. If an individual's leave of absence exceeds ninety
(90) days, the individual shall be deemed to have ceased to be an Employee on
the ninety-first (91st) day of such leave unless the individual's right to
reemployment with the Participating Company Group is guaranteed either by
statute or by contract.

               (h) "FAIR MARKET VALUE" means, as of any date:

                    (i) If the Stock is then listed on a national or regional
securities exchange or market system or is regularly quoted by a recognized
securities dealer, the closing sale price of a share of Stock (or the mean of
the closing bid and asked prices if the Stock is so quoted instead) as quoted on
the Nasdaq National Market, the Nasdaq SmallCap Market or such other national or
regional securities exchange or market system constituting the primary market
for the Stock, or by such recognized securities dealer, as reported in The Wall
Street Journal or such other source as the Company deems reliable. If the
relevant date does not fall on a day on which the Stock has traded on such
securities exchange or market system or has been quoted by such securities
dealer, the date on which the Fair Market Value is established shall be the last
day on which the Stock was so traded or quoted prior to the relevant date, or
such other appropriate day as determined by the Board, in its discretion.

                    (ii) If, on the relevant date, the Stock is not then listed
on a national or regional securities exchange or market system or regularly
quoted by a recognized securities dealer, the Fair Market Value of a share of
Stock shall be as determined in good faith by the Board.

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               (i) "OFFERING" means an offering of Stock as provided in Section
6.1.

               (j) "OFFERING DATE" means, for any Offering, the first day of the
Offering Period.

               (k) "OFFERING PERIOD" means a period established in accordance
with Section 6.

               (l) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.

               (m) "PARTICIPANT" means an Eligible Employee who has become a
participant in an Offering Period in accordance with Section 7 and remains a
participant in accordance with the Plan.

               (n) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation designated by the Board as a corporation
the Employees of which may, if Eligible Employees, participate in the Plan. The
Board shall have the sole and absolute discretion to determine from time to time
which Parent Corporations or Subsidiary Corporations shall be Participating
Companies.

               (o) "PARTICIPATING COMPANY GROUP" means, at any point in time,
the Company and all other corporations collectively which are then Participating
Companies.

               (p) "PURCHASE DATE" means, for any Purchase Period, the last day
of such period.

               (q) "PURCHASE PERIOD" means a period established in accordance
with Section 6.2.

               (r) "PURCHASE PRICE" means the price at which a share of Stock
may be purchased under the Plan, as determined in accordance with Section 9.

               (s) "PURCHASE RIGHT" means an option granted to a Participant
pursuant to the Plan to purchase such shares of Stock as provided in Section 8,
which the Participant may or may not exercise during the Offering Period in
which such option is outstanding. Such option arises from the right of a
Participant to withdraw any accumulated payroll deductions of the Participant
not previously applied to the purchase of Stock under the Plan and to terminate
participation in the Plan at any time during an Offering Period.

               (t) "STOCK" means the Class A common stock of the Company, as
adjusted from time to time in accordance with Section 4.2.

               (u) "SUBSCRIPTION AGREEMENT" means a written agreement in such
form as specified by the Company, stating an Employee's election to participate
in the Plan and authorizing payroll deductions under the Plan from the
Employee's Compensation.

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               (v) "SUBSCRIPTION DATE" means the last business day prior to the
Offering Date of an Offering Period or such other date as the Company shall
establish.

               (w) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.

          2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.

     3. ADMINISTRATION.

          3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board. All questions of interpretation of the Plan, of any form of agreement or
other document employed by the Company in the administration of the Plan, or of
any Purchase Right shall be determined by the Board, and such determinations
shall be final, binding and conclusive upon all persons having an interest in
the Plan or the Purchase Right, unless fraudulent or made in bad faith. Subject
to the provisions of the Plan, the Board shall determine all of the relevant
terms and conditions of Purchase Rights; provided, however, that all
Participants granted Purchase Rights pursuant to an Offering shall have the same
rights and privileges within the meaning of Section 423(b)(5) of the Code. Any
and all actions, decisions and determinations taken or made by the Board in the
exercise of its discretion pursuant to the Plan or any agreement thereunder
(other than determining questions of interpretation pursuant to the second
sentence of this Section 3.1) shall be final, binding and conclusive upon all
persons having an interest therein. All expenses incurred in connection with the
administration of the Plan shall be paid by the Company.

          3.2 AUTHORITY OF OFFICERS. Any officer of the Company shall have the
authority to act on behalf of the Company with respect to any matter, right,
obligation, determination or election that is the responsibility of or that is
allocated to the Company herein, provided that the officer has apparent
authority with respect to such matter, right, obligation, determination or
election.

          3.3 POLICIES AND PROCEDURES ESTABLISHED BY THE COMPANY. The Company
may, from time to time, consistent with the Plan and the requirements of Section
423 of the Code, establish, change or terminate such rules, guidelines,
policies, procedures, limitations, or adjustments as deemed advisable by the
Company, in its discretion, for the proper administration of the Plan,
including, without limitation, (a) a minimum payroll deduction amount required
for participation in an Offering, (b) a limitation on the frequency or number of
changes permitted in the rate of payroll deduction during an Offering, (c) an
exchange ratio applicable to amounts withheld in a currency other than United
States dollars, (d) a payroll deduction greater than or less than the amount
designated by a Participant in order to adjust for the Company's delay or
mistake in processing a Subscription Agreement or in otherwise effecting a
Participant's election under the Plan or as advisable to comply with the
requirements of Section 423 of the Code, and (e) determination of the date and
manner by which the Fair Market Value of a share of Stock is

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determined for purposes of administration of the Plan. All such actions by the
Company shall be taken consistent with the requirement under Section 423(b)(5)
of the Code that all Participants granted Purchase Rights pursuant to an
Offering shall have the same rights and privileges within the meaning of such
section.

          3.4 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or officers or
employees of the Participating Company Group, members of the Board and any
officers or employees of the Participating Company Group to whom authority to
act for the Board or the Company is delegated shall be indemnified by the
Company against all reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.

     4. SHARES SUBJECT TO PLAN.

          4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be one million (1,000,000), cumulatively
increased on the first January 1 following the date of the Plan's first Offering
Period (as set forth in Section 6) and each January 1 thereafter until the Plan
is terminated (the "Annual Increase") by the lesser of (a) 1% of the shares of
issued and outstanding Stock on the immediately preceding December 31, (b)
100,000 shares, or (c) such lesser number of shares determined by the Board, and
shall consist of authorized but unissued or reacquired shares of Stock, or any
combination thereof. If an outstanding Purchase Right for any reason expires or
is terminated or canceled, the shares of Stock allocable to the unexercised
portion of that Purchase Right shall again be available for issuance under the
Plan. Notwithstanding the foregoing, at any such time as the offer and sale of
securities pursuant to the Plan is subject to compliance with Section 260.140.45
of Title 10 of the California Code of Regulations ("SECTION 260.140.45"), the
total number of shares of Stock issuable upon the exercise of all outstanding
Purchase Rights (together with options outstanding under any other stock option
plan of the Company) and the total number of shares provided for under any stock
bonus or similar plan of the Company shall not exceed thirty percent (30%) (or
such other higher percentage limitation as may be approved by the shareholders
of the Company pursuant to Section 260.140.45) of the then outstanding shares of
the Company as calculated in accordance with the conditions and exclusions of
Section 260.140.45.

          4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company, or
in the event of any merger (including a merger effected for the purpose of
changing the Company's domicile), sale of assets or other

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reorganization in which the Company is a party, appropriate adjustments shall be
made in the number and class of shares subject to the Plan, the Annual Increase,
the limit on the shares which may be purchased by any Participant on a Purchase
Date (as described in Section 8.1) and each Purchase Right, and in the Purchase
Price. If a majority of the shares of the same class as the shares subject to
outstanding Purchase Rights are exchanged for, converted into, or otherwise
become (whether or not pursuant to an Ownership Change Event) shares of another
corporation (the "NEW SHARES"), the Board may unilaterally amend the outstanding
Purchase Rights to provide that such Purchase Rights are exercisable for New
Shares. In the event of any such amendment, the number of shares subject to, and
the Purchase Price of, the outstanding Purchase Rights shall be adjusted in a
fair and equitable manner, as determined by the Board, in its discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 4.2 shall be rounded down to the nearest whole number,
and in no event may the Purchase Price be decreased to an amount less than the
par value, if any, of the stock subject to the Purchase Right. The adjustments
determined by the Board pursuant to this Section 4.2 shall be final, binding and
conclusive.

     5. ELIGIBILITY.

          5.1 EMPLOYEES ELIGIBLE TO PARTICIPATE. Each Employee of a
Participating Company is eligible to participate in the Plan and shall be deemed
an Eligible Employee, except any Employee who is either: (a) customarily
employed by the Participating Company Group for twenty (20) hours or less per
week or (b) customarily employed by the Participating Company Group for not more
than five (5) months in any calendar year.

          5.2 EXCLUSION OF CERTAIN SHAREHOLDERS. Notwithstanding any provision
of the Plan to the contrary, no Employee shall be treated as an Eligible
Employee and granted a Purchase Right under the Plan if, immediately after such
grant, the Employee would own or hold options to purchase stock of the Company
or of any Parent Corporation or Subsidiary Corporation possessing five percent
(5%) or more of the total combined voting power or value of all classes of stock
of such corporation, as determined in accordance with Section 423(b)(3) of the
Code. For purposes of this Section 5.2, the attribution rules of Section 424(d)
of the Code shall apply in determining the stock ownership of such Employee.

          5.3 DETERMINATION BY COMPANY. The Company shall determine in good
faith and in the exercise of its discretion whether an individual has become or
has ceased to be an Employee or an Eligible Employee and the effective date of
such individual's attainment or termination of such status, as the case may be.
For purposes of an individual's participation in or other rights, if any, under
the Plan as of the time of the Company's determination, all such determinations
by the Company shall be final, binding and conclusive, notwithstanding that the
Company or any court of law or governmental agency subsequently makes a contrary
determination.

     6. OFFERINGS.

          6.1 OFFERING PERIODS. The Plan shall be implemented by sequential
Offerings (an "OFFERING PERIOD"). The Board shall determine the dates on which
Offering Periods will commence and the duration of each Offering Period, subject
to Section 6.3 below. Unless

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otherwise provided by the Board with respect to a particular Offering Period,
each Offering Period will have a duration of approximately six (6) months.

          6.2 PURCHASE PERIODS. If the Board so determines, in its discretion,
each Offering Period may consist of two (2) or more consecutive Purchase Periods
having such duration as the Board shall specify, and the last day of each such
Purchase Period shall be a Purchase Date.

          6.3 DISCRETION TO VARY DURATION. The Board may establish a different
duration for one or more Offering Periods or Purchase Periods or different
commencing or ending dates for such periods; provided, however, that no Offering
Period may have a duration exceeding twenty-seven (27) months. If the first or
last day of an Offering Period or a Purchase Period is not a day on which the
national securities exchanges or Nasdaq Stock Market are open for trading, the
Company shall specify the trading day that will be deemed the first or last day,
as the case may be, of the period.

     7. PARTICIPATION IN THE PLAN.

          7.1 INITIAL PARTICIPATION. An Eligible Employee may become a
Participant in an Offering Period by delivering a properly completed
Subscription Agreement to the office designated by the Company not later than
the close of business for such office on the Subscription Date established by
the Company for that Offering Period. An Eligible Employee who does not deliver
a properly completed Subscription Agreement to the Company's designated office
on or before the Subscription Date for an Offering Period shall not participate
in the Plan for that Offering Period or for any subsequent Offering Period
unless the Eligible Employee subsequently delivers a properly completed
Subscription Agreement to the appropriate office of the Company on or before the
Subscription Date for such subsequent Offering Period. An Employee who becomes
an Eligible Employee after the Offering Date of an Offering Period shall not be
eligible to participate in that Offering Period but may participate in any
subsequent Offering Period provided the Employee is still an Eligible Employee
as of the Offering Date of such subsequent Offering Period.

          7.2 CONTINUED PARTICIPATION. A Participant shall automatically
participate in the next Offering Period commencing immediately after the final
Purchase Date of each Offering Period in which the Participant participates
provided that the Participant remains an Eligible Employee on the Offering Date
of the new Offering Period and has not either (a) withdrawn from the Plan
pursuant to Section 12.1 or (b) terminated employment as provided in Section 13.
A Participant who may automatically participate in a subsequent Offering Period,
as provided in this Section, is not required to deliver any additional
Subscription Agreement for the subsequent Offering Period in order to continue
participation in the Plan. However, a Participant may deliver a new Subscription
Agreement for a subsequent Offering Period in accordance with the procedures set
forth in Section 7.1 if the Participant desires to change any of the elections
contained in the Participant's then effective Subscription Agreement.

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     8. RIGHT TO PURCHASE SHARES.

          8.1 GRANT OF PURCHASE RIGHT. Except as set forth below, on the
Offering Date of each Offering Period, each Participant in that Offering Period
shall be granted automatically a Purchase Right consisting of an option to
purchase the lesser of (a) that number of whole shares of Stock determined by
dividing Twenty-Five Thousand Dollars ($25,000) by the Fair Market Value of a
share of Stock on such Offering Date or (b) five hundred (500) shares of Stock.
No Purchase Right shall be granted on an Offering Date to any person who is not,
on such Offering Date, an Eligible Employee.

          8.2 PRO RATA ADJUSTMENT OF PURCHASE RIGHT. Notwithstanding the
provisions of Section 8.1, if the Board establishes an Offering Period of any
duration other than six months, then (a) the dollar amount in Section 8.1 shall
be determined by multiplying $4,166.66 by the number of months (rounded to the
nearest whole month) in the Offering Period and rounding to the nearest whole
dollar, and (b) the share amount in Section 8.1 shall be determined by
multiplying 83.33 shares by the number of months (rounded to the nearest whole
month) in the Offering Period and rounding to the nearest whole share.

          8.3 CALENDAR YEAR PURCHASE LIMITATION. Notwithstanding any provision
of the Plan to the contrary, no Participant shall be granted a Purchase Right
which permits his or her right to purchase shares of Stock under the Plan to
accrue at a rate which, when aggregated with such Participant's rights to
purchase shares under all other employee stock purchase plans of a Participating
Company intended to meet the requirements of Section 423 of the Code, exceeds
Twenty-Five Thousand Dollars ($25,000) in Fair Market Value (or such other
limit, if any, as may be imposed by the Code) for each calendar year in which
such Purchase Right is outstanding at any time. For purposes of the preceding
sentence, the Fair Market Value of shares purchased during a given Offering
Period shall be determined as of the Offering Date for such Offering Period. The
limitation described in this Section shall be applied in conformance with
applicable regulations under Section 423(b)(8) of the Code.

     9. PURCHASE PRICE.

          The Purchase Price at which each share of Stock may be acquired in an
Offering Period upon the exercise of all or any portion of a Purchase Right
shall be established by the Board; provided, however, that the Purchase Price on
each Purchase Date shall not be less than eighty-five percent (85%) of the
lesser of (a) the Fair Market Value of a share of Stock on the Offering Date of
the Offering Period or (b) the Fair Market Value of a share of Stock on the
Purchase Date. Unless otherwise provided by the Board prior to the commencement
of an Offering Period, the Purchase Price on each Purchase Date during that
Offering Period shall be eighty-five percent (85%) of the lesser of (a) the Fair
Market Value of a share of Stock on the Offering Date of the Offering Period, or
(b) the Fair Market Value of a share of Stock on the Purchase Date.

     10. ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION.

          Shares of Stock acquired pursuant to the exercise of all or any
portion of a Purchase Right may be paid for only by means of payroll deductions
from the Participant's

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Compensation accumulated during the Offering Period for which such Purchase
Right was granted, subject to the following:

          10.1 AMOUNT OF PAYROLL DEDUCTIONS. Except as otherwise provided
herein, the amount to be deducted under the Plan from a Participant's
Compensation on each payday during an Offering Period shall be determined by the
Participant's Subscription Agreement. The Subscription Agreement shall set forth
the percentage of the Participant's Compensation to be deducted on each payday
during an Offering Period in whole percentages of not less than one percent (1%)
(except as a result of an election pursuant to Section 10.3 to stop payroll
deductions effective following the first payday during an Offering) or more than
ten percent (10%). The Board may change the foregoing limits on payroll
deductions effective as of any Offering Date.

          10.2 COMMENCEMENT OF PAYROLL DEDUCTIONS. Payroll deductions shall
commence on the first payday following the Offering Date and shall continue to
the end of the Offering Period unless sooner altered or terminated as provided
herein.

          10.3 ELECTION TO CHANGE OR STOP PAYROLL DEDUCTIONS. During an Offering
Period, a Participant may elect to increase or decrease the rate of or to stop
deductions from his or her Compensation by delivering to the Company's
designated office an amended Subscription Agreement authorizing such change on
or before the Change Notice Date, as defined below. A Participant who elects,
effective following the first payday of an Offering Period, to decrease the rate
of his or her payroll deductions to zero percent (0%) shall nevertheless remain
a Participant in the current Offering Period unless such Participant withdraws
from the Plan as provided in Section 12.1. The "CHANGE NOTICE DATE" shall be the
day immediately prior to the beginning of the first pay period for which such
election is to be effective, unless a different date is established by the
Company and announced to the Participants.

          10.4 ADMINISTRATIVE SUSPENSION OF PAYROLL DEDUCTIONS. The Company may,
in its sole discretion, suspend a Participant's payroll deductions under the
Plan as the Company deems advisable to avoid accumulating payroll deductions in
excess of the amount that could reasonably be anticipated to purchase the
maximum number of shares of Stock permitted (a) under the Participant's Purchase
Right or (b) during a calendar year under the limit set forth in Section 8.3.
Payroll deductions shall be resumed at the rate specified in the Participant's
then effective Subscription Agreement at the beginning, respectively, of (a) the
next Offering Period the first Purchase Date of which falls in the following
calendar year, provided that the individual is a Participant in such Offering
Period or (b) the next Purchase Period the Purchase Date of which falls in the
following calendar year, unless the Participant has either withdrawn from the
Plan as provided in Section 12.1 or has ceased to be an Eligible Employee.

          10.5 PARTICIPANT ACCOUNTS. Individual bookkeeping accounts shall be
maintained for each Participant. All payroll deductions from a Participant's
Compensation shall be credited to such Participant's Plan account and shall be
deposited with the general funds of the Company. All payroll deductions received
or held by the Company may be used by the Company for any corporate purpose.

          10.6 NO INTEREST PAID. Interest shall not be paid on sums deducted
from a Participant's Compensation pursuant to the Plan.

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          10.7 VOLUNTARY WITHDRAWAL FROM PLAN ACCOUNT. A Participant may
withdraw all or any portion of the payroll deductions credited to his or her
Plan account and not previously applied toward the purchase of Stock by
delivering to the Company's designated office a written notice on a form
provided by the Company for such purpose. A Participant who withdraws the entire
remaining balance credited to his or her Plan account shall be deemed to have
withdrawn from the Plan in accordance with Section 12.1. Amounts withdrawn shall
be returned to the Participant as soon as practicable after the Company's
receipt of the notice of withdrawal and may not be applied to the purchase of
shares in any Offering under the Plan. The Company may from time to time
establish or change limitations on the frequency of withdrawals permitted under
this Section, establish a minimum dollar amount that must be retained in the
Participant's Plan account, or terminate the withdrawal right provided by this
Section.

     11. PURCHASE OF SHARES.

          11.1 EXERCISE OF PURCHASE RIGHT. On each Purchase Date of an Offering
Period, each Participant who has not withdrawn from the Plan and whose
participation in the Offering has not otherwise terminated before such Purchase
Date shall automatically acquire pursuant to the exercise of the Participant's
Purchase Right the number of whole shares of Stock determined by dividing (a)
the total amount of the Participant's payroll deductions accumulated in the
Participant's Plan account during the Offering Period and not previously applied
toward the purchase of Stock by (b) the Purchase Price. However, in no event
shall the number of shares purchased by the Participant during an Offering
Period exceed the number of shares subject to the Participant's Purchase Right.
No shares of Stock shall be purchased on a Purchase Date on behalf of a
Participant whose participation in the Offering or the Plan has terminated
before such Purchase Date.

          11.2 PRO RATA ALLOCATION OF SHARES. If the number of shares of Stock
which might be purchased by all Participants in the Plan on a Purchase Date
exceeds the number of shares of Stock available in the Plan as provided in
Section 4.1, the Company shall make a pro rata allocation of the remaining
shares in as uniform a manner as practicable and as the Company determines to be
equitable. Any fractional share resulting from such pro rata allocation to any
Participant shall be disregarded.

          11.3 DELIVERY OF CERTIFICATES. As soon as practicable after each
Purchase Date, the Company shall arrange the delivery to each Participant of a
certificate representing the shares acquired by the Participant on such Purchase
Date; provided that the Company may deliver such shares to a broker designated
by the Company that will hold such shares for the benefit of the Participant.
Shares to be delivered to a Participant under the Plan shall be registered in
the name of the Participant, or, if requested by the Participant, in the name of
the Participant and his or her spouse, or, if applicable, in the names of the
heirs of the Participant.

          11.4 RETURN OF CASH BALANCE. Any cash balance remaining in a
Participant's Plan account following any Purchase Date shall be refunded to the
Participant as soon as practicable after such Purchase Date. However, if the
cash balance to be returned to a Participant pursuant to the preceding sentence
is less than the amount that would have been necessary to purchase an additional
whole share of Stock on such Purchase Date, the Company may retain the

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cash balance in the Participant's Plan account to be applied toward the purchase
of shares of Stock in the subsequent Purchase Period or Offering Period, as the
case may be.

          11.5 TAX WITHHOLDING. At the time a Participant's Purchase Right is
exercised, in whole or in part, or at the time a Participant disposes of some or
all of the shares of Stock he or she acquires under the Plan, the Participant
shall make adequate provision for the federal, state, local and foreign tax
withholding obligations, if any, of the Participating Company Group which arise
upon exercise of the Purchase Right or upon such disposition of shares,
respectively. The Participating Company Group may, but shall not be obligated
to, withhold from the Participant's compensation the amount necessary to meet
such withholding obligations.

          11.6 EXPIRATION OF PURCHASE RIGHT. Any portion of a Participant's
Purchase Right remaining unexercised after the end of the Offering Period to
which the Purchase Right relates shall expire immediately upon the end of the
Offering Period.

          11.7 PROVISION OF REPORTS AND SHAREHOLDER INFORMATION TO PARTICIPANTS.
Each Participant who has exercised all or part of his or her Purchase Right
shall receive, as soon as practicable after the Purchase Date, a report of such
Participant's Plan account setting forth the total payroll deductions
accumulated prior to such exercise, the number of shares of Stock purchased, the
Purchase Price for such shares, the date of purchase and the cash balance, if
any, remaining immediately after such purchase that is to be refunded or
retained in the Participant's Plan account pursuant to Section 11.4. The report
required by this Section may be delivered in such form and by such means,
including by electronic transmission, as the Company may determine. In addition,
each Participant shall be provided information concerning the Company equivalent
to that information provided generally to the Company's common shareholders. At
least annually, copies of the Company's balance sheet and income statement for
the just completed fiscal year shall be made available to each Participant. The
Company shall not be required to provide such information to key employees whose
duties in connection with the Company assure them access to equivalent
information.

     12. WITHDRAWAL FROM PLAN OR OFFERING.

          12.1 VOLUNTARY WITHDRAWAL FROM THE PLAN. A Participant may withdraw
from the Plan by signing and delivering to the Company's designated office a
written notice of withdrawal on a form provided by the Company for this purpose.
Such withdrawal may be elected at any time prior to the end of an Offering
Period; provided, however, that if a Participant withdraws from the Plan after a
Purchase Date, the withdrawal shall not affect shares of Stock acquired by the
Participant on such Purchase Date. A Participant who voluntarily withdraws from
the Plan is prohibited from resuming participation in the Plan in the same
Offering from which he or she withdrew, but may participate in any subsequent
Offering by again satisfying the requirements of Sections 5 and 7.1. The Company
may impose, from time to time, a requirement that the notice of withdrawal from
the Plan be on file with the Company's designated office for a reasonable period
prior to the effectiveness of the Participant's withdrawal.

          12.2 RETURN OF PAYROLL DEDUCTIONS. Upon a Participant's voluntary
withdrawal from the Plan pursuant to Section 12.1, the Participant's accumulated
payroll deductions which have not been applied toward the purchase of shares of
Stock shall be refunded

                                       11
<PAGE>   12

to the Participant as soon as practicable after the withdrawal, without the
payment of any interest, and the Participant's interest in the Plan or the
Offering, as applicable, shall terminate. Such accumulated payroll deductions to
be refunded in accordance with this Section may not be applied to any other
Offering under the Plan.

     13. TERMINATION OF EMPLOYMENT OR ELIGIBILITY.

          Upon a Participant's ceasing, prior to a Purchase Date, to be an
Employee of the Participating Company Group for any reason, including
retirement, disability or death, or upon the failure of a Participant to remain
an Eligible Employee, the Participant's participation in the Plan shall
terminate immediately. In such event, the Participant's accumulated payroll
deductions which have not been applied toward the purchase of shares shall, as
soon as practicable, be returned to the Participant or, in the case of the
Participant's death, to the Participant's beneficiary designated in accordance
with Section 20, if any, or legal representative, and all of the Participant's
rights under the Plan shall terminate. Interest shall not be paid on sums
returned pursuant to this Section 13. A Participant whose participation has been
so terminated may again become eligible to participate in the Plan by satisfying
the requirements of Sections 5 and 7.1.

     14. CHANGE IN CONTROL.

          14.1 DEFINITIONS.

               (a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred
if any of the following occurs with respect to the Company: (i) the direct or
indirect sale or exchange in a single or series of related transactions by the
shareholders of the Company of more than fifty percent (50%) of the voting stock
of the Company; (ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all of the assets
of the Company; or (iv) a liquidation or dissolution of the Company.

               (b) A "CHANGE IN CONTROL" shall mean an Ownership Change Event or
a series of related Ownership Change Events (collectively, the "TRANSACTION")
wherein the shareholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting securities of the Company or, in the case of a Transaction
described in Section 14.1(a)(iii), the corporation or other business entity to
which the assets of the Company were transferred (the "TRANSFEREE"), as the case
may be. For purposes of the preceding sentence, indirect beneficial ownership
shall include, without limitation, an interest resulting from ownership of the
voting securities of one or more corporations or other business entities which
own the Company or the Transferee, as the case may be, either directly or
through one or more subsidiary corporations or other business entities. The
Board shall have the right to determine whether multiple sales or exchanges of
the voting securities of the Company or multiple Ownership Change Events are
related, and its determination shall be final, binding and conclusive.

                                       12
<PAGE>   13

          14.2 EFFECT OF CHANGE IN CONTROL ON PURCHASE RIGHTS. In the event of a
Change in Control, the surviving, continuing, successor, or purchasing
corporation or other business entity or parent thereof, as the case may be (the
"ACQUIRING CORPORATION"), may, without the consent of any Participant, assume
the Company's rights and obligations under the Plan. If the Acquiring
Corporation elects not to assume the Company's rights and obligations under the
Plan, the Purchase Date of the then current Purchase Period shall be accelerated
to a date before the date of the Change in Control specified by the Board, but
the number of shares of Stock subject to outstanding Purchase Rights shall not
be adjusted. All Purchase Rights which are neither assumed by the Acquiring
Corporation in connection with the Change in Control nor exercised as of the
date of the Change in Control shall terminate and cease to be outstanding
effective as of the date of the Change in Control.

     15. NONTRANSFERABILITY OF PURCHASE RIGHTS.

          Neither payroll deductions credited to a Participant's Plan account
nor a Participant's Purchase Right may be assigned, transferred, pledged or
otherwise disposed of in any manner other than as provided by the Plan or by
will or the laws of descent and distribution. (A beneficiary designation
pursuant to Section 20 shall not be treated as a disposition for this purpose.)
Any such attempted assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw from the Plan as provided in Section 12.1. A Purchase Right shall be
exercisable during the lifetime of the Participant only by the Participant.

     16. COMPLIANCE WITH SECURITIES LAW.

          The issuance of shares under the Plan shall be subject to compliance
with all applicable requirements of federal, state and foreign law with respect
to such securities. A Purchase Right may not be exercised if the issuance of
shares upon such exercise would constitute a violation of any applicable
federal, state or foreign securities laws or other law or regulations or the
requirements of any securities exchange or market system upon which the Stock
may then be listed. In addition, no Purchase Right may be exercised unless (a) a
registration statement under the Securities Act of 1933, as amended, shall at
the time of exercise of the Purchase Right be in effect with respect to the
shares issuable upon exercise of the Purchase Right, or (b) in the opinion of
legal counsel to the Company, the shares issuable upon exercise of the Purchase
Right may be issued in accordance with the terms of an applicable exemption from
the registration requirements of said Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares under the Plan shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of a
Purchase Right, the Company may require the Participant to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation, and to make any representation or warranty
with respect thereto as may be requested by the Company.

                                       13
<PAGE>   14

     17. RIGHTS AS A SHAREHOLDER AND EMPLOYEE.

          A Participant shall have no rights as a shareholder by virtue of the
Participant's participation in the Plan until the date of the issuance of a
certificate for the shares purchased pursuant to the exercise of the
Participant's Purchase Right (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such certificate is issued, except as
provided in Section 4.2. Nothing herein shall confer upon a Participant any
right to continue in the employ of the Participating Company Group or interfere
in anyway with any right of the Participating Company Group to terminate the
Participant's employment at any time.

     18. LEGENDS.

          The Company may at any time place legends or other identifying symbols
referencing any applicable federal, state or foreign securities law restrictions
or any provision convenient in the administration of the Plan on some or all of
the certificates representing shares of Stock issued under the Plan. The
Participant shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired pursuant to a
Purchase Right in the possession of the Participant in order to carry out the
provisions of this Section. Unless otherwise specified by the Company, legends
placed on such certificates may include but shall not be limited to the
following:

"THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE
REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER AN EMPLOYEE STOCK PURCHASE
PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATION
IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER HEREOF. THE
REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE
REGISTERED HOLDER'S NAME (AND NOT IN THE NAME OF ANY NOMINEE)."

     19. NOTIFICATION OF DISPOSITION OF SHARES.

          The Company may require the Participant to give the Company prompt
notice of any disposition of shares acquired by exercise of a Purchase Right.
The Company may require that until such time as a Participant disposes of shares
acquired upon exercise of a Purchase Right, the Participant shall hold all such
shares in the Participant's name (or, if elected by the Participant, in the name
of the Participant and his or her spouse but not in the name of any nominee)
until the later of two years after the date of grant of such Purchase Right or
one year after the date of exercise of such Purchase Right. The Company may
direct that the certificates evidencing shares acquired by exercise of a
Purchase Right refer to such requirement to give prompt notice of disposition.

                                       14
<PAGE>   15

     20. DESIGNATION OF BENEFICIARY.

          20.1 DESIGNATION PROCEDURE. A Participant may file a written
designation of a beneficiary who is to receive (a) shares and cash, if any, from
the Participant's Plan account if the Participant dies subsequent to a Purchase
Date but prior to delivery to the Participant of such shares and cash or (b)
cash, if any, from the Participant's Plan account if the Participant dies prior
to the exercise of the Participant's Purchase Right. If a married Participant
designates a beneficiary other than the Participant's spouse, the effectiveness
of such designation shall be subject to the consent of the Participant's spouse.
A Participant may change his or her beneficiary designation at any time by
written notice to the Company.

          20.2 ABSENCE OF BENEFICIARY DESIGNATION. If a Participant dies without
an effective designation pursuant to Section 20.1 of a beneficiary who is living
at the time of the Participant's death, the Company shall deliver any shares or
cash credited to the Participant's Plan account to the Participant's legal
representative.

     21. NOTICES.

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

     22. SHAREHOLDER APPROVAL.

          The Plan shall be approved by the shareholders of the Company within
twelve (12) months of the date of adoption thereof by the Board.

     23. AMENDMENT OR TERMINATION OF THE PLAN.

          The Board may at any time amend or terminate the Plan, except that (a)
no such amendment or termination shall affect Purchase Rights previously granted
under the Plan unless expressly provided by the Board and (b) no such amendment
or termination may adversely affect a Purchase Right previously granted under
the Plan without the consent of the Participant, except to the extent permitted
by the Plan or as may be necessary to qualify the Plan as an employee stock
purchase plan pursuant to Section 423 of the Code or to comply with any
applicable law, regulation or rule. In addition, an amendment to the Plan must
be approved by the shareholders of the Company within twelve (12) months of the
adoption of such amendment if such amendment would authorize the sale of more
shares than are then authorized for issuance under the Plan or would change the
definition of the corporations that may be designated by the Board as
Participating Companies.

                                       15<PAGE>   1
                                                                    EXHIBIT 10.5

                                    EXHIBIT A

                          FORM OF AMENDED AND RESTATED
                           COMMERCIAL LEASE AGREEMENT

       This Amended and Restated Commercial Lease Agreement ("Lease") is made
and entered as of __________, 2001 by and between ESS Technology Inc., a
California corporation ("Landlord") and Vialta Inc., a Delaware corporation
("Tenant"), to amend and restate that certain Commercial Lease Agreement between
Landlord and Tenant dated January 1, 2001.

       Landlord is the owner of land and improvements in Fremont, California
legally described on Exhibit 1 attached hereto and incorporated by reference
herein (the "Project").

       The Leased Premises are improved with a freestanding building consisting
of 77,249 square feet commonly known as 48461 Fremont Blvd., Fremont, California
(the "Leased Premises"). The Leased Premises are a portion of the Project, as
depicted on Exhibit 2 attached hereto.

       Landlord desires to lease the Leased Premises to Tenant, and Tenant
desires to lease the Leased Premises from Landlord for the term, at the rental
and upon the covenants, conditions and provisions herein set forth.

       THEREFORE, in consideration of the mutual promises herein contained and
other good and valuable consideration, it is agreed:

       1. Premises and Common Areas. Landlord hereby leases to Tenant the Leased
Premises. In addition to the Leased Premises, Landlord grants to Tenant a
nonexclusive license to use the Common Areas during the term of this Lease. The
term "Common Areas" is defined as the area and facilities outside the Leased
Premises as depicted on Exhibit 2 attached hereto that is designated by the
Landlord for the general non-exclusive use of Landlord, Tenant and other lessees
of the Project and their respective employees, suppliers, shippers, customers
and invitees, including but not limited to parking areas, loading and unloading
areas, trash areas, roadways, sidewalks, walkways, parkways, ramps, driveways,
landscaped areas and decorative walls. Landlord shall have the right to make
changes to the Common Areas provided that such changes do not unreasonably
interfere with Tenant's use and enjoyment of the Leased Premises.

       2. Term.

              (a) The initial term of this Lease shall commence on January 1,
2001 ("Commencement Date") and end on December 31, 2003 ("Initial Term").

              (b) Tenant may renew the Lease for one extended term of up to
three (3) years ("Renewal Term"). Tenant shall exercise such renewal option, if
at all, by giving written notice to Landlord not less than ninety (90) days
prior to the expiration of the Initial Term. The renewal term shall be at the
rental set forth below and otherwise upon the same covenants, conditions and
provisions as provided in this Lease. The Initial Term and the Renewal Term
shall be referred to herein as the "Term."

                                  Exhibit A-1
<PAGE>   2

       3. Rental.

              (a) Tenant shall pay to Landlord during the Initial Term rental of
$1,853,976.00 per year, payable in installments of $154,498.00 per month. Each
installment payment shall be due in advance on the first day of each calendar
month during the lease term to Landlord at ESS Technology Inc., 48401 Fremont
Blvd., Fremont, CA 94538, Attn: Accounting Dept., or at such other place
designated by written notice from Landlord or Tenant. The rental payment amount
for any partial calendar months included in the lease term shall be prorated on
a daily basis.

              (b) The rental for any renewal lease term, if created as permitted
under this Lease, shall be $1,853,976.00 per year, payable in installments of
$154,498.00 per month.

       4. Use. Tenant may use the Leased Premises for general office purposes
and for any purpose not prohibited by (i) law and (ii) any covenants, conditions
and restrictions affecting the Leased Premises as of the date of this Lease.
Notwithstanding the forgoing, Tenant shall not use the Leased Premises for the
purposes of storing, manufacturing or selling any explosives, flammables or any
other inherently dangerous substance regulated by law ("Hazardous Substance"),
except for such Hazardous Substances customarily used in an office, without the
prior written consent of Landlord.

       5. Sublease and Assignment. Tenant shall have the right without
Landlord's consent to assign this Lease to a corporation with which Tenant may
merge or consolidate, to any subsidiary of Tenant, to any corporation that
controls, is controlled by or under common control with Tenant, or to a
purchaser of all or substantially all of Tenant's assets. Except as set forth
above, Tenant shall not sublease all or any part of the Leased Premises, or
assign this Lease in whole or in part without Landlord's consent, such consent
not to be unreasonably withheld, conditioned or delayed.

       6. Repairs by Tenant. During the Lease term, Tenant shall make, at
Tenant's expense, all necessary repairs to the interior of the Leased Premises
except those provided in Section 7 hereof. Tenant's repairs shall include such
items as routine repairs of interior floors, walls, ceilings, and other interior
parts of the Leased Premises damaged or worn through normal occupancy, subject
to the obligations of the parties otherwise set forth in this Lease.

       7. Tenant Alterations and Improvements. Tenant, at Tenant's expense,
shall have the right following Landlord's consent to remodel, redecorate, and
make additions, improvements and replacements of and to all or any part of the
Leased Premises from time to time as Tenant may deem desirable, provided the
same are made in a workmanlike manner and utilizing good quality materials.
Tenant shall have the right to place and install personal property, trade
fixtures, equipment and other temporary installations in and upon the Leased
Premises, and fasten the same to the Leased Premises. All personal property,
equipment, machinery, trade fixtures and temporary installations, whether
acquired by Tenant at the commencement of the Term or placed or installed on the
Leased Premises by Tenant thereafter, shall remain Tenant's property free and
clear of any claim by Landlord. Tenant shall have the right to remove the same
at any time during the term of this Lease provided that all damage to the Leased
Premises caused by such removal shall be repaired by Tenant at Tenant's expense.

                                  Exhibit A-2
<PAGE>   3

Notwithstanding the foregoing, Tenant shall be entitled to make non-structural
interior alterations to the Leased Premises which do not exceed Twenty Five
Thousand Dollars ($25,000) in cost in any calendar year without Landlord's prior
written consent.

       8. Landlord's Maintenance and Repairs. Except for damage caused by the
active negligence or willful misconduct of Tenant, in which event Tenant shall
repair the damage, Landlord, at Landlord's sole expense, shall keep in good
condition and repair the exterior walls, roof (including roof membrane),
elevator shafts, footings, foundations, structural portions of load-bearing
walls, structural floors and subfloors, and structural columns and beams
("Building's Structure"). Landlord, at Landlord's expense, shall keep in good
condition and repair the Leased Premises' HVAC, life-safety, plumbing,
electrical and mechanical systems ("Building Systems") as well as the parking
lots, walkways, driveways, landscaping, fences, signs and utility installations
of the Common Areas upon the Leased Premises and all parts thereof. Landlord
shall commence and complete such repairs hereunder within thirty (30) days after
receipt of written notice from Tenant of the need for such repairs, except in
the case of an emergency, when such repairs shall be commenced and completed as
soon as possible. Tenant expressly waives the benefits of any statute now or
hereafter in effect which would otherwise afford Tenant the right to make
repairs at Landlord's expense or to terminate this Lease because of Landlord's
failure to furnish any services when such failure is caused by accident,
breakage, repairs, strikes, lockout, or other labor disturbances or by any other
cause beyond the reasonable control of Landlord.

       9. Property Taxes. Landlord shall pay, prior to delinquency, all general
real estate taxes and installments of special assessments coming due during the
Lease term on the Leased Premises, and all personal property taxes with respect
to Landlord's personal property, if any, on the Leased Premises. Tenant shall be
responsible for paying all personal property taxes with respect to Tenant's
personal property at the Leased Premises.

       10. Insurance.

              (a) If the Leased Premises are damaged by fire or other casualty
resulting from the act or negligence or willful misconduct of Tenant or any of
Tenant's agents, employees or invitees, rent shall not be diminished or abated
while such damages are under repair, and Tenant shall be responsible for the
costs of repair not covered by insurance.

              (b) Landlord shall maintain fire and extended coverage insurance
on the Project, in such amounts, as Landlord shall deem appropriate. Tenant
shall be responsible, at its expense, for fire and extended coverage insurance
on all of its personal property, including removable trade fixtures, located in
the Leased Premises.

              (c) Tenant and Landlord shall, each at its own expense, maintain a
policy or policies of comprehensive general liability insurance with respect to
the respective activities of each in the Leased Premises with the premiums
thereon fully paid on or before due date, issued by and binding upon some
insurance company approved by Landlord, such insurance to afford minimum
protection of not less than $1,000,000 combined single limit coverage of bodily
injury, property damage or combination thereof. Landlord shall be listed as an
additional insured on Tenant's policy or policies of comprehensive general
liability insurance, and Tenant shall

                                  Exhibit A-3
<PAGE>   4

provide Landlord with current Certificates of Insurance evidencing Tenant's
compliance with this Paragraph. Tenant shall obtain the agreement of Tenant's
insurers to notify Landlord that a policy is due to expire at least (10) days
prior to such expiration. Landlord shall not be required to maintain insurance
against thefts within the Project.

              (d) Notwithstanding anything to the contrary in this Lease or any
Ancillary Agreement (as that term is defined in that certain Master Distribution
Agreement between Landlord and Tenant dated _________), Tenant hereby waives any
right of recovery against Landlord and its respective agents, employees,
contractors and invitees, and Landlord hereby waives any right of recovery
against Tenant and its agents, employees, contractors and invitees, for any loss
or damage that is covered by any insurance policy maintained or required to be
maintained with respect to this Lease or the Project. Each party shall, in
addition to naming the other parties as additional insureds/loss payees on all
applicable policies, inform all its insurers of policies described in this Lease
about this waiver of subrogation, and shall secure from such insurers amendments
to the policies recognizing and providing for such waiver.

       11. Indemnity.

              (a) Tenant's Indemnification. Tenant hereby agrees to indemnify,
defend and hold harmless Landlord from and against any and all claims, losses,
liabilities and expenses, including reasonable attorneys' fees (whether incurred
in litigation, on appeal, discretionary review, or otherwise), suffered or
incurred by Landlord by reason of (a) the occupancy of the Leased Premises by
Tenant, the conduct of Tenant's business thereon, or any act, omission or
neglect of Tenant, its agents, contractors, employees, subtenants or invitees in
relation thereto, on or after the Commencement Date, (b) the release of any
Hazardous Substance in or about the Leased Premises or the violation of any
environmental, health and safety laws by Tenant or its agents, contractors,
employees or invitees, or (c) any breach by Tenant of any of Tenant's
obligations under the Lease.

              (b) Landlord's Indemnification. Landlord hereby agrees to
indemnify, defend and hold harmless Tenant from and against any and all claims,
losses, liabilities and expenses, including reasonable attorneys' fees (whether
incurred in litigation, on appeal, discretionary review, or otherwise) suffered
or incurred by Tenant by reason of (a) the occupancy of the Project by Landlord,
the conduct of Landlord's business thereon, or any act, omission or neglect of
Landlord, its agents, contractors, employees, tenants or invitees in relation
thereto, before or after the Commencement Date, (b) any environmental
contamination or pollution of the Leased Premises that occurred or existed
before the Commencement Date, including cleanup and removal from the Leased
Premises of any such prior Hazardous Substance or contamination unless such
preexisting condition is caused by the affirmative act of Tenant, its employees,
agents, contractors successors or assigns, or (c) any breach by Landlord of any
of Landlord's obligations under the Lease.

       12. Utilities. Tenant shall pay all charges for water, sewer, gas,
electricity, telephone and other services and utilities used by Tenant on the
Leased Premises during the term of this Lease unless otherwise expressly agreed
in writing by Landlord. In the event that any utility or service provided to the
Leased Premises is not separately metered, Landlord shall pay the amount due and
separately invoice Tenant for Tenant's pro rata share of the charges. Tenant

                                  Exhibit A-4
<PAGE>   5

shall pay such amounts within fifteen (15) days of invoice. In the event that
Landlord uses the Leased Premises' HVAC system to service the Leased Premises
and Landlord's adjacent building ("Landlord's Facility"), Tenant shall pay the
amount due and separately invoice Landlord for Landlord's pro rata share of the
charges. Landlord shall pay such amounts within fifteen (15) days of invoice.
Tenant shall not use any equipment or devices that, in Landlord's reasonable
opinion, overload the wiring or interfere with electrical services to other
tenants. Landlord shall pay all charges for water, sewer, gas, electricity and
other services used in the Common Areas.

       13. Signs. Tenant shall have the right to place on the Leased Premises,
at locations selected by Tenant, any signs which are permitted by applicable
zoning ordinances and private restrictions. Landlord shall assist and cooperate
with Tenant in obtaining any necessary permission from governmental authorities
or adjoining owners to place or construct the foregoing signs. Tenant shall
repair all damage to the Leased Premises resulting from the removal of signs
installed by Tenant.

       14. Entry. Landlord shall have the right to enter upon the Leased
Premises upon reasonable notice at reasonable hours to inspect the same,
provided Landlord shall not thereby unreasonably interfere with Tenant's
business on the Leased Premises.

       15. Parking. During the term of this Lease, Tenant shall have the
non-exclusive use of the automobile parking areas, driveways, and footways in
the Common Areas, subject to reasonable rules and regulations for the use
thereof as prescribed from time to time by Landlord.

       16. Project Rules. Tenant will comply with the reasonable rules of the
Project and Leased Premises adopted and altered by Landlord from time to time
and will cause all of its agents, employees, invitees and visitors to do so; all
changes to such rules will be sent by Landlord to Tenant in writing. The initial
rules for the Project and Leased Premises are attached hereto as Exhibit 3 and
incorporated herein for all purposes.

       17. Damage and Destruction. Subject to Section 10(a) above, if the Leased
Premises or any part thereof or any appurtenance thereto suffers Material Damage
by fire, casualty or structural defects so that the same cannot be used for
Tenant's purposes, then Tenant shall have the right within ninety (90) days
following damage to elect by notice to Landlord to terminate this Lease as of
the date of such damage. In the event of minor damage to any part of the Leased
Premises, and if such damage does not render the Leased Premises unusable for
Tenant's purposes, Landlord shall promptly repair such damage at the cost of the
Landlord. In making the repairs called for in this paragraph, Landlord shall not
be liable for any delays resulting from strikes, governmental restrictions,
inability to obtain necessary materials or labor or other matters which are
beyond the reasonable control of Landlord. Tenant shall be relieved from paying
rent and other charges during any portion of the Lease term that the Leased
Premises are inoperable or unfit for occupancy, or use, in whole or in part, for
Tenant's purposes in the proportion that the area of the Leased Premises not
occupied by Tenant bears to the total area of the Leased Premises. Rentals and
other charges paid in advance for any such periods shall be credited on the next
ensuing payments, if any, but if no further payments are to be made, any such
advance payments shall be refunded to Tenant. The provisions of this paragraph
extend not only to the matters aforesaid, but also to any occurrence which is
beyond Tenant's reasonable control and

                                  Exhibit A-5
<PAGE>   6

which renders the Leased Premises, or any appurtenance thereto, inoperable or
unfit for occupancy or use, in whole or in part, for Tenant's purposes. For
purposes of this paragraph, "Material Damage" means that all or part of the
Leased Premises is damaged or destroyed to the extent that Landlord cannot
reasonably repair the damage within one hundred eighty (180) days after the date
the damage or destruction occurred. Within thirty (30) days after any damage to
the Leased Premises, Landlord shall provide Tenant with a written certificate
from Landlord's contractor specifying whether such damage constitutes Material
Damage.

       18. Default. If Tenant shall fail to pay rent when due to Landlord as
herein provided, and if said failure shall continue for fifteen (15) days after
written notice thereof shall have been given to Tenant by Landlord, or if Tenant
fails to perform any of the other covenants or conditions to be kept, observed
and performed by Tenant, and such failure shall continue for thirty (30) days
after notice thereof in writing to Tenant by Landlord without correction thereof
then having been commenced and thereafter diligently prosecuted, Tenant shall be
in default of this Lease and Landlord may declare the term of this Lease ended
and terminated by giving Tenant written notice of such intention, and if
possession of the Leased Premises is not surrendered, Landlord may reenter said
premises. Landlord shall have, in addition to the remedy above provided, any
other right or remedy available to Landlord on account of any Tenant default,
either in law or equity. Landlord shall use reasonable efforts to mitigate its
damages.

       19. Quiet Possession. Landlord covenants and warrants that upon
performance by Tenant of its obligations hereunder, Landlord will keep and
maintain Tenant in exclusive, quiet, peaceable and undisturbed and uninterrupted
possession of the Leased Premises during the term of this Lease.

       20. Condemnation. If any legally, constituted authority condemns the
Leased Premises or such part thereof which shall make the Leased Premises
unsuitable for leasing, this Lease shall cease when the public authority takes
possession, and Landlord and Tenant shall account for rental as of that date.
Such termination shall be without prejudice to the rights of either party to
recover compensation from the condemning authority for any loss or damage caused
by the condemnation. Neither party shall have any rights in or to any award made
to the other by the condemning authority.

       21. Subordination. Upon written request of Landlord, or the holder of any
mortgage, deed of trust or other lien ("Lien Holder") encumbering the Leased
Premises, Tenant shall subordinate its rights hereunder to the lien of any
mortgage or deed of trust or other lien presently existing or hereafter arising
upon the Leased Premises and to any renewals, refinancing and extensions
thereof; provided that the Lien Holder agrees to recognize the Tenant's rights
under this Lease and not to disturb the possession, use and other rights of
Tenant under this Lease. Landlord agrees to use commercially reasonable efforts
to obtain a Subordination, Non-Disturbance and Attornment Agreement from the
current Lien Holder(s), if any, and deliver same to Tenant within thirty (30)
days from the date of this Lease. In addition, Landlord agrees to obtain a SNDA
from any future Lien Holder within thirty (30) days after Landlord obtains
financing from such Lien Holder; provided that if such SNDA is not so delivered,
Tenant shall not be required to subordinate its rights under this Lease to such
future Lien Holder's lien. In the event of acquisition of title to the Leased
Premises by said Lien Holder or any person through foreclosure proceedings or
otherwise, the Lien Holder or other person acquiring title to the

                                  Exhibit A-6
<PAGE>   7

Premises agrees to accept Tenant under the Lease and to perform the Landlord's
obligations hereunder, provided that no default has occurred and is continuing;
and Tenant agrees to attorn to and recognize such Lien Holder or any other
person acquiring title to the Premises. Landlord and Tenant agree that they will
from time to time upon request execute and deliver a statement in recordable
form certifying that this Lease is unmodified and in full force and effect (or
if there have been modifications, that the same is in full force and effect as
so modified), stating the dates to which rent and other charges payable under
this Lease have been paid, stating that no party is not in default hereunder
(or, if there is an alleged default, stating the nature of such alleged
default).

       22. Notice. Any notice required or permitted under this Lease shall be
deemed sufficiently given or served if sent prepaid, by United States certified
mail, return receipt requested, addressed as follows:

               If to Landlord to:   ESS Technology Inc.
                                    48401 Fremont Blvd.
                                    Fremont, CA 94538

               If to Tenant to:     Vialta Inc.
                                    48461 Fremont Blvd.
                                    Fremont, CA 94538

Landlord and Tenant shall each have the right from time to time to change the
place notice is to be given under this paragraph by written notice thereof to
the other party.

       23. Brokers. Landlord and Tenant represent that neither party was shown
the Leased Premises by any real estate broker or agent and that neither party
has otherwise engaged in any activity which could form the basis for a claim for
real estate commission, brokerage fee, finder's fee or other similar charge, in
connection with this Lease.

       24. Waiver. No waiver of any default of Landlord or Tenant hereunder
shall be implied from any omission to take any action on account of such default
if such default persists or is repeated, and no express waiver shall affect any
default other than the default specified in the express waiver and that only for
the time and to the extent therein stated. One or more waivers by Landlord or
Tenant shall not be construed as a waiver of a subsequent breach of the same
covenant, term or condition.

       25. Memorandum of Lease. The parties hereto contemplate that this Lease
should not and shall not be filed for record, but in lieu thereof, at the
request of either party, Landlord and Tenant shall execute a Memorandum of Lease
to be recorded for the purpose of giving record notice of the appropriate
provisions of this Lease.

       26. Headings. The headings used in this Lease are for convenience of the
parties only and shall not be considered in interpreting the meaning of any
provision of this Lease.

       27. Successors. The provisions of this Lease shall extend to and be
binding upon Landlord and Tenant and their respective legal representatives,
successors and assigns.

                                  Exhibit A-7
<PAGE>   8

       28. Consent. Landlord shall not unreasonably withhold, condition or delay
its consent with respect to any matter for which Landlord's consent is required
or desirable under this Lease.

       29. Attorneys' Fees. If either party brings any action or legal
proceeding with respect to this Lease, the prevailing party shall be entitled to
recover reasonable attorneys' and experts' fees and court costs.

       30. Performance. If there is a default with respect to any of Landlord's
covenants, warranties or representations under this Lease, and if the default
continues more than fifteen (15) days after notice in writing from Tenant to
Landlord specifying the default, Tenant may, at its option and without affecting
any other remedy hereunder, cure such default and deduct the cost thereof from
the next accruing installment or installments of rent payable hereunder until
Tenant shall have been fully reimbursed for such expenditures, together with
interest thereon at a rate equal to the lesser of twelve percent (12%) per annum
or the then highest lawful rate. If this Lease terminates prior to Tenant's
receiving full reimbursement, Landlord shall pay the unreimbursed balance plus
accrued interest to Tenant on demand.

       31. Compliance with Law. Tenant shall comply with all laws, orders,
ordinances and other public requirements now or hereafter pertaining to Tenant's
use of the Leased Premises and Common Areas. Landlord shall comply with all
laws, orders, ordinances and other public requirements now or hereafter
affecting the Project. This Lease shall in all respects be governed by and
construed in accordance with the laws of the State of California.

       32. Final Agreement. This Lease terminates and supersedes all prior
understandings or agreements on the subject matter hereof. This Lease may be
modified only by a further writing that is duly executed by both parties.

       33. Cafeteria License. Beginning on the Commencement Date and continuing
throughout the Term, Landlord agrees to allow Tenant's employees to dine in the
cafeteria located at the Landlord's Facility ("Cafeteria License"). The
Cafeteria License shall be for the specific purpose of dining at the cafeteria
during the hours of access determined by Landlord for its employees and at no
other times. During the term of the Cafeteria License, Tenant employees may
purchase meals in the cafeteria at the same price as such meals are offered to
Landlord's employees. Tenant shall use, and shall cause each of its employees,
agents, contractors, invitees and visitors to use, the cafeteria in compliance
with the reasonable and nondiscriminatory rules and regulations established by
Landlord, provided Landlord has given Tenant written notice of such rules and
regulations.

       34. Hotel Use. Landlord is the owner of a hotel (the "ESS Hotel")
adjacent to the Leased Premises. Subject to room availability, Landlord shall
permit Tenant the continuing right throughout the term to rent rooms at the ESS
Hotel for Tenant's employees, agents and business invitees at such rates that
Landlord shall reasonably determine from time to time; provided, however, that
such rates shall be no more than the lowest rate charged to guests of the hotel
who are not employees of Landlord during the calendar year.

                                  Exhibit A-8
<PAGE>   9

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

LANDLORD:                               TENANT:

ESS TECHNOLOGY INC.,                    VIALTA INC.,
a California corporation                a Delaware corporation

By:                                     By:
      ------------------------------           ---------------------------------

Name:                                   Name:
      ------------------------------           ---------------------------------

Title:                                  Title:
      ------------------------------           ---------------------------------

                                  Exhibit A-9
<PAGE>   10

                                    EXHIBIT 1

                                LEGAL DESCRIPTION

                                   Exhibit 1-1
<PAGE>   11

                                    EXHIBIT 2

                  DEPICTION OF LEASED PREMISES AND COMMON AREAS

                                   Exhibit 2-1
<PAGE>   12

                                    EXHIBIT 3

                                  PROJECT RULES

                                   Exhibit 3-1

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