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                                                                    EXHIBIT 10.1
                               BEA SYSTEMS, INC

                       1997 EMPLOYEE STOCK PURCHASE PLAN
                       ---------------------------------

                           Adopted on March 19, 1997
                   Amended and Restated on September 16, 1997
                      Amended and Restated on May 13, 1998
                      Amended and Restated on May 12, 1999

          The following constitute the provisions of the 1997 Employee Stock
Purchase Plan of BEA Systems, Inc.

          1.  Purpose. The purpose of the Plan is to provide employees of the
              -------
Company and its Designated Parents or Subsidiaries with an opportunity to
purchase Common Stock of the Company through accumulated payroll deductions. It
is the intention of the Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Code. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.

          2.  Definitions. As used herein, the following definitions shall
              -----------
apply:

          (a) "Accrual Period" means a period of approximately five and one-half
               --------------
or six and one-half months, commencing on each December 16 and July 1 and
terminating on the next following June 30 or December 15, respectively;
provided, however, that the first Accrual Period shall commence on the Effective
Date and shall end on June 30, 1997.

          (b)  "Board" means the Board of Directors of the Company.
                -----

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

          (d)  "Common Stock" means the common stock of the Company.
                ------------

          (e)  "Company" means BEA Systems, Inc. a Delaware corporation.
                -------

          (f)  "Compensation" means an Employee's base salary, commissions,
                ------------
overtime, bonuses, annual awards, other incentive payments, from the Company or
one or more Designated Parents or Subsidiaries, including such amounts of
earnings as are deferred by the Employee (i) under a qualified cash or deferred
arrangement described in Section 401(k) of the Code, (ii) to a plan qualified
under Section 125 of the Code, or (iii) to any other qualified or non-qualified
plan intended to defer the receipt of compensation. Compensation does not
include reimbursements or other expense allowances, fringe benefits (cash or
noncash), moving expenses, and any other payments not specifically referenced in
the first sentence.

          (g)  "Corporate Transaction" means any of the following stockholder-
                ---------------------
approved transactions to which the Company is a party:

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                (1)  a merger or consolidation in which the Company is not the
          surviving entity, except for a transaction the principal purpose of
          which is to change the state in which the Company is incorporated;

                (2)  the sale, transfer or other disposition of all or
          substantially all of the assets of the Company (including the capital
          stock of the Company's subsidiary corporations) in connection with
          complete liquidation or dissolution of the Company; or

                (3)  any reverse merger in which the Company is the surviving
          entity but in which securities possessing more than fifty percent
          (50%) of the total combined voting power of the Company's outstanding
          securities are transferred to a person or persons different from those
          who held such securities immediately prior to such merger.

          (h)  "Designated Parents or Subsidiaries" means the Parents or
                ----------------------------------
Subsidiaries which have been designated by the Plan Administrator from time to
time as eligible to participate in the Plan.

          (i)  "Effective Date" means the effective date of the Registration
                --------------
Statement relating to the Company's initial public offering of its Common Stock.
However, should any Designated Parent or Subsidiary become a participating
company in the Plan after such date, then such entity shall designate a separate
Effective Date with respect to its employee-participants.

          (j)  "Employee" means any individual, including an officer or
                --------
director, who is an employee of the Company or a Designated Parent or Subsidiary
for purposes of Section 423 of the Code. For purposes of the Plan, the
employment relationship shall be treated as continuing intact while the
individual is on sick leave or other leave of absence approved by the
individual's employer. Where the period of leave exceeds ninety (90) days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated on the
ninety-first (91st) day of such leave, for purposes of determining eligibility
to participate in the Plan.

          (k)  "Enrollment Date" means the first day of each Purchase Period.
                ---------------

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

          (m)  "Exercise Date" means the last day of each Accrual Period.
                -------------

          (n)  "Fair Market Value" means, as of any date, the value of Common
                -----------------
Stock determined as follows:

               (1)  Where there exists a public market for the Common Stock, the
          Fair Market Value shall be (A) the closing price for a share of Common
          Stock for the last market trading day prior to the time of the
          determination (or, if no closing price was reported on that date, on
          the last trading date on which a closing price

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          was reported) on the stock exchange determined by the Plan
          Administrator to be the primary market for the Common Stock or the
          Nasdaq National Market, whichever is applicable or (B) if the Common
          Stock is not traded on any such exchange or national market system,
          the average of the closing bid and asked prices of a share of Common
          Stock on the Nasdaq Small Cap Market for the day prior to the time of
          the determination (or, if no such prices were reported on that date,
          on the last date on which such prices were reported), in each case, as
          reported in The Wall Street Journal or such other source as the Plan
          Administrator deems reliable;

               (2)  In the absence of an established market of the type
          described in (1), above, for the Common Stock, and subject to (3),
          below, the Fair Market Value thereof shall be determined by the Plan
          Administrator in good faith; or

               (3)  On the Effective Date, the Fair Market Value shall be the
          price at which the Board, or if applicable, the Pricing Committee of
          the Board, and the underwriters agree to offer Common Stock to the
          public in the initial public offering of the Common Stock, net of
          discounts and underwriting commissions.

          (o)  "Parent" means a "parent corporation," whether now or hereafter
                ------
existing, as defined in Section 424(e) of the Code.

          (p)  "Participant" means an Employee of the Company or Designated
                -----------
Parent or Subsidiary who is actively participating in the Plan.

          (q)  "Plan" means this Employee Stock Purchase Plan.
                ----

          (r)  "Plan Administrator" means either the Board or a committee of
               ------------------
the Board that is responsible for the administration of the Plan.

          (s)  "Purchase Period" means a purchase period established pursuant
                ---------------
to Section 4 hereof.

          (t)  "Purchase Price" shall  mean an amount equal to 85% of the Fair
                --------------
Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.

          (u)  "Reserves" means the number of shares of Common Stock covered by
                --------
each option under the Plan which have not yet been exercised and the number of
shares of Common Stock which have been authorized for issuance under the
Plan but not yet placed under option.

          (v)  "Subsidiary" means a "subsidiary corporation," whether now or
                ----------
hereafter existing, as defined in Section 424(f) of the Code.

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           3.  Eligibility.
               -----------

          (a)  General.  Any individual who is an Employee on a given
               -------
Enrollment Date shall be eligible to participate in the Plan for the Purchase
Period commencing with such Enrollment Date.

          (b)  Limitations on Grant and Accrual.  Any provisions of the Plan
               --------------------------------
to the contrary notwithstanding, no Employee shall be granted an option under
the Plan. (i) if, immediately after the grant, such Employee (taking into
account stock owned by any other person whose stock would be attributed to such
Employee pursuant to Section 424(d) of the Code) would own stock and/or hold
outstanding options to purchase stock possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock of the Company
or of any Parent or Subsidiary, or (ii) which permits his/her rights to purchase
stock under all employee stock purchase plans of the Company and its Parents or
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the Fair Market Value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time. The determination of the accrual of the right to
purchase stock shall be made in accordance with Section 423(b)(8) of the Code
and the regulations thereunder.

          (c)  Other Limits on Eligibility.  Notwithstanding Subsection (a),
               ---------------------------
above, the following Employees shall not be eligible to participate in the Plan
for any relevant Purchase Period: (i) Employees whose customary employment is 20
hours or less per week; (ii) Employees whose customary employment is for not
more than 5 months in any calendar year; and (iii) Employees who are subject to
rules or laws of a foreign jurisdiction that prohibit or make impractical the
participation of such Employees in the Plan.

           4.  Purchase Periods.
               ----------------

          (a)  The Plan shall be implemented through overlapping or consecutive
Purchase Periods until such time as (i) the maximum number of shares of Common
Stock available for issuance under the Plan shall have been purchased or (ii)
the Plan shall have been sooner terminated in accordance with Section 19 hereof.
The maximum duration of a Purchase Period shall be twenty-seven (27) months.
Initially, the Plan shall be implemented through overlapping Purchase Periods of
twenty-four (24) months' duration commencing each December 16 and July 1
following the Effective Date (except that the initial Purchase Period shall
commence on the Effective Date and shall end on June 30, 1999). The Plan
Administrator shall have the authority to change the length of any Purchase
Period and the length of Accrual Periods within any such Purchase Period
subsequent to the initial Purchase Period by announcement at least thirty (30)
days prior to the commencement of the Purchase Period and to determine whether
subsequent Purchase Periods shall be consecutive or overlapping.

          (b)  A Participant shall be granted a separate option for each
Purchase Period in which he/she participates. The option shall be granted on the
Enrollment Date and shall be automatically exercised in successive installments
on the Exercise Dates ending within the Purchase Period.

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          (c)  An Employee may participate in only one Purchase Period at a
time. Accordingly, except as provided in Section 4(d), an Employee who wishes to
join a new Purchase Period must withdraw from the current Purchase Period in
which he/she is participating and must also enroll in the new Purchase Period
prior to the Enrollment Date for that Purchase Period.

          (d)  If on the first day of any Accrual Period in a Purchase Period in
which a Participant is participating, the Fair Market Value of the Common Stock
is less than the Fair Market Value of the Common Stock on the Enrollment Date of
the Purchase Period (after taking into account any adjustment during the
Purchase Period pursuant to Section 18(a)), the Purchase Period shall be
terminated automatically and the Participant shall be enrolled automatically in
the new Purchase Period which has its first Accrual Period commencing on that
date, provided the Participant is eligible to participate in the Plan on that
date and has not elected to terminate participation in the Plan.

          (e)  Except as specifically provided herein, the acquisition of Common
Stock through participation in the Plan for any Purchase Period shall neither
limit nor require the acquisition of Common Stock by a Participant in any
subsequent Purchase Period.

           5.  Participation.
               -------------

          (a)  An eligible Employee may become a Participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the designated payroll office of
the Company at least ten (10) business days prior to the Enrollment Date for the
Purchase Period in which such participation will commence, unless a later time
for filing the subscription agreement is set by the Plan Administrator for all
eligible Employees with respect to a given Purchase Period.

         (b)  Payroll deductions for a Participant shall commence with the first
payroll period following the Enrollment Date and shall end on the last complete
payroll period during the Purchase Period, unless sooner terminated by the
Participant as provided in Section 10.

          6.  Payroll Deductions.
              ------------------

         (a)  At the time a Participant files his/her subscription agreement,
he/she shall elect to have payroll deductions made during the Purchase Period in
an amount not exceeding fifteen percent (15%) of the Compensation which he/she
receives during the Purchase Period.

         (b)  All payroll deductions made for a Participant shall be credited to
his/her account under the Plan and will be withheld in whole percentages only. A
Participant may not make any additional payments into such account.

         (c)  A Participant may discontinue his/her participation in the Plan as
provided in Section 10, or may increase or decrease the rate of his/her payroll
deductions during the Purchase Period by completing and filing with the Company
a new subscription agreement authorizing an increase or decrease in the payroll
deduction rate. Any decrease in the rate of a

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Participant's payroll deductions shall be effective with the first full payroll
period commencing ten (10) business days after the Company's receipt of the new
subscription agreement unless the Company elects to process a given change in
participation more quickly. Any increase in the rate of a Participant's payroll
deductions shall be effective with the first full payroll period of the next
Accrual Period following the Accrual Period in which the Company receives the
new subscription agreement if such agreement is filed within ten (10) business
days before the commencement of the next Accrual Period unless the Company
elects to process a given change in participation more quickly. A Participant's
subscription agreement shall remain in effect for successive Purchase Periods
unless terminated as provided in Section 10. The Plan Administrator shall be
authorized to limit the number of payroll deduction rate changes during any
Purchase Period.

         (d)  Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) herein, a Participant's
payroll deductions may be decreased to 0% at such time during any Accrual Period
which is scheduled to end during the current calendar year (the "Current Accrual
Period") that the aggregate of all payroll deductions which were previously used
to purchase stock under the Plan in a prior Accrual Period which ended during
that calendar year plus all payroll deductions accumulated with respect to the
Current Accrual Period equal $21,250. Payroll deductions shall recommence at the
rate provided in such Participant's subscription agreement at the beginning of
the first Accrual Period which is scheduled to end in the following calendar
year, unless terminated by the Participant as provided in Section 10.

          7.  Grant of Option.  On the Enrollment Date, each Participant
              ---------------
shall be granted an option to purchase (at the applicable Purchase Price) up to
a number of shares of the Common Stock determined by dividing fifteen percent
(15%) of such Participant's Compensation receivable during the Purchase Period
by the applicable Purchase Price; provided (i) that such option shall be subject
to the limitations set forth in Sections 3(b) and 12 hereof, and (ii) the
maximum number of shares of Common Stock a Participant shall be permitted to
purchase in any Accrual Period shall be three thousand (3,000) shares, subject
to adjustment as provided in Section 18 hereof. Exercise of the option shall
occur as provided in Section 8, unless the Participant has withdrawn pursuant to
Section 10, and the option, to the extent not exercised, shall expire on the
last day of the Purchase Period.

          8.  Exercise of Option.  Unless a Participant withdraws from the Plan
              ------------------
as provided in Section 10, below, the Participant's option will be exercised
automatically on each Exercise Date by applying the accumulated payroll
deductions in the Participant's account to purchase the maximum number of full
shares subject to the option by dividing such Participant's payroll deductions
accumulated prior to such Exercise Date and retained in the Participant's
account as of the Exercise Date by the applicable Purchase Price.  No fractional
shares will be purchased; any payroll deductions accumulated in a Participant's
account which are not sufficient to purchase a full share shall be carried over
to the next Accrual Period or Purchase Period, whichever applies, or returned to
the Participant, if the Participant withdraws from the Plan.  Any amount
remaining in a Participant's account following the purchase of shares on the
Exercise Date which exceeds the cost of one full share of Common Stock on the
Exercise Date
                                       6
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shall be returned to the Participant and shall not be carried over to the next
Purchase Period. During a Participant's lifetime, a Participant's option to
purchase shares hereunder is exercisable only by him/her.

         9.  Delivery.  Upon receipt of a request from a Participant after each
             --------
Exercise Date on which a purchase of shares occurs, the Company shall arrange
the delivery to such Participant, as promptly as practicable, of a certificate
representing the shares purchased upon exercise of his/her option.

        10.  Withdrawal; Termination of Employment.
             -------------------------------------

        (a)  A Participant may withdraw all but not less than all the payroll
deductions credited to his/her account and not yet used to exercise his/her
option under the Plan at any time by giving written notice to the Company in the
form of Exhibit B to this Plan. All of the Participant's payroll deductions
credited to his/her account will be paid to such Participant as promptly as
practicable after receipt of notice of withdrawal, such Participant's option for
the Purchase Period will be automatically terminated, and no further payroll
deductions for the purchase of shares will be made during the Purchase Period.
If a Participant withdraws from a Purchase Period, payroll deductions will not
resume at the beginning of the succeeding Purchase Period unless the Participant
delivers to the Company a new subscription agreement.

        (b)  Upon a Participant's ceasing to be an Employee for any reason or
upon termination of a Participant's employment relationship (as described in
Section 2(j)), the payroll deductions credited to such Participant's account
during the Purchase Period but not yet used to exercise the option will be
returned to such Participant or, in the case of his/her death, to the person or
persons entitled thereto under Section 14, and such Participant's option will be
automatically terminated.

        11.  Interest.  No interest shall accrue on the payroll deductions
             --------
credited to a Participant's account under the Plan.

        12.  Stock.
             -----

        (a)  Subject to adjustment upon changes in capitalization of the Company
as provided in Section 18, the maximum number of shares of Common Stock which
shall be made available for sale under the Plan shall be three million six
hundred sixty six thousand ninety two (3,666,092) shares, and annually,
commencing with the first business day of each fiscal year of the Company
beginning with February 1, 2000 and thereafter, such maximum number of shares
shall be increased by a number of shares of Common Stock equal to the lesser of
(i) six million (6,000,000) shares or (ii) six percent (6%) of the number of
shares of Common Stock outstanding as of the last day of the immediately
preceding fiscal year of the Company reduced by the number of shares of Common
Stock added to the Company's 1997 Stock Incentive Plan pursuant to the terms of
Section 3(a) of that plan. If on a given Exercise Date the number of shares with
respect to which options are to be exercised exceeds the number of shares then
available under the Plan, the Plan Administrator shall make a pro rata
allocation of the shares remaining

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available for purchase in as uniform a manner as shall be practicable and as it
shall determine to be equitable.

        (b)  A Participant will have no interest or voting right in shares
covered by his/her option until such shares are actually purchased on the
Participant's behalf in accordance with the applicable provisions of the Plan.
No adjustment shall be made for dividends, distributions or other rights for
which the record date is prior to the date of such purchase.

        (c)  Shares to be delivered to a Participant under the Plan will be
registered in the name of the Participant or in the name of the Participant and
his/her spouse.

        13.  Administration.  The Plan shall be administered by the Board or a
             --------------
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all persons.

        14.  Designation of Beneficiary.
             --------------------------

        (a)  Each Participant will file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the Participant's account
under the Plan in the event of such Participant's death. If a Participant is
married and the designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective.

        (b)  Such designation of beneficiary may be changed by the Participant
(and his/her spouse, if any) at any time by written notice. In the event of the
death of a Participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such Participant's death, the
Company shall deliver such shares and/or cash to the executor or administrator
of the estate of the Participant, or if no such executor or administrator has
been appointed (to the knowledge of the Plan Administrator), the Plan
Administrator, in its discretion, may deliver such shares and/or cash to the
spouse or to any one or more dependents or relatives of the Participant, or if
no spouse, dependent or relative is known to the Plan Administrator, then to
such other person as the Plan Administrator may designate.

        15.  Transferability.  Neither payroll deductions credited to a
             ---------------
Participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Plan Administrator may treat such act as an election to
withdraw funds from a Purchase Period in accordance with Section 10.

        16.  Use of Funds.  All payroll deductions received or held by the
             ------------
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.

                                       8
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        17.  Reports.  Individual accounts will be maintained for each
             -------
Participant in the Plan. Statements of account will be given to Participants at
least annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.

        18.  Adjustments Upon Changes in Capitalization; Corporate Transactions.
             ------------------------------------------------------------------

        (a)  Adjustments Upon Changes in Capitalization.  Subject to any
             ------------------------------------------
required action by the stockholders of the Company, the Reserves, the fixed
share limit on the annual increase in the number of shares of Common Stock
available for sale under the Plan, as well as the Purchase Price, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
similar event resulting in an increase or decrease in the number of issued
shares of Common Stock. Such adjustment shall be made by the Plan Administrator,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an option. The Plan
Administrator may, if it so determines in the exercise of its sole discretion,
make provision for adjusting the Reserves, as well as the price per share of
Common Stock covered by each outstanding option, in the event the Company
effects one or more reorganizations, recapitalizations, rights offerings or
other increases or reductions of shares of its outstanding Common Stock.

         (b)  Corporate Transactions.  In the event of a proposed Corporate
              ----------------------
Transaction, each option under the Plan shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation, unless the Plan Administrator determines, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
to shorten the Purchase Period then in progress by setting a new Exercise Date
(the "New Exercise Date"). If the Plan Administrator shortens the Purchase
Period then in progress in lieu of assumption or substitution in the event of a
Corporate Transaction, the Plan Administrator shall notify each Participant in
writing, at least ten (10) days prior to the New Exercise Date, that the
Exercise Date for his/her option has been changed to the New Exercise Date and
that his/her option will be exercised automatically on the New Exercise Date,
unless prior to such date he/she has withdrawn from the Purchase Period as
provided in Section 10. For purposes of this Subsection, an option granted under
the Plan shall be deemed to be assumed if, following the Corporate Transaction,
the option confers the right to purchase, for each share of Common Stock subject
to the option immediately prior to the Corporate Transaction, the consideration
(whether stock, cash or other securities or property) received in the Corporate
Transaction by holders of Common Stock for each share of Common Stock held on
the effective date of the Corporate Transaction (and if such holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock); provided,
however, that if such consideration received in the Corporate Transaction was
not solely common stock of the successor corporation or its Parent, the Plan
Administrator may, with the consent of the successor corporation and the
Participant, provide for the consideration to

                                       9
<PAGE>

be received upon exercise of the option to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Corporate Transaction.

         19.  Amendment or Termination.
              ------------------------

         (a)  The Plan Administrator may at any time and for any reason
terminate or amend the Plan. Except as provided in Section 18, no such
termination can affect options previously granted, provided that a Purchase
Period may be terminated by the Plan Administrator on any Exercise Date if the
Plan Administrator determines that the termination of the Plan is in the best
interests of the Company and its stockholders. Except as provided in Section 18,
no amendment may make any change in any option theretofore granted which
adversely affects the rights of any Participant. To the extent necessary to
comply with Section 423 of the Code (or any successor rule or provision or any
other applicable law or regulation), the Company shall obtain stockholder
approval in such a manner and to such a degree as required.

         (b)  Without stockholder consent and without regard to whether any
Participant rights may be considered to have been "adversely affected," the Plan
Administrator shall be entitled to change the Purchase Periods, limit the
frequency and/or number of changes in the amount withheld during Purchase
Periods, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, establish additional terms, conditions, rules
or procedures to accommodate the rules or laws of applicable foreign
jurisdictions, permit payroll withholding in excess of the amount designated by
a Participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
Participant properly correspond with amounts withheld from the Participant's
Compensation, and establish such other limitations or procedures as the Plan
Administrator determines in its sole discretion advisable and which are
consistent with the Plan.

          20.  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 Plan Administrator at the
location, or by the person, designated by the Plan Administrator for the receipt
thereof.

          21.  Conditions Upon Issuance of Shares.  Shares shall not be issued
               ----------------------------------
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance. As a condition to the
exercise of an option, the Company may require the Participant to represent and
warrant at the time of any such exercise that the shares are being purchased
only for investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such a representation is

                                       10
<PAGE>

required by any of the aforementioned applicable provisions of law. In addition,
no options shall be exercised or shares issued hereunder before the Plan shall
have been approved by stockholders of the Company as provided in Section 23.

          22.  Term of Plan.  The Plan shall become effective upon the earlier
               ------------
to occur of its adoption by the Board or its approval by the stockholders of the
Company. It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 19.

          23.  Approval of the Plan.  The Plan became effective when adopted by
               --------------------
the Board on March 19, 1997, and was approved by the Company's stockholders on
March 31, 1997. On September 16, 1997, the Board adopted and approved an
amendment and restatement of the Plan to modify the ending date of each semi-
annual Accrual Period commencing on July 1 from December 31 to December 15 and
to modify the commencement dates of each semi-annual Accrual Period and twenty-
four month Purchase Period commencing on January 1 from January 1 to December
16. On May 13, 1998, the Board adopted an amendment of the Plan to increase the
number of shares of Common Stock available for sale under the Plan and to adopt
a formula to provide for an annual automatic increase in the number of shares of
Common Stock available for sale under the Plan, which amendments were approved
by the Company's stockholders on June 25, 1998. Also on May 13, 1998, the Board
adopted an amendment and restatement of the Plan (a) to increase the maximum
rate of payroll withholding for the purchase of shares under the Plan from ten
percent (10%) of Compensation to fifteen percent (15%) of Compensation (such
amendment effective for Purchase Periods commencing on and after July 1, 1998)
and (b) to grant options under the Plan to each Participant at the maximum
fifteen percent (15%) of Compensation withholding rate (such amendment effective
for Purchase Periods commencing on and after July 1, 1998), and such amendments
were not subject to stockholder approval. On May 12, 1999, the Board adopted an
amendment and restatement of the Plan to reduce the number of shares of Common
Stock available for sale under the Plan and to adjust the formula that provides
an annual automatic increase in the number of shares of Common Stock available
for sale under the Plan, such amendments conditioned upon and not to take effect
until stockholder approval of such amendments is obtained.

         24.  No Employment Rights.  The Plan does not, directly or indirectly,
              --------------------
create any right for the benefit of any employee or class of employees to
purchase any shares under the Plan, or create in any employee or class of
employees any right with respect to continuation of employment by the Company or
a Designated Parent or Subsidiary, and it shall not be deemed to interfere in
any way with such employer's right to terminate, or otherwise modify, an
employee's employment at any time.

         25.  Effect of Plan.  The provisions of the Plan shall, in accordance
              --------------
with its terms, be binding upon, and inure to the benefit of, all successors of
each Participant, including, without limitation, such Participant's estate and
the executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such
Participant.

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<PAGE>

         26.  Applicable Law.  The laws of the State of California (excluding
              --------------
that body of law pertaining to its conflicts of law) will govern all matters
relating to this Plan except to the extent it is superseded by the laws of the
United States.

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