Document:

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                                                                     EXHIBIT 4.3

                       ASPECT COMMUNICATIONS CORPORATION

                       1990 EMPLOYEE STOCK PURCHASE PLAN

     The following constitute the provisions of the 1990 Employee Stock Purchase
Plan of Aspect Communications Corporation.

     1.  Purpose.  The purpose of the Plan is to provide employees of the
         -------
Company and its Designated 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 Internal Revenue Code of 1986, as amended.  The
provisions of the Plan shall, accordingly, he construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

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

          (a) "Board" shall mean the Board of Directors of the Company.
               -----

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

          (c) "Common Stock" shall mean the Common Stock of the Company.
               ------------

          (d) "Company" shall mean Aspect Communications Corporation, a
               -------
California corporation.

          (e) "Compensation" shall mean all base straight time gross earnings
               ------------
plus commissions, overtime, shift differential, on-call pay, call-in pay,
incentive compensation, bonus or other cash compensation but exclusive of fringe
benefits (including disability benefits).

          (f) "Designated Subsidiaries" shall mean the Subsidiaries which have
               -----------------------
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.

          (g) "Employee" shall mean any individual who is an employee of the
               --------
Company for purposes of tax withholding under the Code whose customary
employment with the Company or any Designated Subsidiary is at least twenty (20)
hours per week and more than five (5) months in any calendar year.  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
Company.  Where the period of leave exceeds 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 91st day of
such leave.

          (h) "Enrollment Date" shall mean the first day of each Offering
               ---------------
Period.

          (i) "Exercise Date" shall mean the last day of each Offering Period.
               -------------

          (j) "Offering Period" shall mean a period of approximately six (6)
               ---------------
months, commencing on February 16 and terminating on August 15, or commencing on
August 16 and terminating on February 15 of the next year, during which an
option granted pursuant to the Plan may be exercised.  If February 16 or August
16 falls on a Saturday, Sunday or holiday, then the period will
<PAGE>

commence on the next business day. If August 15 or February 15 falls on a
Saturday, Sunday or holiday, then the period will terminate on the preceding
business day.

          (k) "Plan" shall mean this Employee Stock Purchase Plan.
               ----

          (l) "Reserves" shall mean 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.

          (m) "Subsidiary" shall mean a corporation, domestic or foreign, of
               ----------
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.

          (n) "Trading Day" shall mean a day on which national stock exchanges
               -----------
and the National Association of Securities Dealers Automated Quotation System
are open for trading.

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

          (a) Any Employee as defined in paragraph 2 who shall be employed by
the Company on a given Enrollment Date shall be eligible to participate in the
Plan.

          (b) 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 (or any other person whose stock would be attributed to
such Employee pursuant to Section 425(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 subsidiary of the Company, or (ii) which permits his or her
rights to purchase stock under all employee stock purchase plans of the Company
and its 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.

     4.  Offering Periods.  The Plan shall be implemented by consecutive
         ----------------
Offering Periods with a new Offering Period commencing on February 16 and August
16 of each year (if February 16 or August 16 falls on a Saturday, Sunday or
holiday, the period will commence on the next business day), or on such other
date as the Board shall determine, and continuing thereafter until terminated in
accordance with paragraph 19 hereof.  The Board shall have the power to change
the duration of Offering Periods with respect to future offerings without
shareholder approval if such change is announced at least fifteen (15) days
prior to the scheduled beginning of the first Offering Period to be affected.

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

          (a) An eligible Employee may become a participant in the Plan either
by enrolling via the Genie Human Resources Information Access and Processing
System or by completing a subscription agreement authorizing payroll deductions
in the form provided by the Company's Stock Administration department.
Enrollment must be received by the Stock Administration department prior to the
close of business on the applicable Enrollment Date, unless a later time for
filing the subscription agreement is set by the Board for all eligible Employees
with respect to a given Offering Period.
<PAGE>

          (b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in paragraph 10.

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

          (a) At the time a participant files his or her subscription agreement,
he or she shall elect to have payroll deductions made on each payday during the
Offering Period in an amount not exceeding ten percent (10%) of the Compensation
which he or she receives on each payday during the Offering Period, and the
aggregate of such payroll deductions during the Offering Period shall not exceed
ten percent (10%) of the participant's Compensation during said Offering Period.

          (b) All payroll deductions made for a participant shall be credited to
his or 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 or her participation in the Plan
as provided in paragraph 10, or may decrease, but not increase, the rate of his
or her payroll deductions during the Offering Period (within the limitations of
Section 6(a)) by changing his or her payroll deduction rate through the Genie
Human Resources Information Access and Processing System or by completing and
filing with the Company a new subscription agreement authorizing a change in
payroll deduction rate.  The Board shall be authorized to limit the number of
participation rate changes during any Offering Period.  The change in rate shall
be effective with the first full payroll period following ten (10) business days
after the Company's receipt of the new subscription agreement or change in
payroll deduction rate unless the Company elects to process a given change in
participation more quickly.  A participant's subscription agreement or change in
payroll deduction rate shall remain in effect for successive Offering Periods
unless revised as provided herein or terminated as provided in paragraph 10.

          (d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and paragraph 3(b) herein, a participant's
payroll deductions may be decreased to 0% during an Offering Period.  Payroll
deductions shall recommence at the rate provided in such participant's
subscription agreement at the beginning of the first Offering Period which is
scheduled to end in the following calendar year, unless terminated by the
participant as provided in paragraph 10.

          (e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock.  At any time,
the Company may, but will not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefit attributable to sale or early disposition of
Common Stock purchased by the Employee under this Plan.

     7.  Grant of Option.
         ---------------

          (a) On the Enrollment Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted an option to
purchase on each Exercise Date during such Offering Period (at the per share
option price) up to a number of shares of the Company's Common Stock determined
by dividing such Employee's payroll deductions accumulated prior to such
<PAGE>

Exercise Date and retained in the Participant's account as of the Exercise Date
by the lower of (i) eighty-five percent (85%) of the fair market value of a
share of the Company's Common Stock on the Enrollment Date or (ii) eighty-five
percent (85%) of the fair market value of a share of the Company's Common Stock
on the Exercise Date; provided, however, that the maximum number of shares an
Employee may purchase during each Offering Period shall be 250 Shares, subject
to a pro rata adjustment upon a change in the duration of a future Offering
Period and subject to adjustment pursuant to Section 18 below and provided
further that such purchase shall be subject to the limitations set forth in
Sections 3(b) and 12 hereof.  Exercise of the option shall occur as provided in
Section 8, unless the participant has withdrawn pursuant to Section 10, and
shall expire on the last day of the Offering Period.  Fair market value of a
share of the Company's Common Stock shall be determined as provided in Section
7(b) herein.

          (b) The option price per share of the shares offered in a given
Offering Period shall be the lower of:  (i) 85% of the fair market value of a
share of the Common Stock of the Company on the Enrollment Date; or (ii) 85% of
the fair market value of a share of the Common Stock of the Company on the
Exercise Date.  The fair market value of the Company's Common Stock on a given
date shall be determined by the Board in its discretion; provided, however, that
where there is a public market for the Common Stock, the fair market value per
share shall be the closing sale price of the Common Stock for such date, as
reported by the Nasdaq National Market, or, in the event the Common Stock is
listed on a stock exchange, the fair market value per share shall be the closing
price on such exchange on such date, as reported in the Wall Street Journal.

     8.  Exercise of Option.  Unless a participant withdraws from the Plan as
         ------------------
provided in paragraph 10 below, his or her option for the purchase of shares
will be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable option price with the accumulated payroll deductions in his or her
account.  No fractional shares will be purchased and any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period, as the Board or its committee shall determine, subject to an
earlier withdrawal by the participant as provided in paragraph 10.  Any other
monies left over in a participant's account after an Exercise Date shall be
refunded to the participant.  During a participant's lifetime, a participant's
option to purchase shares hereunder is exercisable only by him or her.

     9.  Delivery.  As promptly as practicable after each Exercise Date on which
         --------
a purchase of shares occurs, the Company shall arrange the delivery to each
participant, as appropriate, of a certificate representing the shares purchased
upon exercise of his or her option.

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

          (a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by withdrawing through the Genie Human
Resources Information Access and Processing System or by giving written notice
to the Company.  All of the participant's payroll deductions credited to his or
her account will be paid to such participant promptly after receipt of notice of
withdrawal and such participant's option for the Offering Period will be
automatically terminated, and no further payroll deductions for the purchase of
shares will be made during the Offering Period.  If a participant withdraws from
an Offering Period, payroll deductions will not resume at the beginning of the
succeeding Offering Period unless the participant delivers to the Company a new
subscription agreement.
<PAGE>

          (b) Except as otherwise provided below, 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(g)), the payroll deductions
credited to such participant's account during the Offering Period but not yet
used to exercise the option will be returned to such participant or, in the case
of his or her death, to the person or persons entitled thereto under paragraph
14, and such participant's option will be automatically terminated.  In the
event a participant's employment terminates by reason of death within three (3)
months of an Exercise Date, the payroll deductions credited to the participant's
account during the Offering Period up to the date of death, but not yet used to
exercise the option, will be held in the participant's account and the maximum
number of full shares subject to such option shall be purchased for the
participant's account on the Exercise Date at the applicable option price.  The
shares purchased for the participant will be issued to the person or persons
entitled thereto under Section 14.

          (c) In the event an Employee fails to remain an Employee of the
Company for at least twenty (20) hours per week during an Offering Period in
which the Employee is a participant, he or she will be deemed to have elected to
withdraw from the Plan and the payroll deductions credited to his or her account
will be returned to such participant and such participant's option terminated.

          (d) A participant's withdrawal from an Offering Period will not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.

     11.  Interest.  No interest shall accrue on the payroll deductions of a
          --------
participant in the Plan.

     12.  Stock.
          -----

          (a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be 6,000,000 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in paragraph 18.  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 Company shall make a pro rata allocation of the shares
remaining available for purchase in as uniform a manner as shall be practicable
and as it shall determine to be equitable.

          (b) The participant will have no interest or voting right in shares
covered by his option until such option has been exercised.

          (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 or her spouse.

     13.  Administration.  The Plan shall be administered by the Board of the
          --------------
Company 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 parties.  Members of the
Board who are eligible Employees are permitted to participate in the Plan,
provided that:
<PAGE>

          (a) Members of the Board who are eligible to participate in the Plan
may not vote on any matter affecting the administration of the Plan or the grant
of any option pursuant to the Plan.

          (b) If a Committee is established to administer the Plan, no member of
the Board who is eligible to participate in the Plan may be a member of the
Committee.

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

          (a) A participant may designate a beneficiary through the Genie Human
Resources Information Access and Processing System or by giving written notice
to the Company.  Such beneficiary will receive any shares and cash, if any, from
the participant's account under the Plan in the event of such participant's
death within three (3) months of, or subsequent to, an Exercise Date on which
the option is exercised but prior to delivery to such participant of such shares
and cash.  In addition, a participant may file a written designation of a
beneficiary who is to receive any shares and/or cash from the participant's
account under the Plan in the event of such participant's death prior to
exercise of the option.

          (b) Such designation of beneficiary may be changed by the participant
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 Company), the Company, 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 Company,
then to such other person as the Company 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 paragraph 14 hereof) by the participant.  Any
such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds from an Offering Period in accordance with paragraph 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.

     17.  Reports.  Individual accounts will be maintained for each participant
          -------
in the Plan.  Statements of account will be given to participating Employees at
least semi-annually, which statements will set forth the amounts of payroll
deductions, the per share purchase price, the number of shares purchased and the
remaining cash balance, if any.

     18.  Adjustments Upon Changes in Capitalization.  Subject to any required
          ------------------------------------------
action by the shareholders of the Company, the Reserves as well as the price per
share of Common Stock covered by each option under the Plan which has not yet
been exercised, 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 increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration."  Such
<PAGE>

adjustment shall be made by the Board, 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.

          In the event of the proposed dissolution or liquidation of the
Company, the Offering Period will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board.
In the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, 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 Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten the
Offering Period then in progress by setting a new Exercise Date (the "New
Exercise Date").  If the Board shortens the Offering Period then in progress in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Board shall notify each participant in writing, at least ten (10) days prior
to the New Exercise Date, that the Exercise Date for his option has been changed
to the New Exercise Date and that his option will be exercised automatically on
the New Exercise Date, unless prior to such date he has withdrawn from the
Offering Period as provided in paragraph 10.  For purposes of this paragraph, an
option granted under the Plan shall be deemed to be assumed if, following the
sale of assets or merger, the option confers the right to purchase, for each
share of option stock subject to the option immediately prior to the sale of
assets or merger, the consideration (whether stock, cash or other securities or
property) received in the sale of assets or merger by holders of Common Stock
for each share of Common Stock held on the effective date of the 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
sale of assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the Board
may, with the consent of the successor corporation and the participant, provide
for the consideration to 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 and the
sale of assets or merger.

          The Board may, if it so determines in the exercise of its sole
discretion, also 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, and
in the event of the Company being consolidated with or merged into any other
corporation.

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

          (a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan.  Except as provided in paragraph 18, no such
termination can affect options previously granted, provided that an Offering
Period may be terminated by the Board of Directors on an Exercise Date or by the
Board's setting a new Exercise Date with respect to an Offering Period then in
progress if the Board determines that the termination of the Plan and/or the
Offering Period is in the best interests of the Company and its shareholders or
if continuation of the Plan and/or the Offering Period would cause the Company
to incur adverse accounting charges as a result of a change in the generally
accepted accounting principles applicable to the Plan.  Except as provided in
paragraph 18 and this paragraph 19, no amendment may make any change in any
option
<PAGE>

theretofore granted which adversely affects the rights of any participant. To
the extent necessary to comply with Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, or under Section 423 of the Code (or any successor rule or
provision or any other applicable law or regulation), the Company shall obtain
shareholder approval in such a manner and to such a degree as required.

          (b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, 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 Board (or its committee) determines in its sole discretion advisable
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 Company at the location, or by
the person, designated by the Company 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 Securities Exchange Act of 1934, as
amended, 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 person exercising such option 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 required by any of
the aforementioned applicable provisions of law.

     22.  Term of Plan.  The Plan shall become effective upon the earlier to
          ------------
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company.  It shall continue in effect for a term of twenty
(20) years unless sooner terminated under paragraph 19.<PAGE>
                                                                     EXHIBIT 4.4

                       ASPECT COMMUNICATIONS CORPORATION

                              AMENDED AND RESTATED
                        1996 EMPLOYEE STOCK OPTION PLAN

     1.  Purposes of the Plan.  The purposes of this 1996 Employee Stock Option
         --------------------
Plan are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to the Employees and
Consultants of the Company and to promote the success of the Company's business.
Awards granted hereunder shall be Nonstatutory Stock Options or Restricted
Stock.

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

          (a) "Administrator" shall mean the Board or any of its Committees
               -------------
appointed pursuant to Section 4 of the Plan.

          (b) "Award" shall mean the grant of a Nonstatutory Stock Option or
               -----
Restricted Stock.

          (c) "Award Agreement" shall mean the written agreement evidencing the
               ---------------
grant of an Award executed by the Company and the Grantee, including any
amendments thereto.

          (d) "Board" shall mean the Board of Directors of the Company.
               -----

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

          (f) "Committee" shall mean the Committee appointed by the Board of
               ---------
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.  The Committee members shall not be required to be Board members.

          (g) "Common Stock" shall mean the Common Stock of the Company.
               ------------

          (h) "Company" shall mean Aspect Communications Corporation, a
               -------
California corporation.

          (i) "Consultant" shall mean any person who is engaged by the Company
               ----------
or any Parent or Subsidiary to render consulting services and is compensated for
such consulting services, excluding any Officers, Named Executives and
Directors.

          (j) "Continuous Status as an Employee or Consultant" shall mean the
               ----------------------------------------------
absence of any interruption or termination of service as an Employee or
Consultant.  Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Board; provided that such leave is for a period
of not more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.
<PAGE>

          (k) "Director" shall mean a member of the Board.
               --------

          (l) "Employee" shall mean any person who is employed by the Company or
               --------
any Parent or Subsidiary of the Company, excluding any Officer, Named Executive
and Director.

          (m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
               ------------
amended.

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

               (i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") System, its Fair Market Value shall be the closing sales
price for such stock as quoted on such system on the date of determination (if
for a given day no sales were reported, the closing bid on that day shall be
used), as such price is reported in The Wall Street Journal or such other source
                                    -----------------------
as the Administrator deems reliable;

               (ii) If the Common Stock is quoted on the Nasdaq System (but not
on the National Market thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be the
mean between the bid and asked prices for the Common Stock; or

               (iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.

          (o) "Grantee" shall mean an Employee or Consultant who receives an
               -------
Award.

          (p) "Named Executive" shall mean any individual who, on the last day
               ---------------
of the Company's fiscal year, is the chief executive officer of the Company (or
is acting in such capacity) or among the four highest compensated officers of
the Company (other than the chief executive officer). Such officer status shall
be determined pursuant to the executive compensation disclosure rules under the
Exchange Act.

          (q) "Nonstatutory Stock Option" shall mean an Option not intended to
               -------------------------
qualify as an Incentive Stock Option, as designated in the applicable option
agreement. "Incentive Stock Option" shall mean an Option intended to qualify as
            ----------------------
an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable option agreement.

          (r) "Officer" shall mean a person who is an officer of the Company
               -------
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

          (s) "Option" shall mean a stock option granted pursuant to the Plan.
               ------
<PAGE>

          (t) "Optioned Stock" shall mean the Common Stock subject to an Option.
               --------------

          (u) "Optionee" shall mean an Employee or Consultant who receives an
               --------
Option.

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

          (w) "Plan" shall mean this 1996 Employee Stock Option Plan.
               ----

          (x) "Restricted Stock" shall mean Shares issued under the Plan to the
               ----------------
Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.

          (y) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange
               ----------
Act as the same may be amended from time to time, or any successor provision.

          (z) "Share" shall mean a share of the Common Stock, as adjusted in
               -----
accordance with Section 11 of the Plan.

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

     3.  Stock Subject to the Plan.  Subject to the provisions of Section 11 of
         -------------------------
the Plan, the maximum aggregate number of shares which may be issued pursuant to
all Awards under the Plan is 9,550,000* shares of Common Stock.  The Shares may
be authorized, but unissued, or reacquired Common Stock.

     Any Shares covered by an Award (or portion of an Award) which is forfeited
or canceled, expires or is settled in cash, shall be deemed not to have been
issued for purposes of determining the maximum aggregate number of Shares which
may be issued under the Plan.  Shares that actually have been issued under the
Plan pursuant to an Award shall not be returned to the Plan and shall not become
available for future issuance under the Plan, except that if unvested Shares are
forfeited, or repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under the Plan.

     4.  Administration of the Plan.
         ---------------------------

          (a) Composition of Administrator.  The Plan shall be administered by
              ----------------------------
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the legal requirements relating to
the administration of nonstatutory stock option plans, if any, of applicable
securities laws and the Code (collectively, the "Applicable Laws"). If a
Committee has been appointed pursuant to this Section 4(a), such Committee shall
continue to serve in its designated capacity until otherwise directed by the

-----------------------------
* As adjusted to reflect the 2:1 stock split in January 1997.
<PAGE>

Board.  From time to time the Board may increase the size of any Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies (however caused)
and remove all members of a Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws.

          (b) Powers of the Administrator.  Subject to the provisions of the
              ---------------------------
Plan, and in the case of a Committee, the specific duties delegated by, or
limitations of authority imposed by, the Board to or on such Committee, the
Administrator shall have the authority, in its discretion:

               (i) to grant Awards under the Plan;

               (ii) to determine, upon review of relevant information and in
accordance with Section 2(l) of the Plan, the fair market value of the Common
Stock;

               (iii) to determine the Employees or Consultants to whom, and the
time or times at which, Awards shall be granted and the number of shares to be
represented by each Award;

               (iv) to interpret the Plan;

               (v) to approve forms of agreement for use under the Plan;

               (vi) to determine the terms and provisions of each Award granted
(which need not be identical) and, with the consent of the holder thereof,
modify or amend each Award;

               (vii) to accelerate or defer (with the consent of the Grantee)
the exercise date of any Award;

               (viii) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Award previously
granted by the Administrator; and

               (ix) to make all other determinations deemed necessary or
advisable for the administration of the Plan.

          (c) Effect of Administrator's Decision.  All decisions, determinations
              ----------------------------------
and interpretations of the Administrator shall be final and binding on all
Grantees and any other holders of any Awards granted under the Plan.

     5.  Eligibility.
         -----------

          (a) Awards may be granted only to Employees and Consultants. An
Employee or Consultant who has been granted an Award may, if he is otherwise
eligible, be granted an additional Award or Awards.

          (b) Each Option shall be designated in the written option agreement as
a Nonstatutory Stock Option.
<PAGE>

          (c) The Plan shall not confer upon any Grantee any right with respect
to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his right or the Company's right to terminate
his employment or consulting relationship at any time, with or without cause.

     6.  Term of Plan.  The Plan shall become effective upon its adoption by the
         ------------
Board of Directors.  It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 14 of the Plan.

     7.  Term of Option. The term of each Nonstatutory Stock Option shall be ten
         --------------
(10) years from the date of grant thereof or such shorter term as may be
provided in the Nonstatutory Stock Option Agreement.

     8.  Limitation on Grants to Employees.  Subject to adjustment as provided
         ---------------------------------
in this Plan, the maximum number of Shares which may be subject to Awards
granted to any employee under this Plan for any fiscal year of the Company shall
be 500,000*.

     9.  Exercise Price and Consideration.
         --------------------------------

          (a) The exercise or purchase price, if any, for an Award shall be
determined by the Administrator.

          (b) The consideration to be paid for the Shares to be issued upon
exercise of an Award, including the method of payment, shall be determined by
the Administrator and may consist entirely of (1) cash, (2) check, (3)
promissory note, (4) other Shares of Common Stock which (i) either have been
owned by the Grantee for more than six (6) months on the date of surrender or
were not acquired, directly or indirectly, from the Company, and (ii) have a
fair market value on the date of surrender equal to the aggregate exercise price
of the Shares as to which said Option shall be exercised, (5) delivery of a
properly executed exercise notice together with irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds
required to pay the exercise price, (6) any combination of such methods of
payment, or (7) such other consideration and method of payment for the issuance
of Shares to the extent permitted under Sections 408 and 409 of the California
General Corporation Law.  In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company (Section 315(b)
of the California General Corporation Law).

     10.  Exercise of Award.
          -----------------

          (a) Procedure for Exercise; Rights as a Shareholder.  Any Award
              -----------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Grantee, and as shall be permissible under the terms
of the Plan.

          An Option may not be exercised for a fraction of a Share.

-----------------------
* Reflects stock splits.  See December 1996 board minutes.
<PAGE>

          An Award shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the Award
by the person entitled to exercise the Award and full payment for the Shares
with respect to which the Award is exercised has been received by the Company.
Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 9(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Shares subject to
the Award, notwithstanding the exercise of the Award.  The Company shall issue
(or cause to be issued) such stock certificate promptly upon exercise of the
Award.  No adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 12 of the Plan.

          Exercise of an Option in any manner shall result in a decrease in the
number of Shares, which thereafter may be available for sale under the Option,
by the number of Shares as to which the Option is exercised.

          (b) Termination of Status as an Employee or Consultant.  In the event
              --------------------------------------------------
of termination of an Optionee's Continuous Status as an Employee or Consultant,
such Optionee may, but only within thirty (30) days (or such other period of
time, not exceeding six (6) months, as is determined by the Administrator) after
the date of such termination (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), exercise his
Option to the extent that he was entitled to exercise it at the date of such
termination.  To the extent that he was not entitled to exercise the Option at
the date of such termination, or if he does not exercise such Option (which he
was entitled to exercise) within the time specified herein, the Option shall
terminate.

          (c) Disability of Optionee.  Notwithstanding the provisions of Section
              ----------------------
10(b) above, in the event of termination of an Optionee's Continuous Status as
an Employee or Consultant as a result of his total and permanent disability (as
defined in Section 22(e)(3) of the Code), he may, but only within six (6) months
(or such other period of time not exceeding twelve (12) months as is determined
by the Administrator) from the date of such termination (but in no event later
than the date of expiration of the term of such Option as set forth in the
Option Agreement), exercise his Option to the extent he was entitled to exercise
it at the date of such termination.  To the extent that he was not entitled to
exercise the Option at the date of termination, or if he does not exercise such
Option (which he was entitled to exercise) within the time specified herein, the
Option shall terminate.

          (d) Death of Optionee.  In the event of the death of an Optionee:
              -----------------

               (i) during the term of the Option who is at the time of his death
an Employee or Consultant of the Company and who shall have been in Continuous
Status as an Employee or Consultant since the date of grant of the Option, the
Option may be exercised, at any time within six (6) months following the date of
death (but in no event later than the date of expiration of the term of such
Option as set forth in the Option Agreement), by the Optionee's
<PAGE>

estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent of the right to exercise that would have
accrued had the Optionee continued living and remained in Continuous Status as
an Employee or Consultant six (6) months after the date of death; or

               (ii) within thirty (30) days (or such other period of time not
exceeding three (3) months as is determined by the Administrator) after the
termination of Continuous Status as an Employee or Consultant, the Option may be
exercised, at any time within six (6) months following the date of death (but in
no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued at the date of termination.

     11.  Non-Transferability of Awards.  The Option may not be sold, pledged,
          -----------------------------
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution; provided, that the Administrator
                                                --------
may in its discretion grant transferable Nonstatutory Stock Options pursuant to
option agreements specifying (i) the manner in which such Nonstatutory Stock
Options are transferable and (ii) that any such transfer shall be subject to the
Applicable Laws.  The designation of a beneficiary by an Optionee will not
constitute a transfer.  An Option may be exercised, during the lifetime of the
Optionee, only by the Optionee or a transferee permitted by this Section 11.
Other Awards may be transferred by gift or through a domestic relations order to
members of the Grantee's Immediate Family to the extent provided in the Award
Agreement or in the manner and to the extent determined by the Administrator.
"Immediate Family" shall mean any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-
in-law, father-in-law, son-in law, daughter-in-law, brother-in-law, or sister-
in-law, including adoptive relationships, any person sharing the Grantee's
household (other than a tenant or employee), a trust in which these persons have
more than fifty percent (50%) of the beneficial interest, a foundation in which
these persons (or the Grantee) control the management of assets, and any other
entity in which these persons (or the Grantee) own more than fifty percent (50%)
of the voting interests.

     12.  Adjustments Upon Changes in Capitalization or Merger.
          ----------------------------------------------------

          (a)  Adjustments.  Subject to any required action by the shareholders
               -----------
of the Company, the number of shares of Common Stock covered by each outstanding
Award, and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan in accordance with Section 3 of the Plan, the
maximum number of shares of Common Stock for which Awards may be granted to any
Employee under Section 8 of the Plan, and the price per share of Common Stock
covered by each outstanding Award, 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 increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose
<PAGE>

determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance 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 Award.

          (b) Corporate Transactions.  In the event of the proposed dissolution
              ----------------------
or liquidation of the Company, the Award will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the
Administrator.  The Administrator may, in the exercise of its sole discretion in
such instances, declare that any Award shall terminate as of a date fixed by the
Administrator and give each Grantee the right to exercise his Award as to all or
any part of the Shares subject to the Award, including Shares as to which the
Award would not otherwise be exercisable.  In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, the Award shall be assumed or an
equivalent award shall be substituted by such successor corporation or a parent
or subsidiary of such successor corporation, unless such successor corporation
does not agree to assume the Award or to substitute an equivalent award, in
which case the Administrator shall, in lieu of such assumption or substitution,
provide for the Grantee to have the right to exercise the Award as to all of the
Shares subject to the Award, including Shares as to which the Award would not
otherwise be exercisable.  If the Administrator makes an Award fully exercisable
in lieu of assumption or substitution in the event of a merger or sale of
assets, the Administrator shall notify the Grantee that the Award shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Award will terminate upon the expiration of such period.

     13.  Time of Granting Awards.  The date of grant of an Award shall, for all
          -----------------------
purposes, be the date on which the Administrator makes the determination
granting such Award.  Notice of the determination shall be given to each
Employee or Consultant to whom an Award is so granted within a reasonable time
after the date of such grant.

     14.  Amendment and Termination of the Plan.
          -------------------------------------

          (a) Amendment and Termination.  The Board may amend or terminate the
              -------------------------
Plan from time to time in such respects as the Board may deem advisable

          (b) Effect of Amendment or Termination.  Any such amendment or
              ----------------------------------
termination of the Plan shall not adversely affect Awards already granted
(except to the extent contemplated by such Awards) and such Awards shall remain
in full force and effect, unless mutually agreed otherwise between the Grantee
and the Board (or other body then administering the Plan), which agreement must
be in writing and signed by the Grantee and the Company.

     15.  Conditions Upon Issuance of Shares.  Shares shall not be issued
          ----------------------------------
pursuant to the exercise of an Award unless the exercise of such Award and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, 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
<PAGE>

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 Award, the Company may require the
person exercising such Award 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 required by any of the
aforementioned relevant provisions of law.

     16.  Reservation of Shares.  The Company, during the term of this Plan,
          ---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.  The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, 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.

     17.  Award Agreement.  Awards shall be evidenced by written award
          ---------------
agreements in such form as the Administrator shall approve.

     18.  Information to Grantees.  The Company shall provide to each Grantee
          -----------------------
upon request, during the period for which such Grantee has one or more Awards
outstanding, copies of all annual reports and other information which are
provided to all shareholders of the Company.

     19.  Withholding Taxes.  As a condition to the exercise of Awards granted
          -----------------
hereunder, the Grantee shall make such arrangements as the Administrator may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection with the exercise, receipt or
vesting of such Award.  The Company shall not be required to issue any Shares
under the Plan until such obligations are satisfied.

     20.  Stock Withholding to Satisfy Withholding Tax Obligations.  At the
          --------------------------------------------------------
discretion of the Administrator, Grantees may satisfy withholding obligations as
provided in this paragraph.  When a Grantee incurs tax liability in connection
with an Award which tax liability is subject to tax withholding under applicable
tax laws, and the Grantee is obligated to pay the Company an amount required to
be withheld under applicable tax laws, the Grantee may satisfy the withholding
tax obligation by one or some combination of the following methods:  (a) by cash
payment, or (b) out of Grantee's current compensation, or (c) if permitted by
the Administrator, in its discretion, by surrendering to the Company Shares that
(i) in the case of Shares previously acquired from the Company, have been owned
by the Grantee for more than six months on the date of surrender, and (ii) have
a fair market value on the date of surrender equal to or less than the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, applicable to exercise, or (d) by electing to have the Company
withhold from the Shares to be issued upon exercise of the Award that number of
Shares having a fair market value equal to the minimum statutory withholding
rates for federal and state tax purposes, including payroll taxes, applicable to
the exercise.  For this purpose, the fair market value of the Shares to be
<PAGE>

withheld shall be determined on the date that the amount of tax to be withheld
is to be determined (the "Tax Date").

          All elections by a Grantee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:

          (a) the election must be made on or prior to the applicable Tax Date;

          (b) once made, the election shall be irrevocable as to the particular
Shares of the Award as to which the election is made; and

          (c) all elections shall be subject to the consent or disapproval of
the Administrator.

          In the event the election to have Shares withheld is made by a Grantee
and the Tax Date is deferred under Section 83 of the Code because no election is
filed under Section 83(b) of the Code, the Grantee shall receive the full number
of Shares with respect to which the Award is exercised but such Grantee shall be
unconditionally obligated to tender back to the Company the proper number of
Shares on the Tax Date.

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