Document:

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                                                                    EXHIBIT 10.6

                                 WEBGAIN, INC.

                          EMPLOYEE STOCK PURCHASE PLAN

       I.     PURPOSE OF THE PLAN

              This Employee Stock Purchase Plan is intended to promote the
interests of WebGain, Inc., a Delaware corporation, by providing eligible
employees with the opportunity to acquire a proprietary interest in the
Corporation through participation in a payroll deduction-based employee stock
purchase plan designed to qualify under Section 423 of the Code.

              Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.

       II.    ADMINISTRATION OF THE PLAN

              The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.

       III.   STOCK SUBJECT TO PLAN

              A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The number of shares of Common Stock
initially reserved for issuance over the term of the Plan shall be limited to
one million seven hundred thousand (1,700,000) shares.

              B. The number of shares of Common Stock available for issuance
under the Plan shall automatically increase on the first trading day of January
each calendar year during the term of the Plan, beginning with calendar year
2002, by an amount equal to one and a half percent (1.5%) of the total number of
shares of Common Stock outstanding on the last trading day in December of the
immediately preceding calendar year, but in no event shall any such annual
increase exceed four million (4,000,000) shares.

              C. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date, (iii) the maximum number and class of
securities purchasable in total by all Participants on any one Purchase Date,
(iv) the maximum number

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and/or class of securities by which the share reserve is to increase
automatically each calendar year pursuant to the provisions of Section III.B of
this Article One and (v) the number and class of securities and the price per
share in effect under each outstanding purchase right in order to prevent the
dilution or enlargement of benefits thereunder.

       IV.    OFFERING PERIODS

              A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of overlapping offering 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.

              B. Each offering period shall be of such duration (not to exceed
twenty-four (24) months) as determined by the Plan Administrator prior to the
start date of such offering period. Offering periods shall commence at
semi-annual intervals on the first business day of February and August each year
over the term of the Plan. Accordingly, two (2) separate offering periods shall
commence in each calendar year the Plan remains in existence. However, the
initial offering period shall commence at the Effective Time and terminate on
the last business day in January 2003.

              C. Each offering period shall consist of a series of one or more
successive Purchase Intervals. Purchase Intervals shall run from the first
business day in February to the last business day in July each year and from the
first business day in August each year to the last business day in January in
the following year. However, the first Purchase Interval in effect under the
initial offering period shall commence at the Effective Time and terminate on
the last business day in July, 2001.

              D. Should the Fair Market Value per share of Common Stock on any
Purchase Date within a particular offering period be less than the Fair Market
Value per share of Common Stock on the start date of that offering period, then
the individuals participating in such offering period shall, immediately after
the purchase of shares of Common Stock on their behalf on such Purchase Date, be
transferred from that offering period and automatically enrolled in the next
offering period commencing after such Purchase Date.

       V.     ELIGIBILITY

              A. Each individual who is an Eligible Employee on the start date
of any offering period under the Plan may enter that offering period on such
start date. However, an Eligible Employee may participate in only one offering
period at a time. For the initial offering period commencing at the Effective
Time, each individual who is an Eligible Employee at that time shall
automatically be enrolled as a Participant with a contribution rate equal to
fifteen percent (15%) of his or her Cash Earnings.

                                       2.
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              B. Except as otherwise provided in Sections IV.D. and V.A. above,
an Eligible Employee must, in order to participate in a particular offering
period, complete the enrollment forms prescribed by the Plan Administrator
(including a stock purchase agreement and a payroll deduction authorization) and
file such forms with the Plan Administrator (or its designate) on or before the
start date of that offering period.

       VI.    PAYROLL DEDUCTIONS

              A. The payroll deduction authorized by the Participant for
purposes of acquiring shares of Common Stock during an offering period may be
any multiple of one percent (1%) of the Cash Earnings paid to the Participant
during each Purchase Interval within that offering period, up to a maximum of
fifteen percent (15%). The deduction rate so authorized shall continue in effect
throughout the offering period, except to the extent such rate is changed in
accordance with the following guidelines:

                     (i) The Participant may, at any time during the offering
       period, reduce his or her rate of payroll deduction (or to the extent
       applicable, the percentage of Cash Earnings to serve as his or her lump
       sum contribution for the initial Purchase Interval of the first offering
       period) to become effective as soon as possible after filing the
       appropriate form with the Plan Administrator. The Participant may not,
       however, effect more than one (1) such reduction per Purchase Interval.

                     (ii) The Participant may, prior to the commencement of any
       new Purchase Interval within the offering period, increase the rate of
       his or her payroll deduction by filing the appropriate form with the Plan
       Administrator. The new rate (which may not exceed the fifteen percent
       (15%) maximum) shall become effective on the start date of the first
       Purchase Interval following the filing of such form.

              B. Payroll deductions shall begin on the first pay day
administratively feasible following the start date of the offering period and
shall (unless sooner terminated by the Participant) continue through the pay day
ending with or immediately prior to the last day of that offering period. The
amounts so collected shall be credited to the Participant's book account under
the Plan, but no interest shall be paid on the balance from time to time
outstanding in such account. The amounts collected from the Participant shall
not be required to be held in any segregated account or trust fund and may be
commingled with the general assets of the Corporation and used for general
corporate purposes.

              C. For the initial Purchase Interval of the first offering period
under the Plan, no payroll deductions shall be required of the Participant until
such time as the Participant affirmatively elects to commence such payroll
deductions following his or her receipt of the SEC prospectus for the Plan. In
the absence of such payroll deductions, the Participant will be

                                       3.
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required to contribute the applicable percentage of his or her Cash Earnings to
the Plan in a lump sum payment immediately prior to the close of that Interval
should the Participant elect to have shares of Common Stock purchased on his or
her behalf on the Purchase Date for that initial Purchase Interval.

              D. Payroll deductions shall automatically cease upon the
termination of the Participant's purchase right in accordance with the
provisions of the Plan.

              E. The Participant's acquisition of Common Stock under the Plan on
any Purchase Date shall neither limit nor require the Participant's acquisition
of Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.

       VII.   PURCHASE RIGHTS

              A. GRANT OF PURCHASE RIGHTS. A Participant shall be granted a
separate purchase right for each offering period in which he or she is enrolled.
The purchase right shall be granted on the start date of the offering period and
shall provide the Participant with the right to purchase shares of Common Stock,
in a series of successive installments during that offering period, upon the
terms set forth below. The Participant shall execute a stock purchase agreement
embodying such terms and such other provisions (not inconsistent with the Plan)
as the Plan Administrator may deem advisable.

              Under no circumstances shall purchase rights be granted under the
Plan to any Eligible Employee if such individual would, immediately after the
grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.

              B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall be
automatically exercised in installments on each successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant on each such Purchase Date. The purchase shall be
effected by applying the Participant's payroll deductions (or, to the extent
applicable, his or her lump sum contribution) for the Purchase Interval ending
on such Purchase Date to the purchase of whole shares of Common Stock at the
purchase price in effect for the Participant for that Purchase Date.

              C. PURCHASE PRICE. The purchase price per share at which Common
Stock will be purchased on the Participant's behalf on each Purchase Date within
the particular offering period in which he or she is enrolled shall be equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the start date of that offering period or (ii) the Fair Market
Value per share of Common Stock on that Purchase Date.

              D. NUMBER OF PURCHASABLE SHARES. The number of shares of Common
Stock purchasable by a Participant on each Purchase Date during the particular
offering period in which he or she is enrolled shall be the number of whole
shares obtained by dividing the amount collected from the Participant through
payroll deductions during the Purchase Interval ending

                                       4.
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with that Purchase Date (or, to the extent applicable, his or her lump sum
contribution for that Purchase Interval) by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall not
exceed 1,250 shares, subject to periodic adjustments in the event of certain
changes in the Corporation's capitalization. In addition, the maximum number of
shares of Common Stock purchasable in total by all Participants in the Plan on
any one Purchase Date shall not exceed 750,000 shares, subject to periodic
adjustments in the event of certain changes in the Corporation's capitalization.
However, the Plan Administrator shall have the discretionary authority,
exercisable prior to the start of any offering period under the Plan, to
increase or decrease the limitations to be in effect for the number of shares
purchasable per Participant and in total by all Participants enrolled in that
particular offering period on each Purchase Date which occurs during that
offering period.

              E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions not applied
to the purchase of shares of Common Stock on any Purchase Date because they are
not sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable per Participant or in
total by all Participants on the Purchase Date shall be promptly refunded.

              F. TERMINATION OF PURCHASE RIGHT. The following provisions shall
govern the termination of outstanding purchase rights:

                     (i) A Participant may, at any time prior to the next
       scheduled Purchase Date in the offering period in which he or she is
       enrolled, terminate his or her outstanding purchase right by filing the
       appropriate form with the Plan Administrator (or its designate), and no
       further payroll deductions shall be collected from the Participant with
       respect to the terminated purchase right. Any payroll deductions
       collected during the Purchase Interval in which such termination occurs
       shall, at the Participant's election, be immediately refunded or held for
       the purchase of shares on the next Purchase Date. If no such election is
       made at the time such purchase right is terminated, then the payroll
       deductions collected with respect to the terminated right shall be
       refunded as soon as possible.

                     (ii) The termination of such purchase right shall be
       irrevocable, and the Participant may not subsequently rejoin the offering
       period for which the terminated purchase right was granted. In order to
       resume participation in any subsequent offering period, such individual
       must re-enroll in the Plan (by making a timely filing of the prescribed
       enrollment forms) on or before the start date of that offering period.

                     (iii) Should the Participant cease to remain an Eligible
       Employee for any reason (including death, disability or change in status)
       while his or her purchase right remains outstanding, then that purchase
       right shall immediately terminate, and all of the Participant's payroll
       deductions for the

                                       5.
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        Purchase Interval in which the purchase right so terminates shall be
        immediately refunded. However, should the Participant cease to remain in
        active service by reason of an approved unpaid leave of absence, then
        the Participant shall have the right, exercisable up until the last
        business day of the Purchase Interval in which such leave commences, to
        (a) withdraw all the payroll deductions collected to date on his or her
        behalf for that Purchase Interval or (b) have such funds held for the
        purchase of shares on his or her behalf on the next scheduled Purchase
        Date. In no event, however, shall any further payroll deductions be
        collected on the Participant's behalf during such leave. Upon the
        Participant's return to active service (x) within ninety (90) days
        following the commencement of such leave or (y) prior to the expiration
        of any longer period for which such Participant's right to reemployment
        with the Corporation is guaranteed by statute or contract, his or her
        payroll deductions under the Plan shall automatically resume at the rate
        in effect at the time the leave began, unless the Participant withdraws
        from the Plan prior to his or her return. An individual who returns to
        active employment following a leave of absence that exceeds in duration
        the applicable (x) or (y) time period will be treated as a new Employee
        for purposes of subsequent participation in the Plan and must
        accordingly re-enroll in the Plan (by making a timely filing of the
        prescribed enrollment forms) on or before the start date of any
        subsequent offering period in which he or she wishes to participate.

              G. CHANGE IN CONTROL. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any
Change in Control, by applying the payroll deductions of each Participant for
the Purchase Interval in which such Change in Control occurs to the purchase of
whole shares of Common Stock at a purchase price per share equal to eighty-five
percent (85%) of the lower of (i) the Fair Market Value per share of Common
Stock on the start date of the offering period in which such individual is
enrolled at the time of such Change in Control or (ii) the Fair Market Value per
share of Common Stock immediately prior to the effective date of such Change in
Control. However, the applicable limitation on the number of shares of Common
Stock purchasable per Participant shall continue to apply to any such purchase,
but not the limitation applicable to the maximum number of shares of Common
Stock purchasable in total by all Participants on any one Purchase Date.

              The Corporation shall use its best efforts to provide at least ten
(10) days' prior written notice of the occurrence of any Change in Control, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Change in Control.

              H. PRORATION OF PURCHASE RIGHTS. Should the total number of shares
of Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.

                                       6.
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              I. ASSIGNABILITY. The purchase right shall be exercisable only by
the Participant and shall not be assignable or transferable by the Participant.

              J. STOCKHOLDER RIGHTS. A Participant shall have no stockholder
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.

       VIII.  ACCRUAL LIMITATIONS

              A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Code Section 423)) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000.00) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value per share on the
date or dates such rights are granted) for each calendar year such rights are at
any time outstanding.

              B. For purposes of applying such accrual limitations to the
purchase rights granted under the Plan, the following provisions shall be in
effect:

                     (i) The right to acquire Common Stock under each
       outstanding purchase right shall accrue in a series of installments on
       each successive Purchase Date during the offering period in which such
       right remains outstanding.

                     (ii) No right to acquire Common Stock under any outstanding
       purchase right shall accrue to the extent the Participant has already
       accrued in the same calendar year the right to acquire Common Stock under
       one or more other purchase rights at a rate equal to Twenty-Five Thousand
       Dollars ($25,000.00) worth of Common Stock (determined on the basis of
       the Fair Market Value per share on the date or dates of grant) for each
       calendar year such rights were at any time outstanding.

              C. If by reason of such accrual limitations, any purchase right of
a Participant does not accrue for a particular Purchase Interval, then the
payroll deductions that the Participant made during that Purchase Interval with
respect to such purchase right shall be promptly refunded.

              D. In the event there is any conflict between the provisions of
this Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.

                                       7.
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       IX.    EFFECTIVE DATE AND TERM OF THE PLAN

              A. The Plan was adopted by the Board on February 15, 2001, and
shall become effective at the Effective Time, provided no purchase rights
granted under the Plan shall be exercised, and no shares of Common Stock shall
be issued hereunder, until (i) the Plan shall have been approved by the
stockholders of the Corporation and (ii) the Corporation shall have complied
with all applicable requirements of the 1933 Act (including the registration of
the shares of Common Stock issuable under the Plan on a Form S-8 registration
statement filed with the Securities and Exchange Commission), all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation. In the event such
stockholder approval is not obtained, or such compliance is not effected, within
twelve (12) months after the date on which the Plan is adopted by the Board, the
Plan shall terminate and have no further force or effect, and all sums collected
from Participants during the initial offering period hereunder shall be
refunded.

              B. Unless sooner terminated by the Board, the Plan shall terminate
upon the earliest of (i) the last business day in January, 2011, (ii) the date
on which all shares available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan or (iii) the date on which
all purchase rights are exercised in connection with a Change in Control. No
further purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following such termination.

       X.     AMENDMENT OF THE PLAN

              A. The Board may alter, amend, suspend or terminate the Plan at
any time to become effective immediately following the close of any Purchase
Interval. However, the Plan may be amended or terminated immediately upon Board
action, if and to the extent necessary to assure that the Corporation will not
recognize, for financial reporting purposes, any compensation expense in
connection with the shares of Common Stock offered for purchase under the Plan,
should the financial accounting rules applicable to the Plan at the Effective
Time be subsequently revised so as to require the Corporation to recognize
compensation expense in the absence of such amendment or termination.

              B. In no event may the Board effect any of the following
amendments or revisions to the Plan without the approval of the Corporation's
stockholders: (i) increase the number of shares of Common Stock issuable under
the Plan, except for permissible adjustments in the event of certain changes in
the Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify the eligibility requirements for participation in
the Plan.

                                       8.
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       XI.    GENERAL PROVISIONS

              A. All costs and expenses incurred in the administration of the
Plan shall be paid by the Corporation; however, each Plan Participant shall bear
all costs and expenses incurred by such individual in the sale or other
disposition of any shares purchased under the Plan.

              B. Nothing in the Plan shall confer upon the Participant any right
to continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.

              C. The provisions of the Plan shall be governed by the laws of the
State of California without resort to that State's conflict-of-laws rules.

                                       9.
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                                   SCHEDULE A

                          CORPORATIONS PARTICIPATING IN
                          EMPLOYEE STOCK PURCHASE PLAN
                            AS OF THE EFFECTIVE TIME

                                  WebGain, Inc.

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                                    APPENDIX

              The following definitions shall be in effect under the Plan:

              A. BOARD shall mean the Corporation's Board of Directors.

              B. CASH EARNINGS shall mean (i) the regular base salary paid to a
Participant by one or more Participating Companies during such individual's
period of participation in one or more offering periods under the Plan plus (ii)
all overtime payments, bonuses, commissions, profit-sharing distributions or
other incentive-type payments received during such period. Such Cash Earnings
shall be calculated before deduction of (A) any income or employment tax
withholdings or (B) any contributions made by the Participant to any Code
Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit
program now or hereafter established by the Corporation or any Corporate
Affiliate. However, Cash Earnings shall NOT include any contributions made by
the Corporation or any Corporate Affiliate on the Participant's behalf to any
employee benefit or welfare plan now or hereafter established (other than Code
Section 401(k) or Code Section 125 contributions deducted from such Cash
Earnings).

              C. CHANGE IN CONTROL shall mean a change in ownership of the
Corporation pursuant to any of the following transactions:

                     (i) a merger, consolidation or other reorganization
       approved by the Corporation's stockholders, unless securities
       representing more than fifty percent (50%) of the total combined voting
       power of the voting securities of the successor corporation are
       immediately thereafter beneficially owned, directly or indirectly and in
       substantially the same proportion, by the persons who beneficially owned
       the Corporation's outstanding voting securities immediately prior to such
       transaction, or

                     (ii) the sale, transfer or other disposition of all or
       substantially all of the assets of the Corporation in complete
       liquidation or dissolution of the Corporation, or

                     (iii) the acquisition, directly or indirectly, by a person
       or related group of persons (other than the Corporation or a person that
       directly or indirectly controls, is controlled by or is under common
       control with the Corporation) of beneficial ownership (within the meaning
       of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
       percent (50%) of the total combined voting power of the Corporation's
       outstanding securities pursuant to a tender or exchange offer made
       directly to the Corporation's stockholders.

              D. CODE shall mean the Internal Revenue Code of 1986, as amended.

              E. COMMON STOCK shall mean the Corporation's common stock.

                                      A-1
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              F. CORPORATE AFFILIATE shall mean any parent or subsidiary
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.

              G. CORPORATION shall mean WebGain, Inc., a Delaware corporation,
and any corporate successor to all or substantially all of the assets or voting
stock of WebGain, Inc. that shall by appropriate action adopt the Plan.

              H. EFFECTIVE TIME shall mean the time at which the Underwriting
Agreement is executed and the Common Stock priced for the initial public
offering of such Common Stock. Any Corporate Affiliate that becomes a
Participating Corporation after such Effective Time shall designate a subsequent
Effective Time with respect to its employee-Participants.

              I. ELIGIBLE EMPLOYEE shall mean any person who is employed by a
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section 3401
(a).

              J. FAIR MARKET VALUE per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:

                     (i) If the Common Stock is at the time traded on the Nasdaq
       National Market, then the Fair Market Value shall be the closing selling
       price per share of Common Stock on the date in question, as such price is
       reported by the National Association of Securities Dealers on the Nasdaq
       National Market and published in The Wall Street Journal. If there is no
       closing selling price for the Common Stock on the date in question, then
       the Fair Market Value shall be the closing selling price on the last
       preceding date for which such quotation exists.

                     (ii) If the Common Stock is at the time listed on any Stock
       Exchange, then the Fair Market Value shall be the closing selling price
       per share of Common Stock on the date in question on the Stock Exchange
       determined by the Plan Administrator to be the primary market for the
       Common Stock, as such price is officially quoted in the composite tape of
       transactions on such exchange and published in The Wall Street Journal.
       If there is no closing selling price for the Common Stock on the date in
       question, then the Fair Market Value shall be the closing selling price
       on the last preceding date for which such quotation exists.

                     (iii) For purposes of the initial offering period that
       begins at the Effective Time, the Fair Market Value shall be deemed to be
       equal to the price per share at which the Common Stock is sold in the
       initial public offering pursuant to the Underwriting Agreement.

              K. 1933 ACT shall mean the Securities Act of 1933, as amended.

                                      A-2
<PAGE>   13

              L. PARTICIPANT shall mean any Eligible Employee of a Participating
Corporation who is actively participating in the Plan.

              M. PARTICIPATING CORPORATION shall mean the Corporation and such
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan are listed in attached Schedule A.

              N. PLAN shall mean the Corporation's Employee Stock Purchase Plan,
as set forth in this document.

              O. PLAN ADMINISTRATOR shall mean the committee of two (2) or more
Board members appointed by the Board to administer the Plan.

              P. PURCHASE DATE shall mean the last business day of each Purchase
Interval. The initial Purchase Date shall be July 31, 2001.

              Q. PURCHASE INTERVAL shall mean each successive six (6)-month
period within a particular offering period at the end of which there shall be
purchased shares of Common Stock on behalf of each Participant.

              R. STOCK EXCHANGE shall mean either the American Stock Exchange or
the New York Stock Exchange.

              S. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

                                      A-3<PAGE>   1
                                                                    EXHIBIT 10.7

                             SECURED PROMISSORY NOTE

US$250,000                                                 September 1, 2000
                                                           Palo Alto, California

        FOR VALUE RECEIVED, Henri Richard and Gay P. Richard, husband and wife
(jointly and severally, the "Borrower"), promise to pay to WebGain, Inc., a
Delaware corporation (the "Lender"); at 5425 Stevens Creek Boulevard, Santa
Clara CA 95051, or such other place as Lender may from time to time designate,
in lawful money of the United States, the principal sum of Two Hundred Fifty
Thousand Dollars (US$250,000), plus interest thereon, in the manner set forth
below.

        1. INTEREST. Interest on the principal sum of this secured promissory
note ("Note") will accrue at the rate of six and twenty-two one-hundredths
percent (6.22%) per annum, based on a 365-day year and the actual number of days
elapsed, and will be compounded annually.

        2. MATURITY DATE. Unless otherwise accelerated pursuant to the
provisions of this Note, the entire principal sum and all accrued and unpaid
interest, together with all other sums payable hereunder (collectively, the
"Obligations"), will be due and payable in full on August 31, 2004. (The earlier
of the date on which the Obligations are accelerated and August 31, 2004 is
referred to in this Note as the "Maturity Date.") In the event that a
registration statement filed in connection with an initial public offering of
Lender's capital stock does not become effective prior to August 31, 2004, and
provided further that an Event of Default (as that term is defined below in
section 7) has not occurred, then the Maturity Date will be extended to August
31, 2009.

        3. DEFAULT INTEREST. If Borrower fails to make timely any payment,
whether or not Lender has declared a default hereunder, interest will accrue on
the unpaid portion of the Obligations at the rate of eleven percent (11%) per
annum commencing on the Maturity Date and continuing until all of the
Obligations are irrevocably paid in full by Lender.

        4. PREPAYMENT. This Note may be prepaid in whole or in part, at any
time.

        5. APPLICATION OF PAYMENTS. All payments received by Lender will be
applied first to all fees, costs, and expenses incurred by Lender with respect
to this Note or any other document executed by Borrower in connection herewith;
second, to accrued and unpaid interest; and third, to the unpaid principal
balance of this Note.

        6. SECURITY. The payment and performance of all of Lender's obligations
under this Note, including but not limited to Lender's repayment of the
Obligations, is secured by a lien against and security interest in the premises
commonly known and numbered as 13925 Mirmirou Drive; Los Altos Hills, Santa
Clara County, California (the "Premises"), as is more fully described in a deed
of trust of even date herewith from Borrower to Lender (the "Deed of Trust").
Borrower represents and warrants to Lender that the Deed of Trust is a lien
against the Premises junior in priority only to the deed of trust dated December
17, 1998, from Borrower to Citibank, F.S.B., which was recorded as Document No.
14567248 in the Santa Clara County Recorder's Office on December 23, 1998 (the
"First Deed of Trust"). Borrower covenants and agrees that until all of the
Obligations are paid in full, Borrower will not borrow any money that will
increase any outstanding indebtedness, the repayment of which is secured by the
First Deed of Trust, or by a lien on or security interest in the Premises that
is senior in priority to the lien on and security interest in the Premises that
Borrower has granted to Lender in the Deed of Trust.

<PAGE>   2

        7. DEFAULT. Each of the following will constitute an "Event of Default"
under this Note:

            7.1. Borrower fails to pay when due any of the Obligations.

            7.2. Borrower defaults in the performance of any of its material
obligations under any provision of the Deed of Trust.

            7.3. Any warranty or representation made by Borrower in this Note or
in the Deed of Trust is untrue in any material respect, in any case on any date
as of which the facts set forth are stated or certified.

            7.4. Borrower institutes a voluntary case seeking liquidation or
reorganization under Chapter 7 or Chapter 11, respectively, of the United States
Bankruptcy Code, or consent: to the institution of an involuntary case
thereunder against it; or Borrower files a petition initiating or otherwise
institutes any similar proceeding under any other applicable federal or state
law, or consents thereto; or Borrower applies for, or by consent or acquiescence
there is an appointment of or order entered by a court of competent jurisdiction
appointing a receiver, liquidator, sequestrator, trustee or other officer with
similar powers; or Borrower makes an assignment for the benefit of creditors; or
Borrower admits in writing its inability to pay its debts generally as they
become due; or, if an involuntary case is commenced seeking the liquidation or
reorganization of Borrower under Chapter 7 or Chapter 11, respectively, of the
United States Bankruptcy Code, or any similar proceeding is commenced against
Borrower under any other applicable federal or state law, and (1) the petition
commencing the involuntary case is not timely controverted; or (2) the petition
commencing the involuntary case is not dismissed within thirty (30) days of its
filing; or (3) a trustee (interim or otherwise) is appointed to take possession
of all or a portion of the Borrower's assets, or to operate all or any part of
the business of Borrower; or (4) an order for relief is issued or entered
therein.

            7.5. Lender does not have or ceases to have a valid and perfected
second lien on and security interest in the Premises.

        8. Acceleration. If any Event of Default described above in section 7
occurs, all Obligations will become due and payable immediately upon the
expiration of the respective number of Business Days set forth below following
Borrower's receipt of written notice of such Event of Default (the "Cure
Period"):

              EVENT OF DEFAULT UNDER          CURE PERIOD (BUSINESS DAYS):
              SECTION 7:
              7.1, 7.5                                      2
              7.2, 7.3, 7.4                                 5

Cure Periods will run concurrently, not consecutively. As used in this Note,
"Business Day" means any day that is not a Saturday, a Sunday, or a legal
holiday in the State of California.

        9. REMEDIES. If any Event of Default remains uncured after the
expiration of the respective Cure Period, then Lender may exercise any and all
of the remedies provided in this Note, the Deed of Trust, and by law, without
further notice to Borrower.

        10. WAIVERS. Borrower, and any endorsers or guarantors hereof, severally
waive diligence, presentment, protest and demand, and also notice of protest,
demand, dishonor, acceleration, intent to accelerate, and nonpayment of this
Note, and expressly agree that this Note, or any payment hereunder, may be
extended from time to time without notice, and

                                       2
<PAGE>   3

consent to the acceptance of further security or the release of any security for
this Note, all without in any way affecting the liability of Borrower or any
endorsers or guarantors hereof. No extension of time for the payment of this
Note, or any installment hereof, agreed to by Lender with any person now or
hereafter liable for the payment of this Note, will affect the original
liability of Borrower under this Note, even if Borrower is not a party to such
agreement. Lender may waive its right to require performance of or compliance
with any term, covenant or condition of this Note only by express written
waiver.

        11. MAXIMUM LEGAL RATE OF INTEREST. All agreements between Borrower and
Lender, whether now existing or hereafter arising, are hereby limited so that in
no event will the interest charged hereunder or agreed to be paid to Lender
exceed the maximum amount permissible under applicable law. Lender will be
entitled to amortize, prorate and spread throughout the full term of this Note
all interest paid or payable so that the interest paid does not exceed the
maximum amount permitted by law. If Lender ever receives interest or anything
deemed interest in excess of the maximum lawful amount, an amount equal to the
excessive interest will be applied to the reduction of the principal, and if it
exceeds the unpaid balance of principal hereof, such excess will be refunded to
Borrower. If interest otherwise payable to Lender would exceed the maximum
lawful amount, the interest payable will be reduced to the maximum amount
permitted under applicable law. This paragraph will control all agreements
between Borrower and Lender in connection with the indebtedness evidenced
hereby.

        12. Representations and Warranties. Borrower represents and warrants to
Lender that it has full power, authority, and legal right to execute, deliver,
and comply with this Note and any other document or instrument relating to this
Note to be executed by it. All actions of Borrower that are necessary or
appropriate for the execution and delivery of and compliance with this Note and
such other documents and Instruments have been taken. Upon its execution and
delivery, this Note will constitute the valid and legally binding obligation of
Borrower, enforceable against it in accordance with its terms, subject only to
bankruptcy, insolvency, reorganization, moratorium and other laws applicable to
creditors' rights or the collection of debtors' obligations generally.

        13. SUCCESSORS AND ASSIGNS. The terms of this Note will inure to the
benefit of and bind Borrower and Lender and their respective successors,
assigns, agents, representatives, and all persons claiming by or through them.

        14. TIME. Time is of the essence with respect to all of the provisions
of this Note.

        15. REPLACEMENT NOTE. If this Note is destroyed, lost or stolen,
Borrower will deliver a new secured promissory note to Lender on the same terms
and conditions as this Note, with a notation of the unpaid principal and accrued
and unpaid interest in substitution of the prior Note. Lender will furnish to
Borrower reasonable evidence that the Note was destroyed, lost or stolen and any
security or indemnity that may be reasonably required by Borrower In connection
with the replacement of this Note.

        16. GOVERNING LAW: ARBITRATION: VENUE; EQUITABLE RELIEF.

            16.1. Governing Law. This Note will be governed by and construed and
enforced in accordance with the laws of the State of California, without regard
to principles of conflicts of laws.

            16.2. Initiation of Arbitration Proceeding. Borrower agrees that all
disputes, claims and controversies between Borrower and Lender concerning the
interpretation or enforcement of this Note, or any other matter arising out of
or relating to this Note, will be

                                       3
<PAGE>   4

arbitrated pursuant to the provisions of this section. Either Borrower or Lender
may initiate an arbitration proceeding by making a written demand for
arbitration and serving a notice of said demand upon the adverse party by hand
delivery or overnight, express carrier, and upon the San Francisco regional
office of J - A - M - S ("JAMS"). A written response to the demand must be
served upon the initiating party and JAMS within ten (10) days of the adverse
party's receipt of the demand.

            16.3. Selection of Arbitrator. The arbitration will be conducted by
a single arbitrator who is a retired judge associated with the San Francisco
regional office of JAMS. The arbitrator will be selected in accordance with the
JAMS Rules of Practice & Procedure for Arbitration then in effect (the "JAMS
Rules") within fourteen (14) days of the service of the written demand for
arbitration. If Borrower and Lender cannot so agree upon the selection of the
arbitrator within the fourteen (14) day period, then the arbitration will be
conducted by a single arbitrator who will be a retired judge associated with the
San Francisco regional office of JAMS, and who will be selected by JAMS within
five (5) days of the service of a written request that JAMS select the
arbitrator.

            16.4. Venue. Borrower covenants and agrees that any arbitration
proceeding instituted under the provisions of this Note will be conducted in San
Francisco through the San Francisco regional office of JAMS. Borrower
acknowledges to Lender that its agreement to abide by the specific provisions of
this section is a material inducement to Lender to make the loan evidenced by
this Note, and that Lender is reasonably relying upon Borrower's representation.

            16.5. Arbitration Hearing and Award. The arbitration hearing will be
conducted within thirty (30) days of the appointment of the arbitrator. The
arbitration will be conducted In accordance with the JAMS Rules. The
arbitrator's award will be conclusive and binding upon Borrower and Lender. The
arbitrator's award will provide, among other things, that the prevailing party
in the arbitration is entitled to recover from the adverse party its costs and
expenses incurred in connection therewith including, without limitation,
attorneys' fees as determined by the arbitrator, the costs of the arbitration,
and actual out-of-pocket expenses including, without limitation, expert witness
and consultants' fees, if any. Judgment upon the arbitrator's award may be
entered in any court of competent jurisdiction.

            16.6. Equitable Relief. The Arbitrator has the authority to grant
Lender or Borrower equitable relief on such terms and conditions as it deems
reasonably necessary or appropriate.

        IN WITNESS WHEREOF, Borrower has executed this Note as of the date and
year first above written.

Borrower:

/s/    GAY P. RICHARD                           /s/     HENRI RICHARD
---------------------------------               --------------------------------
       GAY P. RICHARD                                   HENRI RICHARD

                                       4

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