10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
	For the quarterly period ended March 31, 2005

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
	For the transition period from            to

Commission file number: 0-18391

ASPECT COMMUNICATIONS CORPORATION

(Exact name of registrant as specified in its charter)

California	94-2974062
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1320 Ridder Park Drive, San Jose, California 95131-2312
(Address of principal executive offices and zip code)

Registrant’s telephone number: (408) 325-2200

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ      No o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes þ       No o

     The number of shares outstanding of the Registrant’s Common Stock, $.01 par value, was 61,280,434 at April 29, 2005.

ASPECT COMMUNICATIONS CORPORATION

TABLE OF CONTENTS

		Page Number
Part I:	Financial Information
Item 1:	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2005 and 2004	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2005 and 2004	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4:	Controls and Procedures	27
Part II:	Other Information	28
Item 5:	Other Information
Item 6:	Exhibits	28
Signature		29
EXHIBIT 10.105
EXHIBIT 10.106
EXHIBIT 10.107
EXHIBIT 10.108
EXHIBIT 10.109
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1

2

ASPECT COMMUNICATIONS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share amounts – unaudited)

	March 31, 2005			December 31, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	105,380		$	89,250
Short-term investments		113,788			113,381
Accounts receivable, net		48,012			49,163
Inventories		3,745			3,340
Other current assets		17,058			13,138
Total current assets		287,983			268,272
Property and equipment, net		62,277			62,494
Intangible assets, net		1,585			2,308
Goodwill, net		2,707			2,707
Other assets		4,273			4,723
Total assets	$	358,825		$	340,504
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	124		$	150
Accounts payable		5,403			7,491
Accrued compensation and related benefits		19,357			19,252
Other accrued liabilities		58,562			61,954
Deferred revenues		55,670			48,003
Total current liabilities		139,116			136,850
Long term borrowings		138			155
Other long-term liabilities		4,523			5,793
Total liabilities		143,777			142,798
Redeemable convertible preferred stock, $0.01 par value: 2,000,000 shares authorized, 50,000 outstanding		44,804			42,490
Shareholders’ equity:
Common stock, $0.01 par value: 200,000,000 shares authorized, shares outstanding: 61,174,646 at March 31, 2005 and 60,370,631 at December 31, 2004		612			604
Additional paid-in capital		255,643			250,391
Deferred stock compensation		(249	)		(283	)
Accumulated other comprehensive loss		(2,691	)		(1,644	)
Accumulated deficit		(83,071	)		(93,852	)
Total shareholders’ equity		170,244			155,216
Total liabilities, redeemable convertible preferred stock and shareholders’ equity	$	358,825		$	340,504

See Notes to Condensed Consolidated Financial Statements

3

ASPECT COMMUNICATIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data – unaudited)

	Three months ended March 31,
	2005			2004
Net revenues:
Software license	$	19,127		$	16,605
Hardware		11,737			11,530
Services:
Software license updates and product support		51,555			54,257
Professional services and education		8,184			9,095
Services		59,739			63,352
Total net revenues		90,603			91,487
Cost of revenues:
Cost of software license revenues		3,492			2,280
Cost of hardware revenues		7,133			8,331
Cost of services revenues		25,561			25,239
Total cost of revenues		36,186			35,850
Gross margin		54,417			55,637
Operating expenses:
Research and development		11,400			11,360
Selling, general and administrative		28,483			26,539
Restructuring charges		411			—
Total operating expenses		40,294			37,899
Income from operations		14,123			17,738
Interest income		1,218			757
Interest expense		(165	)		(1,127	)
Other income (expense)		(295	)		316
Net income before income taxes		14,881			17,684
Provision for income taxes		1,786			2,110
Net income		13,095			15,574
Accrued preferred stock dividend and accretion of redemption premium		(1,939	)		(1,779	)
Amortization of beneficial conversion feature		(375	)		(357	)
Net income attributable to common shareholders	$	10,781		$	13,438
Basic and diluted earnings per share attributable to common shareholders (See Note 8)	$	0.13		$	0.17
Weighted average shares outstanding, basic and diluted		60,757			57,740

See Notes to Condensed Consolidated Financial Statements

4

ASPECT COMMUNICATIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands-unaudited)

	Three months ended March 31,
	2005			2004
Cash flows from operating activities:
Net income	$	13,095		$	15,574
Reconciliation of net income to cash provided by operating activities:
Depreciation		4,011			6,105
Amortization of intangible assets		724			743
Non-cash compensation and services expense		507			—
Tax benefit from employee stock option plans		1,137			—
Loss on disposal of property		2			9
Loss on short-term investment, net		399			267
Changes in operating assets and liabilities:
Accounts receivable, net		317			206
Inventories		(457	)		507
Other current assets and other assets		(3,589	)		(732	)
Accounts payable		(2,068	)		1,658
Accrued compensation and related benefits		228			1,741
Other accrued liabilities		(4,004	)		(10,177	)
Deferred revenues		7,973			13,078
Cash provided by operating activities		18,275			28,979
Cash flows from investing activities:
Purchase of investments		(29,394	)		(61,054	)
Proceeds from sales and maturities of investments		27,967			33,317
Property and equipment purchases		(3,903	)		(3,827	)
Cash used in investing activities		(5,330	)		(31,564	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net		3,649			7,642
Payments on capital lease obligations		(43	)		(33	)
Proceeds from borrowings		—			40,000
Payments on borrowings		—			(40,979	)
Payments on financing costs		—			(1,053	)
Cash provided by financing activities		3,606			5,577
Effect of exchange rate changes on cash and cash equivalents		(421	)		273
Net increase in cash and cash equivalents		16,130			3,265
Cash and cash equivalents:
Beginning of period		89,250			75,653
End of period	$	105,380		$	78,918
Supplemental disclosure of cash flow information:
Cash paid for interest	$	171		$	643
Cash paid for income taxes	$	1,324		$	2,967
Supplemental schedule of non-cash investing and financing activities:
Accrued preferred stock dividend and amortization of redemption premium	$	1,939		$	1,779
Amortization of beneficial conversion feature	$	375		$	357

See Notes to Condensed Consolidated Financial Statements

5

ASPECT COMMUNICATIONS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

Note 1: Basis of Presentation

     The condensed consolidated financial statements include the accounts of Aspect Communications Corporation (“Aspect” or “the Company”) and all of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

     The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s 2004 Annual Report on Form 10-K.

Note 2: Stock Based Compensation

     At March 31, 2005, the Company had three active stock option plans used as part of employee compensation and one active employee stock purchase plan. The Company accounts for those plans under the recognition and measurement principles of APB Opinion 25, Accounting for Stock Issued to Employees, and related Interpretations. The following table illustrates the effect on net income and earnings per share as if the Company had applied the fair-value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

	Three months ended March 31,
	2005			2004
Net income attributable to common shareholders as reported	$	10,781		$	13,438
Deduct: Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax effects		(3,270	)		(2,228	)
Add back: Non-cash compensation and services expense		507			—
Pro forma net income attributable to common shareholders	$	8,018		$	11,210
Basic and diluted income per share:
As reported	$	0.13		$	0.17
Pro forma	$	0.10		$	0.14

Note 3: Inventories

     Inventories are stated at the lower of cost (first-in, first-out) or market. Inventories consist of (in thousands):

	March 31,		December 31,
	2005		2004
Raw materials	$	2,372	$	2,194
Finished goods		1,373		1,146
Total inventories	$	3,745	$	3,340

Note 4: Other Current Assets

6

     Other current assets consist of (in thousands):

	March 31,		December 31,
	2005		2004
Prepaid expenses	$	12,011	$	7,818
Other receivables		1,748		1,927
Restricted cash		3,299		3,393
Total other current assets	$	17,058	$	13,138

Note 5: Product Warranties and Indemnification

     The Company generally warrants its products against certain manufacturing and other defects. These product warranties are provided for specific periods of time depending on the nature of the product, geographic location of its sale and other factors. The Company accrues for estimated product warranty claims for certain customers based primarily on historical experience of actual warranty claims as well as current information on repair costs. Accrued warranty costs as of March 31, 2005 were immaterial. Most customers purchase extended warranty contracts, which are accounted for under FASB Technical Bulletin 90-1, Accounting for Separately Priced Extended Warranty and Product Maintenance Contracts.

     The Company also indemnifies its customers against claims that its products infringe certain copyrights, patents or trademarks, or incorporate misappropriated trade secrets. The Company has not been subject to any material infringement claims by customers in the past and does not have significant claims pending as of March 31, 2005.

Note 6: Other Accrued Liabilities

     Other accrued liabilities consist of (in thousands):

	March 31,		December 31,
	2005		2004
Accrued sales and use taxes	$	4,347	$	7,162
Accrued restructuring		5,893		6,322
Accrued income taxes		23,324		23,359
Other accrued liabilities		24,998		25,111
Total	$	58,562	$	61,954

Note 7: Comprehensive Income

     Comprehensive income for the three months ended March 31 is calculated as follows (in thousands):

	Three months ended March 31,
	2005			2004
Net income attributable to common shareholders	$	10,781		$	13,438
Unrealized gain (loss) on investments		(622	)		273
Accumulated translation adjustments		(425	)		(372	)
Total comprehensive income	$	9,734		$	13,339

Note 8: Earnings Per Share

     Basic earnings per common share (EPS) is generally calculated by dividing income available to common shareholders by the weighted average number of common shares outstanding. However, due to the Company’s issuance of redeemable convertible preferred stock on January 21, 2003, which contains certain participation rights, EITF Topic

7

D-95, Effect of Participating Convertible Securities on the Computation of Basic Earnings, requires those securities to be included in the computation of basic EPS if the effect is dilutive. Furthermore, Topic D-95 requires that the dilutive effect to be included in basic EPS may be calculated using either the if-converted method or the two-class method. The Company has elected to use the two-class method in calculating basic EPS.

     Basic earnings per share for the three months ended March 31, are calculated using the two-class method as follows (in thousands, except percentages and per share data):

     Basic EPS — Two-Class Method

	Three months ended March 31,
	2005					2004
	Amount			EPS		Amount			EPS
Net income	$	13,095				$	15,574
Preferred Stock dividend accretion and amortization		(2,314	)				(2,136	)
Net income attributable to common shareholders		10,781					13,438
Amount allocable to common shareholders(1)		73.2	%				72.2	%
Rights to undistributed income	$	7,892		$	0.13	$	9,702		$	0.17
Weighted average common shares outstanding		60,782					57,740
Weighted average shares of restricted common stock		(25	)				—
Basic weighted average common shares outstanding		60,757					57,740

(1) Basic weighted average common shares outstanding	60,757		57,740
Weighted average additional common shares assuming conversion of Preferred Stock	22,222		22,222
Weighted average common equivalent shares assuming conversion of Preferred Stock	82,979		79,962
Amount allocable to common shareholders	73.2	%	72.2	%

Diluted EPS

	Three months ended March 31,
	2005			2004
Net income attributable to common shareholders	$	10,781		$	13,438
Preferred Stock dividend accretion and amortization		2,314			2,136
Net income	$	13,095		$	15,574
Basic weighted average common shares outstanding		60,757			57,740
Dilutive effect of weighted average shares of restricted common stock		25			—
Dilutive effect of stock options		3,134			6,219
Dilutive effect of Preferred Stock assuming conversion		22,222			22,222
Diluted weighted average shares outstanding		86,138			86,181
Diluted earnings per share attributable to common shareholders	$	0.15	*	$	0.18	*

*   Diluted earnings per share cannot be greater than basic earnings per share. Therefore, reported diluted earnings per share and basic earnings per share for the three months ended March 31 were the same.

     As of March 31, 2005 and 2004, approximately 3.2 million and 1.3 million weighted average common stock options outstanding, respectively, have been excluded from the diluted earnings per share calculations, as the inclusion of these common stock options would have been anti-dilutive.

Note 9: Restructuring Charge

     In fiscal years 2002 and 2001, the Company reduced its workforce by 22% and 28%, respectively, and consolidated selected facilities in its continuing effort to better optimize operations. As of March 31, 2005, the total restructuring

8

accrual was $8.1 million, of which, $5.9 million was a short-term liability recorded in other accrued liabilities, and $2.2 million was a long-term liability. Components of the restructuring accrual were as follows (in thousands):

							Other
	Severance and			Consolidation of			Restructuring
	Outplacement			Facilities Costs			Costs			Total
Balance at January 1, 2003	$	1,284		$	19,959		$	101		$	21,344
2003 adjustments		(471	)		4,284			—			3,813
2003 payments		(813	)		(7,295	)		(101	)		(8,209	)
Balance at December 31, 2003	$	—		$	16,948		$	—		$	16,948
2004 payments		—			(7,597	)		—			(7,597	)
Balance at December 31, 2004	$	—		$	9,351		$	—		$	9,351
2005 provisions		—			411			—			411
2005 payments		—			(1,666	)		—			(1,666	)
Balance at March 31, 2005	$	—		$	8,096		$	—		$	8,096

     Severance and outplacement costs are related to the termination of employees in 2001 and 2002. Employee separation costs include severance and other related benefits. Functions impacted by the restructuring included sales infrastructure, support services, manufacturing, marketing, research and development, and corporate functions. In 2003, the Company reduced its estimate of remaining severance and outplacement costs.

     The consolidation of facilities costs component of the restructuring accrual includes rent of unoccupied facilities, net of expected sublease income, and write-offs of abandoned internal use software assets. The Company revised its estimate of future facility related obligations and increased the accrual by approximately $0.4 million in the first quarter of 2005 due to an increase in the estimate of costs as a result of the termination of a lease obligation for one of our facilities and $4 million in 2003 due to an increase in the estimate of the period of time necessary to sublet abandoned facilities as a result of the then-current real estate market conditions. The remaining accrual balance relates primarily to facilities identified in the 2001 restructurings and will be paid over the next five years.

Note 10: Lines of Credit and Borrowings

     On February 13, 2004, the Company entered into a $100 million revolving credit facility with a number of financial institutions led by Comerica Bank, which is also the administrative agent, and The CIT Group/ Business Credit, Inc., which is also the collateral agent. This credit facility amended the Company’s prior $50 million credit facility with Comerica Bank entered into on August 9, 2002. It eliminated the prior facility’s borrowing base requirements and other related restrictions. The revolver has a three-year term and the amounts borrowed are secured by substantially all of the Company’s assets, including the stock of its significant subsidiaries. The Company can select interest options for advances based on the prime rate or eurocurrency rates, which include margins that are subject to quarterly adjustment. The revolver includes a $10 million sub-line for issuance of stand-by letters of credit. Mandatory prepayment and reduction of the facility is required in the amount of 100% of permitted asset sales over $1 million annually and 100% of the proceeds of future debt issuances, subject to certain exclusions. The revolver can be used for working capital, general corporate purposes and the financing of capital expenditures. The credit agreement includes customary representations and warranties and covenants. The financial covenants include minimum liquidity ratio, minimum fixed charge coverage ratio, minimum earnings before interest expense, income taxes, depreciation and amortization, or EBITDA, maximum debt to EBITDA ratio and minimum tangible net worth tests. As of March 31, 2005, the Company had no amounts outstanding under the credit facility and was in compliance with all related covenants and restrictions.

     In addition to the line of credit the Company has two outstanding bank guarantees with a European bank, which are required for daily operations such as payroll, import/export duties and facilities. As of March 31, 2005, approximately $3 million is recorded as restricted cash in other current assets on the consolidated balance sheets related to these bank guarantees.

9

Note 11: Convertible Preferred Stock

     On January 21, 2003, the Company and Vista Equity Fund II, L.P. or Vista, closed a private placement for the sale of $50 million of the Company’s Series B convertible preferred stock with net proceeds of $44 million after expenses. The shares of Series B convertible preferred stock were sold for $1,000 per share and the holders of the 50,000 outstanding shares of Series B convertible preferred stock are entitled to vote (on an as-converted basis) on all matters subject to a stockholder vote. On most issues, the holders of Series B preferred stock and common stock vote together as a single class; however, the holders of Series B convertible preferred stock have veto rights with respect to certain Company actions. The actions which require the affirmative vote of the holders of a majority of the outstanding shares of Series B convertible preferred stock are fully described in the Company’s Certificate of Determination of Rights, Preferences and Privileges of Series B convertible preferred stock. The shares of Series B convertible preferred stock are initially convertible into 22.2 million shares of the Company’s common stock (subject to certain anti-dilution protection adjustments) and are mandatorily redeemable at 125% of the original purchase price of the stock plus accumulated unpaid dividends on January 21, 2013. Each holder of the Series B convertible preferred stock has the right, at any time, to convert all or a portion of its outstanding shares of Series B convertible preferred stock into shares of common stock. As more fully described in the Company’s Certificate of Determination of Rights, Preferences and Privileges of Series B convertible preferred stock, the Company may elect to cause all, or under certain circumstances portions, of the outstanding shares of Series B convertible preferred stock to be converted into common stock. In order for the Company to cause such a conversion to occur, all the shares issued pursuant to such conversion must be sold pursuant to an underwritten public offering of common stock pursuant to an effective registration statement under the Securities Act in which the price per share paid by the public exceeds $8.00 (subject to adjustments to reflect any stock dividends, stock splits and the like) and the Company would need to notify each holder of Series B convertible preferred stock no later than ten business days prior to the conversion date. Prior to such offering, the holder could convert all or a portion of its shares into common stock to avoid selling such shares in such offering.

     The shares of Series B convertible preferred stock have a liquidation preference over the shares of common stock such that (i) upon any liquidation, dissolution or winding up of the Company, the holders of Series B convertible preferred stock receive payments equal to 100% of their investment amount, plus unpaid dividends prior to payments to the holders of common stock, or (ii) in the event of a change of control of the Company, the holders of Series B convertible preferred stock receive payments equal to 125% of their investment amount plus accumulated unpaid dividends, prior to payments to the holders of common stock (or, in each case, if greater, the amount they would have received had the Series B convertible preferred stock converted to common stock immediately prior to such liquidation or change of control). Additionally, in the event that the Company declares a dividend or distribution to the holders of common stock, the holders of Series B convertible preferred stock shall be entitled to equivalent participation on an as if converted basis in such dividend or distribution.

     During the time that the Series B convertible preferred stock is outstanding, the Company is obligated to accrue dividends on each share of the Series B convertible preferred stock, compounded on a daily basis at the rate of 10% per annum. The undeclared preferred stock dividends are forfeited in the event of conversion. Accrued dividends were $1.5 million and $1.4 million for the three months ended March 31, 2005 and 2004 respectively. In addition to the dividend accrual, the Company is recording accounting charges associated with the accretion of the 125% redemption premium and the amortization of the beneficial conversion feature under the net interest method through January 21, 2013. The redemption premium of $17.6 million is calculated based on a redemption value of $62.5 million. Accretion of the redemption premium was $401,000 and $388,000 for the three months ended March 31, 2005 and 2004 respectively. The beneficial conversion feature of $17.6 million is computed based on the difference between the conversion price of the preferred equity and the fair market value of the Company’s common stock on January 21, 2003. Amortization of the beneficial conversion feature was $375,000 and $357,000 for the three months ended March 31, 2005 and 2004, respectively.

     The sale and issuance of the Series B convertible preferred stock to Vista followed the approval of the transaction by the Company’s shareholders at the Special Meeting of Shareholders on January 21, 2003. Pursuant to Vista’s contractual rights, following the sale and issuance of the Series B convertible preferred stock, Vista elected two new members to the Company’s Board of Directors.

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Note 12: Segment Information

     Under SFAS 131, Disclosures about Segments of an Enterprise and Related Information, the Company’s operations are reported in two operating segments, which are product and services. All financial segment information required by SFAS 131 can be found in the consolidated financial statements. For geographical reporting, revenues are attributed to the geographic location in which customers are invoiced and revenue is recognized. Long-lived assets consist of property and equipment and are attributed to the geographic location in which they are located. No single customer accounted for 10% or more of net revenues or accounts receivable for the three months ended March 31, 2005 and 2004.

     The following presents net revenues for the three months ended March 31, by geographic area (in thousands):

	Three months ended March 31,
	2005		2004
Net revenues:
United States	$	57,167	$	51,444
United Kingdom		19,784		18,830
Other International (each < 10% of total)		13,652		21,213
Total consolidated	$	90,603	$	91,487

     The following presents property and equipment by geographic area (in thousands):

	March 31,		December 30,
	2005		2004
Long-lived assets (property and equipment):
United States	$	59,251	$	59,362
United Kingdom		1,382		1,407
Other International (each <10% of total)		1,644		1,725
Total consolidated	$	62,277	$	62,494

     For management reporting purposes, the Company organizes software license revenues into five groups: call center, workforce productivity, contact center integration, customer self service and other. The following presents net revenues by product group for the three months ended March 31, 2005 and 2004 (in thousands):

	Three months ended March 31,
	2005		2004
Software license:
Call Center (ACD)	$	9,776	$	7,284
Workforce Productivity		6,308		4,949
Contact Center Integration		2,271		2,902
Customer Self Service (IVR)		507		753
Other		265		717
Total software license		19,127		16,605
Hardware:		11,737		11,530
Services:
Software license updates and product support		51,555		54,257
Professional services and education		8,184		9,095
Total services:		59,739		63,352
Total consolidated	$	90,603	$	91,487

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Note 13: Recent Accounting Pronouncements

     SFAS No. 123R

     In December 2004, the Financial Accounting Standards Board (“FASB”) recently enacted Statement of Financial Accounting Standards 123 revised 2004 (“SFAS 123R”), Share-Based Payment which replaces Statement of Financial Accounting Standards No. 123 (“SFAS 123”), Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25 (“APB 25”), Accounting for Stock Issued to Employees. SFAS 123R requires the measurement of all share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in our consolidated statements of income. The accounting provisions of SFAS 123R are effective for reporting periods beginning after June 15, 2005. In April 2005, the Securities and Exchange Commission deferred the adoption date of SFAS 123R to the first annual period starting after June 15, 2005. The Company is now required to adopt SFAS 123R in the first quarter of fiscal 2006, beginning January 1, 2006. The pro forma disclosures previously permitted under SFAS 123 no longer will be an alternative to financial statement recognition. See Note 2 for the pro forma net income and net income per share amounts, for the first quarter of 2005 and 2004, as if the Company had used a fair-value-based method similar to the methods required under SFAS 123R to measure compensation expense for employee stock incentive awards. Although the Company has not yet determined whether the adoption of SFAS 123R will result in amounts that are similar to the current pro forma disclosures under SFAS 123, the Company is evaluating the requirements under SFAS 123R and expects the adoption to have a significant adverse impact on the consolidated statements of income and net income per share.

FSP No. 109-2

     FASB Staff Position (“FSP”) No. 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004 (“FSP 109-2”), provides guidance under FASB Statement No. 109, Accounting for Income Taxes, with respect to recording the potential impact of the repatriation provisions of the American Jobs Creation Act of 2004 (the “Jobs Act”) on enterprises’ income tax expense and deferred tax liability. The Jobs Act was enacted on October 22, 2004. FSP 109-2 states that an enterprise is allowed time beyond the financial reporting period of enactment to evaluate the effect of the Jobs Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying FASB Statement No. 109. The Company has not yet completed evaluating the impact of the repatriation provisions. Accordingly, as provided for in FSP 109-2, the Company has not adjusted its tax expense or deferred tax liability to reflect the repatriation provisions of the Jobs Act.

Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

     The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part I-Item 1 of this Quarterly Report and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis in our 2004 Annual Report on Form 10-K.

Forward-looking Statements

     The matters discussed in this report including, but not limited to, statements relating to (i) the Company’s belief that its installed base represents a recurring revenue base and expectation that services and support revenues will continue to account for a significant portion of its revenues for the foreseeable future (ii) anticipated spending levels in capital expenditures, research and development, selling, general and administrative expenses; and (iii) anticipated restructuring charges; and (iv) the adequacy of the Company’s financial resources to meet currently anticipated cash flow requirements for the next twelve months are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended; Section 21E of the Securities and Exchange Act of 1934, as amended; and the Private Securities Litigation Reform Act of 1995; and are made under the safe-harbor provisions thereof. Forward-looking statements may be identified by phrases such as “we anticipate,” “are expected to,” and “on a forward-looking basis,” and are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. Specific factors that could cause actual earnings per share results to differ include a potentially prolonged period of generally poor economic conditions that could impact our customers’ purchasing decisions; the hiring and retention of key employees; changes in product line revenues; insufficient, excess, or obsolete inventory and variations in valuation; and foreign exchange rate fluctuations. For a discussion of these and other risks related to our business, see the section entitled “Business Environment and Risk Factors” below. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. Aspect undertakes no obligation to publicly release any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof.

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Overview

     We are a leading provider of enterprise communication solutions that manage and optimize the contact center by integrating the applications that drive customer communications, customer and contact center information and workforce productivity. Our software and hardware solutions allow businesses to better service their customers by connecting them to appropriate resources, functionalities or applications, regardless of user location or method of communication. We understand the importance of unifying the applications that support customer communications, collect customer information and enhance workforce productivity, and we have focused exclusively on contact center solutions since our inception in 1985. We have a well established customer base, including more than two-thirds of the Fortune 50.

     The Current Economic Environment

     We believe the economic climate in the first quarter of 2005 was comparable to the economic environment we experienced in 2003 and 2004, especially when compared to the difficult environment in prior periods which had resulted in dramatically decreased capital spending. This prior climate had a pronounced effect on our ability to generate new license fees, as IT budgets were frozen and large capital expenditures like those required to purchase some of our products were quite limited. Even now we continue to see senior executive approval required in many cases and strong competition for sales opportunities as well as intense price competition both for new licenses and for support services. While we believe our installed base continues to represent a solid recurring revenue opportunity and a significant cash flow generator, and while our pricing has remained relatively consistent, we cannot provide any assurance that these pressures on IT spending will ease, or that the general economic climate will continue to improve. Continued competitive pressure and a weak economy could have a continuing pronounced effect on our operating results.

     Significant Financial Events in the First Quarter of 2005

     In the first quarter of 2005, we generated $18.3 million in cash flow from operations and increased our cash, cash equivalents and short term investments to $219 million.

     Sources of Revenue

     Our product revenues are derived from license fees for software products and, to a lesser extent, sales of hardware products. With respect to our product revenues, a limited number of product lines, including call center hardware and software, workforce productivity, customer self service and contact center integration products, have accounted for substantially all our product revenues. We also generate a substantial portion of our revenues from fees for services complementing such products, including software license updates, product support (maintenance), and professional services. We typically license our products on a per user basis with the price per user varying based on the selection of products licensed. Our software license updates and support fees are generally based on the level of support selected and the number of users licensed to use our products. Our professional service fees are generally based on a fixed price or time and materials basis. Our education services are generally billed on a per person basis.

     We currently expect that services and support revenues will continue to account for a significant portion of our revenues for the foreseeable future.

     To date, revenues from license fees have been derived from direct sales of software products to end users through our direct sales force and to a lesser extent from our channel and other alliance partners. Our ability to achieve revenue growth and improved operating margins in the future will depend in large part upon our success in expanding and maintaining these indirect sales channels worldwide.

Critical Accounting Policies and Estimates

     The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the

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United States of America. The preparation of such financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant estimates and assumptions relate to the allowance for doubtful accounts, revenue reserves, excess and obsolete inventory, valuation allowance and realization of deferred income taxes, restructuring and self-insurance reserves. Actual amounts could differ significantly from these estimates. We are not currently aware of any material changes in our business that would cause these estimates to differ significantly. Our critical accounting polices and estimates are discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

Results of Operations

     The following table sets forth statements of operations data for the three months ended March 31, 2005 and 2004 expressed as a percentage of total revenues:

	Three months ended
	March 31,
	2005			2004
Net revenues:
Software license		21	%		18	%
Hardware		13			13
Services:
Software license updates and product support		57			59
Professional services and education		9			10
Services		66			69
Total net revenues		100			100
Cost of revenues:
Cost of software license revenues		4			2
Cost of hardware revenues		8			9
Cost of services revenues		28			28
Total cost of revenues		40			39
Gross margin		60			61
Operating expenses:
Research and development		13			13
Selling, general and administrative		31			29
Restructuring charges		—			—
Total operating expenses		44			42
Net income from operations		16			19
Interest income		1			1
Interest expense		—			(1	)
Other income (expense)		(1	)		—
Net income before income taxes		16			19
Provision for income taxes		2			2
Net income		14			17
Less preferred stock dividend, accretion and amortization		(2	)		(2	)
Net income attributable to common shareholders		12	%		15	%

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Revenues

	Three months ended, March 31
($ in thousands)	2005		% Change			2004
Software license	$	19,127		15	%	$	16,605
Hardware		11,737		2			11,530
Services:
Software license updates and product support		51,555		(5	)		54,257
Professional services and Education		8,184		(10	)		9,095
Services		59,739		(6	)		63,352
Total net revenues	$	90,603		(1	)%	$	91,487

     Net revenues decreased by 1% in the first quarter of 2005 as compared to the first quarter of 2004. The decrease in revenues was the result of lower revenues in software license updates and product support partially offset by increased sales to new and existing customers of our call center and workforce productivity product lines.

     Net revenues derived from the Americas constituted 66% and 59% of total revenues for the first quarter ended in 2005 and 2004, respectively. Net revenues derived from Europe and Asia Pacific constituted 34% and 41% of total revenues for the first quarter ended in 2005 and 2004, respectively.

     Software license and hardware revenues. Software license revenue increased by 15% to $19.1 million for the first quarter of 2005 as compared to $16.6 million in the comparable period for 2004. Hardware revenues increased by 2% to $11.7 million for the first quarter of 2005 compared to $11.5 million for the first quarter of 2004. The increase in sales was primarily attributable to increased demand for software products and related hardware products to increase contact center workforce efficiencies by new and current customers. A substantial portion of our revenues for the first quarter of 2005 was derived from our call center and workforce productivity product lines.

     Software license updates and product support revenues for the first quarter of 2005 resulted in a decrease of 5% to $51.6 million from $54.3 million in the first quarter of 2004. The decrease in revenue for the first quarter of 2005 compared to the first quarter of 2004 was primarily the result of a decline in renewals for certain customers who have consolidated or outsourced several contact centers and pricing discounts on certain support contract renewals.

     Professional services and education revenues for the first quarter of 2005 decreased by 10% as compared to the same period in 2004. Professional services and education revenues consist primarily of installation of product, consulting services, and education fees. The decrease in professional services was the result of a decline in demand for educational classes compared to the similar period in 2004.

Gross Margin

	Three months ended, March 31,
	2005			2004
Gross software license margin		82	%		86	%
Gross hardware margin		39			28
Gross services margin		57			60
Total gross margin		60	%		61	%

     Gross margin on total revenues decreased to 60% in the first quarter of 2005 from 61% in the corresponding period of 2004.

     Gross software license margin. Cost of software license revenues includes fees paid to various third parties and amortization of intangible assets. Gross software license margin decreased in the first quarter of 2005 compared to the first quarter of 2004 due to increased license fees of $1.1 million paid to third-party licensors.

     Gross hardware margin. Cost of hardware revenues includes labor, materials, overhead, and other directly allocated costs involved in the manufacture and delivery of our products. The increase in gross hardware margin in the first quarter of 2005 as compared to the first quarter of 2004 was primarily attributable to product mix sold and increased hardware pricing.

     Gross services margin. Cost of service revenues consists primarily of employee salaries and benefits, facilities, systems costs to support maintenance, consulting and education. Gross services margin declined from the first quarter

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of 2004 compared to the first quarter of 2005 due to lower services revenue and higher costs for third-party software support.

Operating Expenses

	Three months ended March 31,
($ in thousands)	2005		% Change			2004
Research and development	$	11,400		0	%	$	11,360
Selling, general and administrative		28,483		7			26,539
Restructuring charges		411		100			—
Total operating expenses	$	40,294		6	%	$	37,899

     Research and development, or R&D, expenses relate to the development of new products, enhancements of existing products and quality assurance activities. These costs consist primarily of employee salaries and benefits, facilities, IT and consulting expenses. R&D expenses increased for the first quarter of 2005 as compared to the first quarter of 2004 due to an increase of $0.5 million in equipment and product localization costs offset by a reduction of $0.4 million in consulting costs. We anticipate that R&D expenses will increase in absolute dollars for the second quarter of 2005 as compared to the first quarter of 2005.

     Selling, general and administrative, or SG&A, expenses consist primarily of employee salaries and benefits, commissions, professional and consulting fees, facilities and IT costs. SG&A increased by 7% to $28.5 million in the first quarter of 2005 from $26.5 million in the first quarter of 2004. The increase was primarily due to a foreign currency loss of $0.9 million in the first quarter of 2005 compared to a foreign currency gain of $0.4 million in the comparable period of 2004, as well as increases of $1.0 million in bad debt expense, $0.5 million in marketing expenses for seminars and tradeshows and $0.5 million in stock-based compensation, offset by decreases of $0.3 million in facilities and IT costs, $0.6 million in salaries, benefits and employee related costs and $0.4 million in professional services. We anticipate that SG&A expenses will decrease in absolute dollars in the second quarter of 2005 as compared to the first quarter of 2005.

     Restructuring charges, consist of costs related to severance, outplacement and consolidation of facilities related to workforce adjustments. A $0.4 million restructuring charge was recorded for the first quarter of 2005 due to lease termination costs related to one of our facilities. We expect to complete consolidation of our San Jose facilities in the second quarter of 2005 and that acceleration of the lease obligation on the vacated facilities will result in a second quarter restructuring charge of approximately $4 million.

Interest and Other Income (Expense):

($ in thousands)	2005			% Change			2004
Interest income	$	1,218			61	%	$	757
Interest expense		(165	)		(85	)		(1,127	)
Other income (expense)		(295	)		(193	)		316
Total other income (expense)	$	758			1504	%	$	(54	)

     Interest income represents, primarily, earnings on short-term investments. Interest income increased to $1.2 million for the first quarter of 2005 compared $0.8 million for the comparable period in 2004 due to higher levels of cash and short-term investments and higher rates on investments as compared to the comparable period in 2004.

     Interest expense decreased to $0.2 million for the first quarter of 2005 compared to $1.1 million for the comparable period in 2004 primarily due to reduced debt obligations.

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     Other income (expense) includes fees charged for bank services, gains or losses recognized on sale of investments and other non-operating income and expenses. Other expense increased $0.6 million due to a non recurring other income benefit of $0.3 million recorded in the first quarter of 2004. In addition, short-term investments losses of $0.1 million were recorded in the first quarter of 2005 while a gain of $0.1 million was recorded in the first quarter of 2004.

Provision for Income Taxes

	Three months ended March 31,
	2005			2004
Net income before income taxes	$	14,881		$	17,684
Effective tax rate		12.0	%		11.9	%

     The tax rates for the first quarter of 2005 and 2004 varied from the statutory rate primarily due the realization of previously reserved deferred tax assets. As a result, the tax provision is based on current tax calculations in foreign jurisdictions and nominal amounts in federal and state jurisdictions due to our substantial U.S. net operating loss carryforwards. Our tax rates for the first quarter of 2005 and 2004 further varied from the statutory rate as a result of nondeductible expenses and the effect of tax rates in foreign jurisdictions differing from the U.S. statutory rate. We evaluate the appropriateness of our valuation allowance on a quarterly basis.

     On October 22, 2004, the American Jobs Creation Act of 2004 (“AJCA”) was signed into law. The AJCA introduced an 85% dividends received deduction on the repatriation of certain foreign earnings which will be available throughout 2005. This deduction would result in an approximate 5.25% federal tax rate on the repatriated earnings. To qualify for the deduction, the earnings must be reinvested in the United States pursuant to a domestic reinvestment plan established by a company’s chief executive officer and approved by the company’s board of directors. Additionally, certain other criteria, as outlined in the AJCA, must also be met.

     We may elect to apply this provision to qualifying earnings repatriations in fiscal 2005. We are in the process of analyzing the company’s options provided by the repatriation opportunity and expect to complete our evaluation by the end of the second quarter of 2005. The range of possible amounts that we are considering for repatriation under this provision is between zero and $30 million and the corresponding range of additional income tax as a direct result of this repatriation is between zero and $3 million.

Liquidity and Capital Resources

	Three months ended March 31,
	2005			% Change			2004
Cash provided by operating activities	$	18,275			(37	)%	$	28,979
Cash used in investing activities		(5,330	)		(83	)		(31,564	)
Cash provided by financing activities		3,606			(35	)		5,577
Net increase in cash and cash equivalents		16,130			394			3,265

     As of March 31, 2005 cash, cash equivalents, and short-term investments totaled $219 million, which represented 61% of total assets and our principal source of liquidity. In addition, we had restricted cash of $3.3 million related to various letter of credit agreements.

     The net cash provided by operating activities was $18.3 million for the quarter ended March 31, 2005, as compared to $29.0 million in the corresponding period of 2004. The decrease in net cash provided by operating activities in the first quarter of 2005 was the result of lower net income, reduction in accounts payable and a decrease in deferred revenues collected. Cash collections from customers during the first quarter 2005 were $103 million compared to $113 million collected during the comparable period in 2004. In addition, days sales outstanding increased during the period as compared to the same period in 2004 by 6 days to a days sales outstanding of 39 days as of March 31, 2005. Days sales outstanding is calculated by using the average accounts receivable balance for the period ended divided by the estimated daily revenue for the period.

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     The net cash used in investing activities was $5.3 million in the first quarter of 2005 compared to $31.6 million in the corresponding period of 2004. Net cash used in investing activities for the three month ended March 31, 2005 related to the net purchase of short-term investments of $1.4 million and property and equipment purchases of $3.9 million compared to the similar period in 2004 in which the net purchase of short-term investments amounted to $27.7 million and purchase of property and equipment amounted to $3.8 million.

     The net cash provided by financing activities was $3.6 million in the first quarter of 2005 compared to $5.6 million in the corresponding period of 2004. Net cash provided by financing activities for the period ended March 31, 2005 was primarily the result of $3.6 million in proceeds from the issuance of common stock relating to the exercise of employee stock options. For the similar period in 2004, net cash provided by financing activities was the result of net proceeds of $7.6 million from the issuance of common stock relating to the exercise of employee stock options less payments for financing costs of $1.1 million and net payments on borrowings of $1.0 million.

     On February 13, 2004, we entered into a $100 million revolving credit facility with a number of financial institutions led by Comerica Bank, which is also administrative agent, and The CIT Group/Business Credit, Inc., which is also collateral agent. This credit facility amended and restated our prior $50 million credit facility with Comerica Bank entered into on August 9, 2002. It eliminated the prior facility’s borrowing base requirements and other related restrictions. The revolver has a three-year term and is secured by substantially all of our assets. We can select interest options for advances based on the prime rate or eurocurrency rates, which include margins that are subject to quarterly adjustment. The revolver includes a $10 million sub-line for issuance of stand-by letters of credit. Mandatory prepayment and reduction of the facility is required in the amount of 100% of permitted asset sales over $1 million annually and 100% of the proceeds of future debt issuances, subject to certain exclusions. The revolver can be used for working capital, general corporate purposes and the financing of capital expenditures. The credit agreement includes customary representations and warranties and covenants. The financial covenants include minimum EBITDA, minimum liquidity ratio, minimum fixed charge coverage ratio, maximum total debt to EBITDA ratio and minimum tangible effective net worth tests, tested on a quarterly basis, defined as follows:

•   EBITDA of no less than $10 million each quarter.

•   Liquidity Ratio of not less than 1.5 to 1.0 for the period from December 31, 2003 to September 29, 2004; 1.75 to 1.0 for the period from September 30, 2004 through March 30, 2005; and 2.0 to 1.0 thereafter.

•   Fixed Charge Coverage Ratio of not less than 1.5 to 1.0 as of the last day of each quarter.

•   Total Debt to EBITDA Ratio of no more than 1.25 to 1.0 as of the end of each quarter.

•   Tangible Effective Net Worth balance greater than the Base Tangible Effective Net Worth.

     The preceding financial covenants are applicable to the quarter ended March 31, 2004 and all quarters thereafter. The definitions of the terms for these financial covenants can be found in the Amended and Restated Credit Agreement filed as Exhibit 99.1 to our Current Report on Form 8-K filed April 20, 2004. In September 2004, we repaid the $40 million outstanding under the $100 million revolving credit facility and may presently borrow against the revolving credit facility. We were in compliance with all related covenants and restrictions for the revolving credit facility as of March 31, 2005.

     In addition to the above revolving credit facility, we had outstanding bank guarantees with a European bank that are required for daily operations such as payroll, import/export duties and facilities. As of March 31, 2005, approximately $3 million is recorded as restricted cash on the balance sheet related to these bank guarantees.

     We believe that cash, cash equivalents, and short-term investments will be sufficient to meet our operating cash needs for at least the next twelve months. However, we continually evaluate opportunities to improve our cash position by selling additional equity, debt securities, obtaining and re-negotiating credit facilities. The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders. In addition, we will, from time to time, consider the acquisition of or investment in complementary businesses, products, services and technologies which might affect our liquidity requirements or cause us to issue additional equity or debt securities. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.

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Contractual Obligations

     The following table reflects a summary of our contractual obligations as of March 31, 2005 (in thousands):

	Payments Due by Period
			Less
			Than
Contractual Obligations	Total		1 Year		1-3 Years		4-5 Years		After 5 Years
	(In thousands)
Capital lease obligations	$	262	$	124	$	138	$	—	$	—
Operating leases (a)		51,000		12,766		15,080		7,548		15,606
Contract manufacturer(b)		3,510		3,510		—		—		—
Purchase obligations(c)		39,234		11,166		24,000		4,068		—
Total contractual obligations	$	94,006	$	27,566	$	39,218	$	11,616	$	15,606

(a)	Included in operating leases is a restructuring accrual liability of $8.1 million discussed in Note 9.
(b)	We use several contract manufacturers to provide manufacturing services for our products. We issue purchase orders with estimates of our requirements several months ahead of the delivery date which are non-cancelable. In addition to the above, we record a liability for purchase commitments for quantities in excess of our future demand forecasts. As of March 31, 2005, the liability for excess quantities was $0.2 million.
(c)	Purchase obligations include agreements to purchase services and licenses that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty.

Off-Balance Sheet Arrangements

     We have no material off-balance sheet arrangements other than operating leases that are discussed in Note 10 to the Consolidated Financial Statements in our 2004 Annual Report on Form 10-K.

Business Environment and Risk Factors

We may experience a shortfall in revenues or earnings or otherwise fail to meet public market expectations in any particular quarter, which could materially and adversely affect our business and the market price of our common stock.

     Our revenues and operating results may fluctuate significantly because of a number of factors, many of which are outside of our control. Some of these factors include:

•   changes in demand for our products and services;

•   a shift in the timing or shipment of a customer order from one quarter to another;

•   product and price competition;

•   our ability to develop and market new products and services and control costs;

•   timing of new product introductions and product enhancements;

•   failure by our customers to renew existing support or maintenance agreements in a timely manner, if at all;

•   mix of products and services sold;

•   delay or deferral of customer implementations of our products;

•   size and timing of individual license transactions;

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•   length of our sales cycle;

•   changes in domestic and foreign markets;

•   success in growing our distribution channels;

•   acquisitions by competitors; and

•   performance by outsourced service providers, and the costs of the underlying contracts of these providers, that are critical to our operations.

     One or more of the foregoing factors may cause our operating expenses to be disproportionately high during any given period or may cause our revenues and operating results to fluctuate significantly. Based upon the preceding factors, we may experience a shortfall in revenues or earnings or otherwise fail to meet public market expectations, which could materially and adversely affect our business, financial condition, results of operations and the market price of our common stock.

There could be reductions in information technology spending which could decrease demand for our products and harm our business.

     Our products typically represent substantial capital commitments by customers. As a result, customer purchase decisions may be significantly affected by a variety of factors, including trends in capital spending for telecommunications and enterprise software, competition and the availability or announcement of alternative technologies. Weakness in global economic conditions in recent periods and related reductions in information technology, or IT, spending have resulted in many of our customers delaying or substantially reducing their spending on contact center hardware, software and services. If the weakness in the global economy were to continue or worsen, demand for our products and services would likely continue to decrease and our business would be harmed.

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Our failure to timely develop and market products and services that meet customer requirements could cause us to lose customers and could harm our business.

     Demand for our products and services could be adversely affected by any of our products and services not meeting customer specifications or by problems with system performance, system availability, installation or service delivery commitments, or market acceptance. We need to continue to develop new products and services and manage product transitions in order to succeed. If we fail to introduce enhanced versions and releases of products, or enhancements to our service offerings, in a timely manner, customers may license competing products or purchase competing services, we may suffer lost sales and we could fail to achieve anticipated results. Our future operating results will depend on the demand for our product suite, including new and enhanced releases that are subsequently introduced. If our competitors release new products and services that are superior to our products and services in performance or price, demand for our products and services may decline. Our products may not be released on schedule or may contain defects when released which could result in the rejection of our products, damage to our reputation, lost revenues, diverted development resources and increased customer service and support costs and warranty claims. Any of the foregoing results could harm our business.

Because we rely on our installed customer base for support contract renewals and much of our future revenues, those revenues could be significantly impaired if our existing customers do not continue to purchase and use our products and services.

     We derive a significant portion of our revenues from support contracts. As a result, if we lose a major customer or if a support contract is delayed, reduced or cancelled, our revenues could be adversely affected. In addition, customers who have accounted for significant revenues in the past may not generate the same amounts of revenues in future periods. We also depend on our existing customers to purchase new products that we introduce to the market. We may not be able to obtain new customers to replace any existing customers that we lose.

Our failure to successfully address industry changes resulting from the convergence of voice and data networks could cause us to lose customers and harm our business.

     Historically, we have supplied the hardware, software and associated support services for implementing contact center solutions. Contact center technology is undergoing a change in which voice and data networks are converging into a single integrated network. Our approach to this convergence has been to provide migration software permitting the integration of existing telephony environments with networks in which voice traffic is routed through data networks. This integration is provided by a software infrastructure that requires enterprise-level selling and deployment of enterprise-wide solutions, rather than selling and deployment efforts focused solely on telephone communication. This industry transition has caused us to change many aspects of our business and as a result we have had to:

•   make changes in our management and technical personnel;

•   change our sales and distribution models;

•   expand relationships with our customers as sales are now often made throughout the organization;

•   modify the pricing and positioning of our products and services;

•   address new competitors; and

•   increasingly rely on systems integrators to deploy our solutions.

     If we fail to successfully address the changed conditions in which we operate, our business could be harmed.

If we are unable to successfully compete with the companies in our market, including against those that have greater financial, technical and marketing resources than we do, we might lose customers which would hurt sales and harm our business.

     The market for our products is intensely competitive, and competition is likely to intensify as companies in our industry consolidate to offer integrated solutions. Our principal competitors currently include companies in the contact center market and companies that market traditional telephony products and services. As the market develops for converged voice and data networks and products and the demand for traditional, telephony-based call centers diminishes, companies in these markets are merging, creating potentially larger and more significant competitors. Many current and potential competitors, including Avaya Inc., Cisco Systems, Genesys, a subsidiary of Alcatel, Intervoice, Nortel Networks and Siemens may have considerably greater resources, larger customer bases and broader international presence than us. If we are unable to improve and expand the functionality of our products and services, we might lose customers, which would hurt our sales and harm our business.

If we are not be able to adapt our products and services quickly or efficiently enough to respond to technological change, our customers might choose products and services of our competitors which would hurt our sales and harm our business.

     The market for our products and services is subject to rapid technological change and new product introductions. Current competitors or new market entrants have in the past developed, and may in the future develop new, proprietary products with features that have adversely affected or could in the future adversely affect the competitive position of our products. We may not successfully anticipate market demand for new products or services or introduce them in a timely manner.

     The convergence of voice and data networks, and of wired and wireless communications could require substantial modification and customization of our current products and sales and distribution model, as well as the introduction of new products. Further, customer acceptance of these new technologies may be slower than we anticipate. We may not be able to compete effectively in these markets. In addition, our products must readily integrate with major third-party security, telephony, front-office and back-office systems. Any changes to these third-party systems could require us to redesign our products, and any such redesign might not be possible on a timely basis or achieve market acceptance.

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If we are not able to properly anticipate demand for our products and services, our operating results could suffer.

     The demand for and sales mix of our products and services depends on many factors and is difficult to forecast. If forecasted demand does not develop, we could have excess production resulting in higher inventories of finished products and components, which would use cash and could lead to write-offs of some or all of the excess inventories or returns, which could result in lower gross margins. In addition, we may also incur certain costs, such as fees for excess manufacturing capacity and cancellation of orders and charges associated with excess and obsolete materials and goods in our inventory, which could result in lower margins. If demand increases beyond what we forecast, we may have to increase production at our contract manufacturers or increase our capacity to deliver products and services. We depend on our suppliers to provide additional volumes of components and those suppliers might not be able to increase production rapidly enough to meet unexpected demand or may choose to allocate capacity to other customers. Even if we are able to procure enough components, our contract manufacturers might not be able to produce enough of our products to meet market demand. The inability of either our manufacturers or our suppliers to increase production rapidly enough or our inability to obtain qualified services personnel could cause us to fail to meet customer demand. Rapid increases or decreases in production levels could result in higher costs for manufacturing, supply of components and other expenses. These higher costs could reduce our margins. Furthermore, if production is increased rapidly, manufacturing yields could decline, which may also reduce our margins.

We are involved in litigation which could be expensive and divert our resources.

     We have in the past and continue to be involved in litigation for a variety of matters. Any claims brought against us will likely have a financial impact, potentially affecting the market performance of our common stock, generating costs associated with the disruption of business and diverting management’s attention. There has been extensive litigation regarding patents and other intellectual property rights in our industry, and we are periodically notified of such claims by third parties. We have been sued in the past for alleged patent infringement. We expect that software product developers and providers of software in markets similar to ours will increasingly be subject to infringement claims or demands for infringement indemnification as the number of products and competitors in our industry grows and the functionality of products overlap. Any claims, with or without merit, could be costly and time-consuming to defend, divert our management’s attention, cause product delays and have an adverse effect on our revenues and operating results. If any of our products were found to infringe a third party’s proprietary rights, we could be required to enter into royalty or licensing agreements to be able to sell our products, which may not be available on terms acceptable to us or at all. Moreover, even if we negotiate license agreements with a third party, future disputes with such parties are possible. If we are unable to resolve an intellectual property dispute through a license, settlement or successful litigation, we would be subject to pay damages and be prevented from making, using or selling certain products or services. In the future, we could become involved in other types of litigation, such as shareholder lawsuits for alleged violations of securities laws, claims by employees, and product liability claims.

We are subject to risks inherent in doing business internationally which could negatively impact our business and competitive position.

     We market our products and services worldwide and may enter additional foreign markets in the future. If we fail to enter certain major markets successfully, our competitive position could be impaired and we may be unable to compete on a global scale. The financial resources required to enter, establish and grow new and existing foreign markets may be substantial, and foreign operations are subject to additional risks which may negatively impact our business including:

•   the cost and timing of the multiple governmental approvals and product modifications required by many countries;

•   fluctuations in the value of foreign currencies;

•   less effective protection of intellectual property;

•   difficulties in staffing and managing foreign operations;

•   difficulties in identifying and securing appropriate partners;

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•   global economic climate considerations including potentially negative tax and foreign and domestic trade legislation, which could result in the creation of trade barriers such as tariffs, duties, quotas and other restrictions;

•   longer payment cycles; and

•   seasonal reductions in business activity in international locales, such as during the summer months in Europe.

Our failure to grow and maintain our relationships with systems integrators or VARs could impact our ability to market and implement our products and reduce future revenues.

     Failure to establish or maintain relationships with systems integrators or VARs would significantly harm our ability to sell our products. Systems integrators sell and promote our products and perform custom integration of systems and applications. VARs market,sell, service, install and deploy our products. If these relationships fail, we will have to devote substantially more resources to the sales and marketing, implementation and support of our products than we would have had to otherwise. In addition, there could be channel conflict among our varied sales channels, which could harm our business, financial condition and results of operations.

If we are unable to expand our distribution channels, we may not be able to increase sales and our operating results could be hurt.

     We have historically sold our products and services through our direct sales force and a limited number of distributors. Changes in customer preferences, the markets we target, the competitive environment or other factors may require us to expand our third-party distributor, VARs, systems integrator, technology alliances, electronic and other alternative distribution channels, and we have continued to work on such expansion in recent periods. We may not be successful in expanding these distribution channels, and such failure could hurt our operating results by limiting our ability to increase or maintain our sales through these channels or by increasing our sales expenses faster than our revenues.

We are dependent on third-party suppliers for certain services and components and underperformance by these suppliers could cause us to lose customers and could harm our business.

     We have outsourced our manufacturing capabilities to third parties and rely on those suppliers to order components; build, configure and test systems and subassemblies; and ship products to meet our customers’ delivery requirements in a timely manner. Failure to ship product on time or failure to meet our quality standards would result in delays to customers, customer dissatisfaction or cancellation of customer orders.

     Should we have performance issues with our manufacturing sub-contractors, the process to move from one sub-contractor to another or manufacture products ourselves is a lengthy and costly process that could affect our ability to execute customer shipment requirements and might negatively affect revenues and costs. We depend on certain critical components in the production of our products. Some of these components such as certain server computers, integrated circuits, power supplies, connectors and plastic housings are obtained only from a single supplier and only in limited quantities. In addition, some of our major suppliers use proprietary technology and software code that could require significant redesign of our products in the case of a change in vendor. Further, suppliers could discontinue their products, or modify them in a manner incompatible with our current use, or use manufacturing processes and tools that could not be easily migrated to other vendors. Our inability to obtain these components from our current suppliers or quickly identify and qualify alternative suppliers could harm our ability to timely and cost-effectively produce and deliver our products.

     We also outsource certain of our information technology activities to third parties. We rely heavily on these vendors to provide day-to-day support. We may experience disruption in our business if these vendors or we have difficulty meeting our requirements, or if we need to transition the activities to other vendors or ourselves, which could negatively affect our revenues and costs.

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If we fail to attract, motivate and retain highly qualified key personnel, our ability to operate our business could be impaired.

     Our future success will depend to a significant extent on our ability to attract, retain and motivate highly qualified technical, marketing, sales and management personnel. Competition for these employees is intense and the process of recruiting personnel with the combination of skills and attributes required to operate our business can be time consuming and expensive. We have recently undergone significant changes in senior management and other personnel. For example, our Chief Financial Officer was appointed in December 2004. Our failure to recruit, retain and motivate qualified personnel could be disruptive to our operations, and could have a material adverse effect on our operating results.

We have replaced and intend to upgrade or replace certain parts of our information systems and may not be successful in implementing the changes.

     We have upgraded certain of our information systems to Oracle 11i, including systems to manage order processing, shipping, support entitlement, accounting and internal computing operations and intend to upgrade or replace certain other information systems that support our operations. Many of these systems are proprietary to us and are very complex. Any failure or significant downtime in our information systems could prevent us from taking customer orders, shipping products, providing services or billing customers and could harm our business. We may not be successful in implementing these new systems and transitioning data from our old systems to the new systems. For example, we experienced delays in invoicing in the quarter ended September 30, 2004 which delayed collections, increased DSOs relative to the prior quarter, and increased accounts receivable for the quarter.

     In addition, our information systems require the services of personnel with extensive knowledge of these information systems and the business environment in which we operate. In order to successfully implement and operate our systems, we must continue to attract and retain a significant number of highly skilled employees. If we fail to attract and retain the highly skilled personnel required to implement, maintain and operate our information systems, our business could suffer.

If our intellectual property is copied, obtained or developed by third parties, competition against us could increase, which could reduce our revenues and harm our business.

     Our success depends in part upon our internally developed technology. Despite the precautions we take to protect our intellectual property, unauthorized third parties may copy or otherwise obtain and use our technology. In addition, third parties may develop similar technology independently. Unauthorized copying, use or reverse engineering of our products or independent development of technology similar to ours by competitors could materially adversely affect our business, financial condition and results of operations.

We depend on licenses from third parties for rights to the technology used in several of our products. If we are unable to continue these relationships and maintain our rights to this technology, our product offerings could suffer.

     We depend on licenses for some of the technology used in our products from a number of third-party vendors. If we were unable to continue using the technology made available to us under these licenses on commercially reasonable terms or at all, we may have to discontinue, delay or reduce product shipments until we obtain equivalent replacement technology, which could hurt our business. In addition, if our vendors choose to discontinue support of the licensed technology in the future, we may not be able to modify or adapt our own products.

Regulatory changes affecting our industry and future changes to generally accepted accounting principles may negatively impact our operating results or ability to operate our business.

     The electronic communications industry is subject to a wide range of regulations in the markets and countries in which we currently operate or may wish to operate in the future. For example, the electronics industry is increasingly becoming subject to various regulations regarding the recycling and disposal of electronics equipment and the reduction of the use of hazardous substances in the manufacturing of such equipment. In addition, new products and services may involve entering different or newly regulated areas. Changes in these environments may impact our business and could affect our ability to operate in certain markets or certain regions from time to time.

     Revisions to generally accepted accounting principles or related rules of the Securities and Exchange Commission will require us to review our accounting and financial reporting procedures in order to ensure continued compliance.

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From time to time, such changes have an impact on our accounting and financial reporting, and these changes may impact market perception of our financial condition.

     In addition, recently adopted or new legislation or regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002, has, and may continue to lead to an increase in our costs related to audits in particular and regulatory compliance generally. A failure to comply with these new laws and regulations could materially harm our business.

     During the course of our implementation of Oracle 11i to enable our Section 404 compliance efforts in the third quarter of 2004, as well as during our normal financial operations and quarterly close process in the fourth quarter of 2004, we identified five significant deficiencies in the design and operation of our internal controls, of which three were outstanding as of December 31, 2004. While three of the identified deficiencies have been remediated, we are in the process of remediating the other two identified deficiencies. It is possible that in the future we will identify further significant deficiencies or material weaknesses in the design and operation of our internal controls. We may be unable to remediate such matters in a timely fashion, and/or our independent auditors may not agree with our remediation efforts in connection with their Section 404 attestation. Such failures could impact our ability to record, process, summarize and report financial information, and could impact market perception of the quality of our financial reporting, which could adversely affect our business and our stock price.

     Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Aspect have been detected.

We may engage in future acquisitions or investments that could prove difficult to integrate with our business and which may impair our operations.

     We have made a number of acquisitions in the past. Acquisitions or investments we make may experience significant fluctuations in market value or may result in significant write-offs or the issuance of additional equity or debt securities to finance or fund them. Acquisitions and investments can be costly and disruptive, and we may be unable to successfully integrate a new business or technology into our business. There are a number of risks that future transactions could entail, including:

•   inability to successfully integrate or commercialize acquired technologies or otherwise realize anticipated synergies or economies of scale on a timely basis;

•   diversion of management attention;

•   disruption of our ongoing business;

•   inability to assimilate or retain key technical and managerial personnel for both companies;

•   inability to establish and maintain uniform standards, controls, procedures and processes;

•   governmental, regulatory or competitive responses to the proposed transactions;

•   impairment of relationships with employees, vendors or customers including, in particular, acquired distribution and VAR relationships;

•   permanent impairment of our equity investments;

•   adverse impact on our annual effective tax rate; and

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•   dilution of existing equity holders.

Our operations are geographically concentrated and we are subject to business interruption risks.

     Significant elements of our product development, manufacturing, information technology systems, corporate offices and support functions are concentrated in San Jose, California, Nashville, Tennessee and Chelmsford, Massachusetts. Significant sales, administrative and support functions and related infrastructure to support our international operations are also concentrated at our U.K. offices. In the event of a natural disaster, such as an earthquake or flood, or localized extended outages of critical utilities or transportation systems that affects us, our customers or our suppliers, we could experience a significant business interruption.

Fluctuations in the value of foreign currencies could result in currency transaction losses.

     As we expand our international operations, we expect that our international business will increasingly be conducted in foreign currencies. Fluctuations in the value of foreign currencies relative to the United States dollar have caused, and we expect such fluctuations to continue to increasingly cause, currency transaction gains and losses. We cannot predict the effect of exchange rate fluctuations upon future quarterly and annual operating results. We may experience currency losses in the future.

Risks Related to Our Common Stock

The market price for our common stock may be particularly volatile, and our shareholders may be unable to resell their shares at a profit.

     The market price of our common stock has been subject to significant fluctuations and may continue to fluctuate or decline. From January 1, 2004 to March 31, 2005, the closing price per share of our common stock has ranged from a low of $7.37 to a high of $19.45. The stock markets have experienced significant price and trading volume fluctuations. The market for technology has been extremely volatile and frequently reaches levels that bear no relationship to the past or present operating performance of those companies. General economic conditions, such as recession or interest rate or currency rate fluctuations in the United States or abroad, could negatively affect the market price of our common stock. In addition, our operating results may be below the expectations of securities analysts and investors. If this were to occur, the market price of our common stock would likely significantly decrease. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against that company. Such litigation could result in substantial cost and a diversion of management’s attention and resources.

     The market price of our common stock may fluctuate in response to various factors, some of which are beyond our control. These factors include, but are not limited to, the following:

•   changes in market valuations or earnings of our competitors or other technology companies;

•   actual or anticipated fluctuations in our operating results;

•   changes in financial estimates or investment recommendations by securities analysts who follow our business;

•   technological advances or introduction of new products by us or our competitors;

•   the loss of key personnel;

•   our sale of common stock or other securities in the future;

•   intellectual property or litigation developments;

•   changes in business or regulatory conditions;

•   the trading volume of our common stock; and

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•   disruptions in the geopolitical environment, including war in the Middle East or elsewhere or acts of terrorism in the United States or elsewhere.

Vista has been granted certain approval rights as to particular corporate actions and owns Series B convertible preferred stock representing, on an as converted basis, approximately 26.8% of our common stock.

     Vista’s ownership of our Series B Convertible Preferred Stock together with its right to nominate two of our seven directors provides Vista with a substantial degree of control over our operations. Additionally, Vista’s consent is required for the issuance of additional capital stock, a sale of all or substantially all of our assets, the consummation of any transaction the result of which is that any person becomes the beneficial owner of more than fifty percent of our voting securities, the incurrence of certain indebtedness, a voluntary liquidation or dissolution, acquisitions by us of any material interest in any company, business or joint venture, the consummation of certain related party transactions by us, the execution by us of any agreement which restricts our right to comply with certain of our obligations to Vista, the approval of our annual budget or any material deviations from our annual budget, the declaration or payment of any dividends or distributions on our common stock, or a change in the compensation paid to, the termination of the employment of, or the replacement of, certain of our executive officers including our Chief Executive Officer. If Vista viewed these matters differently from us, we might not be able to accomplish specific corporate actions, and this failure could harm our business.

We have implemented anti-takeover provisions that could make it more difficult to acquire us.

     Our articles of incorporation, our bylaws and our shareholder rights plan contain provisions that may inhibit potential acquisition bids for us and prevent changes in our management. Certain provisions of our charter documents could discourage potential acquisition proposals and could delay or prevent a change in control transactions. These provisions of our charter documents could have the effect of discouraging others from making tender offers for our shares, and as a result, these provisions may prevent the market price of our common stock from reflecting the effects of actual or rumored takeover attempts. These provisions may also prevent changes in our management.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Reference is made to the information appearing under the caption “Quantitative and Qualitative Disclosures About Market Risk” of the Registrant’s 2004 Annual Report on Form 10-K, which information is hereby incorporated by reference. The Company believes there were no material changes in the Company’s exposure to financial market risk during the first quarter of 2005.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

     Our Chief Executive Officer and our Chief Financial Officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this interim report (the “Evaluation Date”), have concluded that as of the Evaluation Date, our disclosure controls and procedures were adequate and designed to ensure that material information relating to us and our consolidated subsidiaries would be made known to them by others within those entities.

     In 2004, we completed a major phase of our implementation of Oracle 11i, an upgrade to our information systems that supports our operations, including systems to manage order processing, shipping, support entitlement, accounting and internal computing operations. This application had been hosted on third-party computer servers. In the first quarter of 2005, we moved the application and associated infrastructure in-house. As of December 31, 2004 we had three significant deficiencies which were in the process of remediating and have two remaining significant deficiencies as of March 31, 2005. See “Risk Factors — Regulatory changes affecting our industry and future changes to generally accepted accounting principles may negatively impact our operating results or ability to operate our business.”

     Our management is responsible for establishing and maintaining adequate internal controls over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). There were no significant

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changes in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

     Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Part II: Other Information

Item 5. Other Information

     (a)  The Compensation Committee of the Company’s Board of Directors met on May 4, 2005 and approved the grant under the 1999 Equity Incentive Plan of options to purchase an aggregate of 512,000 shares of common stock to certain officers of the Company, including an option to Mr. Barnett, the Company’s President and Chief Executive Officer, to purchase 300,000 shares. These options have an exercise price of $8.94 per share, the closing price of the Company’s stock on the Nasdaq National Market on May 4th. Mr. Barnett’s option vests and becomes exercisable in two tranches. The first tranche vests as to 200,000 shares in accordance with the Company’s standard time-based vesting schedule (25% of such shares on the first anniversary of the date of grant and 1/48 of such shares each month thereafter so that, assuming Mr. Barnett’s continued service through such date, he will be fully vested in these 200,000 option shares on May 4, 2009). The second tranche of Mr. Barnett’s option vests as to 100,000 shares on May 4, 2010, but the vesting will accelerate to commence vesting on the standard time-based vesting schedule (so that he would be fully vested in the option by May 4, 2009) if he satisfies by October 31, 2005 performance objectives established by the Committee and the Board which relate to the execution of certain strategic business plans for the Company and its business. All option grants made to the Company’s officers who are party to the Company’s Change of Control Agreement (including Mr. Barnett) will accelerate if the officer is involuntary terminated without cause or experiences a constructive termination of employment within three months prior to or thirteen months following a change of control of Aspect.

     In addition to the option grants made to the Company’s officers, options to purchase an aggregate of approximately 1.2 million shares of common stock were granted on May 4, 2005 to other employees of Aspect under the Company’s 1999 Equity Incentive Plan.

Item 6. Exhibits

A. Exhibits

10.105	Amended and Restated 1999 Equity Incentive Plan.
10.106	Form Nonstatutory Stock Option Agreement for 1999 Equity Incentive Plan.
10.107	Form Incentive Stock Option Agreement for 1999 Equity Incentive Plan.
10.108	Form Stock Award Agreement for 1999 Equity Incentive Plan.
10.109	Change of Control Agreement, effective as of February 2005.
31.1	Gary E. Barnett’s Certification pursuant to 13a-14(a) as adopted pursuant to 302 of the Sarbanes-Oxley Act of 2002.
31.2	James C. Reagan’s Certification pursuant to 13a-14(a) as adopted pursuant to 302 of the Sarbanes-Oxley Act of 2002.
32.1	Gary E. Barnett’s Certification pursuant to 18. U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002.
32.1	James C. Reagan’s Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ASPECT COMMUNICATIONS CORPORATION (Registrant)
	By: /s/ JAMES C. REAGAN
	James C. Reagan
	Executive Vice President and Chief Financial Officer
Date: May 10, 2005

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EXHIBIT INDEX

10.105	Amended and Restated 1999 Equity Incentive Plan.
10.106	Form Nonstatutory Stock Option Agreement for 1999 Equity Incentive Plan.
10.107	Form Incentive Stock Option Agreement for 1999 Equity Incentive Plan.
10.108	Form Stock Award Agreement for 1999 Equity Incentive Plan.
10.109	Change of Control Agreement, effective as of February 2005.
31.2	Gary E. Barnett’s Certification pursuant to 13a-14(a) as adopted pursuant to 302 of the Sarbanes-Oxley Act of 2002.
31.2	James C. Reagan’s Certification pursuant to 13a-14(a) as adopted pursuant to 302 of the Sarbanes-Oxley Act of 2002.
32.1	Gary E. Barnett’s Certification pursuant to 18. U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002.
32.1	James C. Reagan’s Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002.

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EX-10.105

Exhibit 10.105

ASPECT COMMUNICATIONS CORPORATION

1999 EQUITY INCENTIVE PLAN

(as amended and restated May 2003)

     1. Purposes of the Plan. The purposes of this Equity Incentive 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. Options granted under the Plan may be either Incentive Stock Options (as defined under Section 422 of the Code) or Nonstatutory Stock Options, as determined by the Administrator at the time of grant of an Option and subject to the applicable provisions of Section 422 of the Code and the regulations promulgated thereunder. Stock Awards may also be granted under the Plan.

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

          (a) “Administrator” means the Board or its Committee appointed pursuant to Section 4 of the Plan.

          (b) “Affiliate” means an entity other than a Subsidiary (as defined below) in which the Company owns an equity interest or which, together with the Company, is under common control of a third person or entity.

          (c) “Applicable Laws” means the legal requirements relating to the administration of equity compensation plans under applicable U.S. state corporate laws, U.S. federal and applicable state securities laws, the Code, any Stock Exchange rules or regulations and the applicable laws of any other country or jurisdiction where Options are granted under the Plan, as such laws, rules, regulations and requirements shall be in place from time to time.

          (d) “Award” means any Option or Stock Award that the Administrator grants under the Plan.

          (e) “Board” means the Board of Directors of the Company.

          (f) “Change of Control” means (1) a sale of all or substantially all of the Company’s assets, or (2) any merger, consolidation or other business combination transaction of the Company with or into another corporation, entity or person, other than a transaction in which the holders of at least a majority of the shares of voting capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by such shares remaining outstanding or by their being converted into shares of voting capital stock of the surviving entity) a majority of the total voting power represented by the shares of voting capital stock of the

Company (or the surviving entity) outstanding immediately after such transaction, or (3) the direct or indirect acquisition (including by way of a tender or exchange offer) by any person, or persons acting as a group, of beneficial ownership or a right to acquire beneficial ownership of shares representing a majority of the voting power of the then outstanding shares of capital stock of the Company.

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

          (h) “Committee” means one or more committees or subcommittees appointed by the Board to administer the Plan in accordance with Section 4 below.

          (i) “Common Stock” means the Common Stock of the Company.

          (j) “Company” means Aspect Communications Corporation, a California corporation.

          (k) “Consultant” means any person, including an advisor, who is engaged by the Company or any Parent or Subsidiary to render services and is compensated for such services.

          (l) “Continuous Service Status” means the absence of any interruption or termination of service as an Employee or Consultant to the Company or a Parent, Subsidiary or Affiliate. Continuous Service Status shall not be considered interrupted in the case of (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Administrator, provided that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; or (iv) in the case of transfers between locations of the Company or between the Company, its Parent(s), Subsidiaries, Affiliates or their respective successors. For purposes of this Plan, a change in status from an Employee to a Consultant or from a Consultant to an Employee will not constitute a termination of Continuous Service Status.

          (m) “Corporate Transaction” means a sale of all or substantially all of the Company’s assets, or a merger, consolidation or other capital reorganization of the Company with or into another corporation.

          (n) “Director” means a member of the Board.

          (o) “Employee” means any person (including, if appropriate, any Named Executive, Officer or Director) employed by the Company or any Parent or Subsidiary of the Company. The payment by the Company of a director’s fee to a Director shall not be sufficient to constitute “employment” of such Director by the Company.

          (p) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (q) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

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               (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 sales price on the last preceding trading date from which such quotation exists 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.

          (r) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable written Option Agreement.

          (s) “Named Executive” means 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 most highly 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.

          (t) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option, as designated in the applicable Option Agreement.

          (u) “Officer” means a person who is an officer of the Company within the meaning of Section 16(a) of the Exchange Act and the rules and regulations promulgated thereunder.

          (v) “Option” means a stock option granted pursuant to the Plan.

          (w) “Option Agreement” means a written document, the form(s) of which shall be approved from time to time by the Administrator, reflecting the terms of an Option granted under the Plan and includes any documents attached to or incorporated into such Option Agreement, including, but not limited to, a notice of stock option grant and a form of exercise notice.

          (x) “Optioned Stock” means the Common Stock subject to an Option.

          (y) “Optionee” means an Employee or Consultant who receives an Option.

          (z) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

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          (aa) “Participant” means any holder of one or more Options or Stock Awards, or the Shares issuable or issued upon exercise of such Options or Stock Awards, granted under the Plan.

          (bb) “Plan” means this 1999 Equity Incentive Plan, as amended from time to time.

          (cc) “Reporting Person” means an Officer, Director or greater than 10% shareholder of the Company within the meaning of Rule 16a-2 of the Exchange Act, who is required to file reports pursuant to Rule 16a-3 of the Exchange Act.

          (dd) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, or any successor provision.

          (ee) “Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.

          (ff) “Stock Awards” means rights to acquire or be issued Shares of Common Stock granted pursuant to Section 11 below.

          (gg) “Stock Award Agreement” means a written document, the form(s) of which shall be approved from time to time by the Administrator, reflecting the terms, conditions and restrictions applicable a Stock Award granted under the Plan and includes any documents attached to or incorporated into such Stock Award Agreement.

          (hh) “Stock Exchange” means any stock exchange or consolidated stock price reporting system on which prices for the Common Stock are quoted at any given time.

          (ii) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

          (jj) “Ten Percent Holder” means a person who owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary.

     3. Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be sold or issued under the Plan is 6,450,000 Shares of Common Stock; provided however that no more than 500,000 Shares may be sold or issued pursuant to Stock Awards granted pursuant to Section 11 below. The Shares may be authorized, but unissued, or reacquired Common Stock.

     If an Award should expire or become unexercisable for any reason without having been exercised or the Shares subject thereto otherwise having been issued in full, the unpurchased or unissued Shares that were subject thereto shall, unless the Plan has been terminated, become available for future grant under the Plan. In addition, any Shares of Common Stock that are retained by the Company upon exercise of an Award in order to satisfy the exercise price for such Award, or to satisfy any withholding taxes due with respect to such exercise or issuance, shall be

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treated as not issued and shall continue to be available under the Plan. Shares issued under the Plan and later repurchased by the Company pursuant to any repurchase right that the Company may have shall not be available for future grant under the Plan.

4. Administration of the Plan.

          (a) General. The Plan shall be administered by the Board or a Committee, or a combination thereof, as determined by the Board; provided however that Plan shall be administered in a way that complies with the Applicable Laws. The Plan may be administered by different administrative bodies with respect to different classes of Optionees and, if permitted by the Applicable Laws, the Board may authorize one or more officers (who may (but need not) be Officers) to grant Options to Employees and Consultants.

          (b) Administration with respect to Reporting Persons. With respect to Options granted to Reporting Persons and Named Executives, the Plan may (but need not) be administered so as to permit such Options to qualify for the exemption set forth in Rule 16b-3 and to qualify as performance-based compensation under Section 162(m) of the Code.

          (c) Committee Composition. If a Committee has been appointed pursuant to this Section 4, such Committee shall continue to serve in its designated capacity until otherwise directed by the 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 and, in the case of a Committee administering the Plan pursuant to Section 4(b) above, to the extent permitted or required by Rule 16b-3 and Section 162(m) of the Code.

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

               (i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(q) of the Plan;

               (ii) to select the Employees and Consultants to whom Awards may from time to time be granted;

               (iii) to determine whether and to what extent Awards are granted;

               (iv) to determine the number of shares of Common Stock to be covered by each such Award granted;

               (v) to approve forms of Option Agreement or Stock Award Agreement for use under the Plan;

               (vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder, which terms and conditions include but are

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not limited to the exercise or purchase price, the time or times when an Award may be exercised (which may be based on performance criteria), the vesting and/or exercisability schedule, any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or Shares issued or issuable upon exercise of such Award, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

               (vii) to determine when and under what circumstances an Option may be settled in cash under Section 10(g) instead of Common Stock;

               (viii) to make any amendments or adjustments to any Award that the Administrator determines, in its discretion and under the authority granted to it under the Plan, to be necessary or advisable, provided however that no amendment or adjustment to an Award that would materially and adversely affect the rights of any Participant shall be made without the prior written consent of the Participant;

               (ix) to construe and interpret the terms of the Plan and awards granted under the Plan; and

               (x) in order to fulfill the purposes of the Plan and without amending the Plan, to modify grants of Awards to Participants who are foreign nationals or employed outside of the United States in order to recognize differences in local law, tax policies or customs.

          (e) Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Participants.

5. Eligibility.

          (a) Recipients of Grants. Incentive Stock Options may be granted only to Employees. Nonstatutory Stock Options and Stock Awards may be granted to Employees and Consultants. An Employee or Consultant who has been granted an Award may, if he or she is otherwise eligible, be granted an additional Award or Awards.

          (b) Type of Option. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value of Shares with respect to which Incentive Stock Options are exercisable for the first time by an Optionee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

          (c) No Employment Rights. The Plan shall not confer upon any Participant any right with respect to continuation of employment or consulting relationship with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate his or her employment or consulting relationship at any time, with or without cause.

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     6. Term of Plan. The Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 15 of the Plan.

     7. Term of Option. The term of each Option shall be the term stated in the Option Agreement; provided however that the term of an Option shall be no more than ten (10) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement and provided further that, in the case of an Incentive Stock Option granted to a person who at the time of such grant is a Ten Percent Holder, the term of such Incentive Stock Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement.

     8. Limitation on Grants to Employees. Subject to adjustment as provided in Section 14 below, the maximum number of Shares which may be subject to Options granted to any one Employee under this Plan for any fiscal year of the Company shall be 750,000; provided however that, in the case of Options granted to a newly-hired Employee as an inducement to his or her entering into an employment or other service arrangement with the Company or a Subsidiary or Parent, the maximum number of Shares which may be subject to such Options shall be 1,000,000.

9. Option Exercise Price and Consideration.

          (a) Exercise Price. The per Share exercise price for the Shares to be issued pursuant to exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

               (i) In the case of an Incentive Stock Option

                    (A) granted to an Employee who at the time of grant is a Ten Percent Holder, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant; or

                    (B) granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

               (ii) In the case of a Nonstatutory Stock Option granted to any person, the per share Exercise Price shall be no less than 100% of the Fair Market Value on the date of grant.

               (iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to merger or other corporate transaction.

          (b) Permissible Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant) and may consist entirely of (1) cash, (2) check, (3) cancellation of indebtedness;

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(4) other Shares that (i) in the case of Shares acquired upon exercise of an Option either have been owned by the Optionee for more than six 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 the Option is exercised, (5) if, as of the date of exercise of an Option the Company then is permitting employees to engage in a “same-day sale” cashless brokered exercise program involving one or more brokers, through such a program that complies with the Applicable Laws (including without limitation the requirements of Regulation T and other applicable regulations promulgated by the Federal Reserve Board) and that ensures prompt delivery to the company of the amount required to pay the exercise price and any applicable withholding taxes, (6) any combination of the foregoing methods of payment, or (7) such other consideration and method of payment for the issuance of Shares to the extent permitted under the Applicable Laws. 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 and the Administrator may refuse to accept a particular form of consideration at the time of any Option exercise if, in its sole discretion, acceptance of such form of consideration is not in the bests interests of the Company at such time.

10. Exercise of Option.

          (a) Exercisability.

               (i) General. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, consistent with the terms of the Plan, and reflected in the Option Agreement, including vesting requirements and/or performance criteria with respect to the Company and/or the Optionee.

               (ii) Leave of Absence. The Administrator shall have the discretion to determine whether and to what extent the vesting of Options shall be tolled during any unpaid leave of absence; provided however that in the absence of such determination, vesting of Options shall be tolled during any such unpaid leave (unless otherwise required by the Applicable Laws). In the event of military leave, vesting shall toll during any unpaid portion of such leave, provided that, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Options to the same extent as would have applied had the Participant continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave.

               (iii) Minimum Exercise Requirements. An Option may not be exercised for a fraction of a Share. The Administrator may require that an Option be exercised as to a minimum number of Shares, provided that such requirement shall not prevent an Optionee from exercising the full number of Shares as to which the Option is then exercisable.

               (iv) Procedures for and Results of Exercise. An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in

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accordance with the terms of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option 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.

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

               (v) Rights as Stockholder. 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 Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. 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 14 of the Plan.

          (b) Termination of Status as an Employee or Consultant. In the event of termination of an Optionee’s Continuous Service Status for any reason other than the Optionee’s death, disability or retirement, such Optionee may, but only within ninety (90) days (or such other period of time, as is determined by the Administrator, with such determination in the case of an Incentive Stock Option being made at the time of grant of the Option) 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 or her Option to the extent that he or she was vested in the Optioned Stock at the date of such termination. To the extent that the Optionee was not vested in the Optioned Stock at the date of such termination, or if the Optionee does not exercise the Option to the extent so vested within the time specified above, the Option shall terminate and the Optioned Stock underlying the unexercised portion of the Option shall revert to the Plan. No termination shall be deemed to occur and this Section 10(b) shall not apply if (i) the Optionee is a Consultant who becomes an Employee, or (ii) the Optionee is an Employee who becomes a Consultant.

          (c) Disability of Optionee. Notwithstanding Section 10(b) above, in the event of termination of an Optionee’s Continuous Service Status as a result of his or her total and permanent disability (as defined in Section 22(e)(3) of the Code), such Optionee may, but only within twelve (12) months (or such other period of time as is determined by the Administrator, with such determination in the case of an Incentive Stock Option being made at the time of grant of the Option) 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 the Option to the extent he or she was vested in the Optioned Stock at the date of such termination. To the extent that the Optionee was not vested in the Optioned Stock at the date of termination, or if the Optionee does not exercise the Option to the extent so vested within the time specified above, the Option shall terminate and the Optioned Stock underlying the unexercised portion of the Option shall revert to the Plan.

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          (d) Death of Optionee. Notwithstanding Section 10(b) above, in the event of the death of an Optionee:

               (i) during the term of the Option where the Optionee is at the time of his or her death an Employee or Consultant of the Company and only if the Optionee shall have been in Continuous Service Status since the date of grant of the Option, then the Option may be exercised at any time within twelve (12) 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 that the Optionee would have vested in the Optioned Stock had the Optionee continued living and remained in Continuous Status as an Employee or Consultant six (6) months after the date of death, subject to the limitation set forth in Section 5(b); or

               (ii) within thirty (30) days (or such other period of time not exceeding three (3) months as is determined by the Administrator, with such determination in the case of an Incentive Stock Option being made at the time of grant of the Option) after the termination of Continuous Service Status, the Option may be exercised, at any time within twelve (12) 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 that the Optionee was vested in the Optioned Stock at the date of termination.

          (e) Retirement of Optionee. Notwithstanding Section 10(b) above, in the event of termination of an Optionee’s Continuous Service Status as a result of his or her retirement after reaching the age of at least 62 years, such Optionee may, but only within twelve (12) months (or such other period of time as is determined by the Administrator, with such determination in the case of an Incentive Stock Option being made at the time of grant of the Option) 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 the Option to the extent he or she was vested in the Optioned Stock at the date of such termination. To the extent that the Optionee was not vested in the Optioned Stock at the date of termination, or if the Optionee does not exercise the Option to the extent so vested within the time specified above, the Option shall terminate and the Optioned Stock underlying the unexercised portion of the Option shall revert to the Plan.

          (f) Extension of Exercise Period. The Administrator shall have full power and authority to extend the period of time for which an Option is to remain exercisable following termination of an Optionee’s Continuous Service Status from the periods set forth in Sections 10(b), 10(c), 10(d) or 10(e) above or in the Option Agreement to such greater time as the Board shall deem appropriate, provided that in no event shall such Option be exercisable later than the date of expiration of the term of such Option as set forth in the Option Agreement.

          (g) Buy-Out Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares an Option previously granted under the Plan based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time such offer is made.

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11. Stock Awards.

          (a) General Terms. Stock Awards shall be subject to the terms, conditions and restrictions determined by the Administrator at the time the Stock Award is granted. Such terms, conditions and restrictions may (but need not) include, without limitation, conditions requiring the Participant to purchase the Shares underlying the Stock Award at such price as is determined by the Administrator, restrictions on transfer, vesting provisions, forfeiture provisions and provisions permitting the Company to repurchase shares subject to the Stock Award.

          (b) Stock Award Agreements. Each Stock Award granted under the Plan shall be evidenced by a Stock Award Agreement between the recipient and the Company. Such Agreement, and the Shares issued or to be issued pursuant to the Award, shall be subject to all applicable terms of the Plan and of the Stock Award Agreement. The provisions of the various Stock Award Agreements entered into under the Plan need not be identical.

          (c) Vesting. If an Award is granted subject to forfeiture, vesting and/or repurchase provisions or restrictions, the Administrator may, in its discretion, accelerate in whole or in part the schedule governing such vesting provisions or the lapsing of such restrictions or otherwise provide for the waiver of any such provisions or restrictions under such circumstances and subject to such conditions as it deems appropriate, consistent with the terms of the Plan. The certificates evidencing Shares subject to such provisions and restrictions, although issued in the name of the Participant, shall be held by the Company or a third party designated by the Administrator in escrow to enforce such provisions and restrictions.

          (d) Rights as a Stockholder. Once Shares are issued under the Plan pursuant to a Stock Award, whether or not such Shares are subject to vesting conditions or other forfeiture or repurchase provisions, the Participant shall have the rights equivalent to those of a stockholder, and shall be a stockholder when his or her ownership of the Shares is entered upon the records of the duly authorized transfer agent of the Company. The holders of Shares issued under a Stock Award shall have the same voting, dividend and other rights as the Company’s other stockholders. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued.

     12. Taxes.

          (a) As a condition of the grant, vesting or exercise of an Award granted under the Plan, the Participant (or in the case of a Participant’s death, the person exercising the Award) shall make such arrangements as the Administrator may require for the satisfaction of any applicable federal, state, local or foreign withholding tax obligations that may arise in connection with the exercise of Option and the issuance of Shares. The Company shall not be required to issue any Shares under the Plan until such obligations are satisfied.

          (b) In the case of an Employee and in the absence of any other arrangement, the Employee shall be deemed to have directed the Company to withhold or collect from the Employee’s compensation an amount sufficient to satisfy such tax obligations from the next payroll payment otherwise payable after the date of an exercise of the Award.

          (c) In the case of a Participant other than an Employee (or in the case of an Employee where the next payroll payment is not sufficient to satisfy such tax obligations, with respect to any remaining tax obligations), in the absence of any other arrangement and to the

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extent permitted under the Applicable Laws, the Participant shall be deemed to have elected 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 determined as of the applicable Tax Date (as defined below) equal to the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, applicable to the exercise. For purposes of this Section 12, the Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined under the Applicable Laws (the “Tax Date”).

          (d) If permitted by the Administrator, in its discretion, a Participant may satisfy his or her tax withholding obligations upon exercise of an Award by surrendering to the Company Shares that (i) in the case of Shares previously acquired from the Company, have been owned by the Participant for more than six (6) months on the date of surrender, and (ii) have a Fair Market Value determined as of the applicable Tax Date on the date of surrender equal to the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, applicable to the exercise.

          (e) Any election or deemed election by a Participant to have Shares withheld to satisfy tax withholding obligations under Section 12(c) or (d) above shall be irrevocable as to the particular Shares as to which the election is made and shall be subject to the consent or disapproval of the Administrator. Any election by a Participant under Section 12(d) above must be made on or prior to the applicable Tax Date.

          (f) In the event an election to have Shares withheld is made by a Participant 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 Participant shall receive the full number of Shares with respect to which the Award is exercised but such Participant shall be unconditionally obligated to tender back to the Company the proper number of Shares on the applicable Tax Date.

     13. Non-Transferability of Awards. An 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 or Stock Awards pursuant to Option Agreements or Stock Award Agreements specifying (i) the manner in which such Nonstatutory Stock Options or Stock Awards 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 13.

     14. Adjustments Upon Changes in Capitalization, Corporate Transactions, Change of Control and Certain Other Transactions.

          (a) Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of Shares of Common Stock covered by each outstanding Award, the numbers of Shares set forth in Section 3 above (that is, both of the specific Share numbers set forth in the first sentence of Section 3 above), the number of shares of Common Stock that have been authorized for issuance under the Plan but as to which no Awards

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have yet been granted or that have been returned to the Plan upon cancellation or expiration of an Award, and the maximum numbers of Shares of Common Stock for which Awards may be granted to any Employee under Section 8 above (that is, both of the specific Share number set forth in Section 8 above), as well as the price per Share of Common Stock covered by each such 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, recapitalization or reclassification of the Common Stock (including any change in the number of Shares of Common Stock effected in connection with a change of domicile of the Company), 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 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) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, each outstanding Award shall terminate immediately prior to the consummation of the transaction, unless otherwise provided by the Administrator.

          (c) Corporate Transactions; Change of Control. In the event of a Corporate Transaction, each outstanding Award shall be assumed or an equivalent award shall be substituted by the successor corporation or a Parent or Subsidiary of such successor corporation (such entity, the “Successor Corporation”), unless the Successor Corporation does not agree to such assumption or substitution, in which case such Awards shall terminate upon the consummation of the transaction. Notwithstanding the preceding sentence, in the event of a Change of Control, each outstanding Award shall be assumed or an equivalent award substituted by the Successor Corporation, unless the Successor Corporation does not agree to such assumption or substitution, in which case, the vesting of each Award shall accelerate and each Award shall become exercisable in full (including with respect to Shares as to which an Option would not otherwise be vested and exercisable) prior to consummation of the transaction at such time and on such conditions as the Administrator shall determine. To the extent an Award is not exercised prior to consummation of a Change of Control in which the vesting of Awards is being accelerated, such Award shall terminate upon such consummation and the Administrator shall notify the Participant of such fact at least five (5) days prior to the date on which the Award terminates.

          For purposes of this Section 14(c), an Award shall be considered assumed, without limitation, if, at the time of issuance of the stock or other consideration upon a Corporate Transaction or a Change of Control, as the case may be, each Participant would be entitled to receive upon exercise of the Award the same number and kind of shares of stock or the same amount of property, cash or securities as such holder would have been entitled to receive upon the occurrence of the transaction if the holder had been, immediately prior to such transaction, the holder of the number of Shares of Common Stock covered by the Award at such time (after

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giving effect to any adjustments in the number of Shares covered by the Award as provided for in this Section 14); provided however that if the consideration received in the transaction is not solely common stock of the Successor Corporation or its Parent, the Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received upon exercise of the Award to be solely common stock of the Successor Corporation or its Parent equal to the Fair Market Value of the per Share consideration received by holders of Common Stock in the transaction.

          (d) Certain Distributions. In the event of any distribution to the Company’s shareholders of securities of any other entity or other assets (other than dividends payable in cash or stock of the Company) without receipt of consideration by the Company, the Administrator may, in its discretion, appropriately adjust the price per Share of Common Stock covered by each outstanding Award to reflect the effect of such distribution.

     15. 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 or such other date as is determined by the Administrator; provided however that in the case of an Incentive Stock Option, the grant date shall be the later of the date on which the Administrator makes the determination granting such Incentive Stock Option or the date of commencement of the Optionee’s employment relationship with the Company. Notice of the determination shall be given to each Participant to whom an Award is so granted within a reasonable time after the date of such grant.

16. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter, suspend, discontinue or terminate the Plan, but no amendment, alteration, suspension, discontinuance or termination (other than an adjustment made pursuant to Section 14(a) above) shall be made that would materially and adversely affect the rights of any Participant under any outstanding grant, without his or her consent. Notwithstanding the above, to the extent necessary and desirable to comply with the Applicable Laws, the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such as degree as required.

          (b) Effect of Amendment or Termination. Any such amendment or termination of the Plan shall not affect Awards already granted and such Awards shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company.

     17. Conditions Upon Issuance of Shares. Notwithstanding any other provision of the Plan or any agreement entered into by the Company pursuant to the Plan, the Company shall not be obligated, and shall have no liability for failure, to issue or deliver any Shares under the Plan unless such issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel.

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     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 law.

     18. 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.

     19. Award Agreement. Awards shall be evidenced by Award agreements in such form as the Administrator shall from time to time approve.

     20. Shareholder Approval. If required by the Applicable Laws, continuance of the Plan shall be subject to approval by the shareholders of the Company within twelve (12) months before or after the date the Plan is adopted. To the extent shareholder approval is required by the Applicable Laws and is not obtained, all Awards issued under the Plan that are subject to such approval shall become void. In addition, the Company shall obtain shareholder approval prior to reducing the exercise price of any Award to the then current Fair Market Value. Such shareholder approval shall be obtained in the manner and to the degree required under the Applicable Laws.

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EX-10.106

Exhibit 10.106

1999 Equity Incentive Plan
Nonstatutory Stock Option Award Notice

Number of Shares «shares»
Date of Grant «grant_date»
Option Price Per Share «price»
Expiration Date «expiration»
Stock Option No. «grant_number»

     This certifies that «First» «Last» (“Award Recipient”) has the right to purchase up to the Number of Shares of Common Stock of Aspect Communications Corporation, a California corporation (“Aspect”), for the Option Price Per Share on or before the Expiration Date, according to the terms and conditions set forth in the Agreement for a Nonstatutory Stock Option.

     [Insert Vesting Schedule].

     By clicking the “Accept” button, Award Recipient accepts the Option according to the stated terms and conditions, including those set forth in the Agreement for a Nonstatutory Stock Option granted under the 1999 Equity Incentive Plan.

Aspect Communications Corporation

President and Chief Executive Officer

AGREEMENT FOR A NONSTATUTORY STOCK OPTION GRANTED UNDER THE
1999 EQUITY INCENTIVE PLAN

Grant of Option Aspect grants to the Award Recipient a Nonstatutory Stock Option (not intended as an Incentive Stock Option under the requirements of Section 422 of the United States Internal Revenue Code) to purchase up to the Number of Shares of Aspect Common Stock at the Option Price Per Share, in each case as stated in the Award Notice, according to the terms, definitions and provisions of the Aspect 1999 Equity Incentive Plan (the “Plan”), which is incorporated by reference into this Agreement. In the event of any inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall govern. Capitalized terms used herein but not defined have the meanings ascribed to them in the Plan.

Option Nontransferable Only the Award Recipient may exercise this Option during his or her lifetime. This Option may not be transferred in any manner other than by will or by the laws of descent and distribution. The terms and conditions of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Award Recipient.

Exercise of the Option The Award Recipient may elect to purchase vested shares of Aspect Common Stock from Aspect by exercising this Option. The purchase of vested Option shares is described as an “exercise” of this Option. The Award Recipient is advised of the following provisions that apply to any exercise of this Option:

     - Calculating Number of Exercisable Shares The number of shares eligible for exercise on a given date is determined by calculating the total number of shares that are vested and eligible for exercise as set forth in the Award Notice at that date and subtracting the number of shares of this Option previously exercised.

     - No Fractional Shares The Option may not be exercised for a fraction of a share. If at any date the calculation of the number of shares exercisable results in a whole number and a fraction, only the whole number of shares may be exercised at that date.

     - Expiration Date The Option may not be exercised in any case after the Expiration Date stated on the face of this Award Notice.

     - Early Termination of Option The Option may be exercised for up to the number of shares that are vested and eligible to be exercised as of the last day of the Award Recipient’s Continuous Service Status with Aspect or one of its eligible subsidiaries. No additional shares shall become vested and exercisable thereafter. Following termination of Continuous Service Status, shares that were vested and exercisable as of the last day of Continuous Service Status shall remain exercisable for 60 days beyond such last day. If the Award Recipient’s employment terminates by reason of permanent disability or if the Award Recipient dies while holding this Option, then the Award Recipient or his or her personal representative or beneficiaries may exercise up to the number of shares eligible on the last date of employment within six months after such termination of employment or death. If the Award Recipient’s Continuous Service Status terminates under certain circumstances related to his or her permanent disability, death or retirement, then the Award Recipient (or his or her personal representative or beneficiaries, as the case may be) may exercise the Option for up to the number of shares that are vested and eligible to be exercised under such circumstances for the applicable period specified in Section 10(c), 10(d) or 10(e) of the Plan.

Payment The amount of payment required to exercise this Option is equal to the product of the number of shares being exercised times the Option Price Per Share. Payment for the exercise price may be by personal check or wire transfer from the Award Recipient, or to the extent the Company is permitting such program on the date of exercise through a cashless-brokered exercise/same-day sale arrangement through a participating stockbroker.

Mechanics of Exercise To exercise the Option through a cash exercise, the Award Recipient should contact Aspect’s Stock Administration Department at stockadministration@aspect.com. To exercise the Option through a cashless-brokered exercise/same-day sale arrangement, the Award Recipient should log on to his or her E*Trade account at etrade.com. Following completion of appropriate Option exercise documents and delivery of payment, stock administration will coordinate with Aspect’s stock transfer agent to send the Award Recipient or his or her broker the appropriate number of shares.

Sales and Dispositions Subject to the Company’s Trading Policy and the general prohibition on trading in Company securities on the basis of material nonpublic information about the Company and its business, the Award Recipient may sell, gift or otherwise dispose of the shares received on exercise of this Option. Note that a cashless-brokered exercise/same-day sale arrangement involves a public sale of shares.

Merger, Dissolution, Etc. This Option may terminate early in the event of certain Corporate Transactions, as reflected in Section 14(b) and 14(c) of the Plan.

Adjustments in Option Shares The existence of this Option shall not in any way restrict the right of Aspect to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. If any change is made to Aspect’s outstanding common stock (whether by reason of merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination of shares, exchange of shares, or other change in corporate or capital structure of the Company) the Board of Directors may make appropriate adjustments to the kind, price per share, and maximum number of shares subject to this Option. Adjustments made by the Board of Directors will be final, as set forth in Section 14(a) of the Plan.

Employment Rights Nothing in this stock Option award or in the Plan shall confer upon the Award Recipient any right to continue in the employment or service of Aspect or any of its subsidiaries for any period of specific duration or otherwise restrict in any way the rights of Aspect, its subsidiaries, or the Award Recipient to terminate such employment or service relationship at any time for any reason.

Compliance with Laws No shares will be issued in response to a notice of exercise of this Option unless the exercise of the Option and the issuance of the shares shall comply with Applicable Law. The Company will have no liability for failure to issue shares upon attempted exercise of this Option if it cannot do so in compliance with the Applicable Laws.

Acknowledgements By clicking the “Accept” button, the Award Recipient acknowledges receipt of a copy of the Plan and the Plan Prospectus, and accepts this Option subject to all of the terms and conditions of the Plan. The Award Notice, this Agreement, and the Plan constitute the entire agreement of the parties as to the subject matter hereof, and supersede all prior understandings, undertakings and agreements among the parties, with

respect to the Option, the shares and all matters related thereto. The Award Recipient agrees to accept as final and binding all decisions and interpretations of the Board of Directors of Aspect or a Committee thereof, upon any questions arising under the Plan or with respect to this Option.

Notification of Address Change The Award Recipient agrees to notify Aspect’s Human Resources Department of any change in mailing address to facilitate correspondence about this Option.

Withholding Taxes As a condition to the exercise of Options granted hereunder, the Award Recipient shall make such arrangements as the Administrator may require for the satisfaction of any federal, state, local or foreign withholding tax or similar obligations that may arise in connection with the exercise, receipt or vesting of such Option, or with the disposition of shares following exercise of the Option. The Award Recipient agrees that, if necessary to cover any tax withholding obligations of the Award Recipient upon exercise of the Option, the Company may withhold the appropriate amount from his or her cash compensation at or after the time of such exercise. The Company shall not be required and shall have no liability for failure to issue any shares pursuant to this Option until the Award Recipient has satisfied any tax withholding or similar obligation.

Governing Law. The Option, and all determinations made and actions taken with respect thereto, shall be governed by the substantive laws, but not the choice of law rules, of the state of California.

EX-10.107

Exhibit 10.107

1999 Equity Incentive Plan
Incentive Stock Option Award Notice

Number of Shares «shares»
Date of Grant «grant_date»
Option Price Per Share «price»
Expiration Date «expiration»
Stock Option No. «grant_number»

This certifies that «First» «Last» (the “Award Recipient”) has the right to purchase up to the Number of Shares of Common Stock of Aspect Communications Corporation, a California corporation (“Aspect”), for the Option Price Per Share on or before the Expiration Date, according to the terms and conditions set forth in the Agreement for an Incentive Stock Option.

[Insert Vesting Schedule].

By clicking the “Accept” button, Award Recipient accepts the Option according to the stated terms and conditions, including those set forth in the Agreement for an Incentive Stock Option granted under the 1999 Equity Incentive Plan.

Aspect Communications Corporation

President and Chief Executive Officer

AGREEMENT FOR AN INCENTIVE STOCK OPTION GRANTED UNDER THE
1999 EQUITY INCENTIVE PLAN

Grant of Option Aspect grants to the Award Recipient an Incentive Stock Option (meaning, an option intended to be an Incentive Stock Option under the requirements of Section 422 of the United States Internal Revenue Code) to purchase up to the Number of Shares of Aspect Common Stock at the Option Price Per Share, in each case as stated in the Award Notice, according to the terms, definitions and provisions of the Aspect 1999 Equity Incentive Plan (the “Plan”), which is incorporated by reference into this Agreement. In the event of any inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall govern. Capitalized terms used herein but not defined have the meanings ascribed to them in the Plan. If any portion of this Option does not or cannot qualify as an Incentive Stock Option under Applicable Law, then such portion that does not so qualify shall be treated for all purposes as a Nonstatutory Stock Option.

Option Nontransferable Only the Award Recipient may exercise this Option during his or her lifetime. This Option may not be transferred in any manner other than by will or by the laws of descent and distribution. The terms and conditions of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Award Recipient.

Exercise of the Option The Award Recipient may elect to purchase vested shares of Aspect Common Stock from Aspect by exercising this Option. The purchase of vested Option shares is described as an “exercise” of this Option. The Award Recipient is advised of the following provisions that apply to any exercise of this Option:

     - Calculating Number of Exercisable Shares The number of shares eligible for exercise on a given date is determined by calculating the total number of shares that are vested and eligible for exercise as set forth in the Award Notice at that date and subtracting the number of shares of this Option previously exercised.

     - No Fractional Shares The Option may not be exercised for a fraction of a share. If at any date the calculation of the number of shares exercisable results in a whole number and a fraction, only the whole number of shares may be exercised at that date.

     - Expiration Date The Option may not be exercised in any case after the Expiration Date stated on the face of this Award Notice.

     - Early Termination of Option The Option may be exercised for up to the number of shares that are vested and eligible to be exercised as of the last day of the Award Recipient’s Continuous Service Status with Aspect or one of its eligible subsidiaries. No additional shares shall become vested and exercisable thereafter. Following termination of Continuous Service Status, shares that were vested and exercisable as of the last day of Continuous Service Status shall remain exercisable for 60 days beyond such last day. If the Award Recipient’s employment terminates by reason of permanent disability or if the Award Recipient dies while holding this Option, then the Award Recipient or his or her personal representative or beneficiaries may exercise up to the number of shares eligible on the last date of employment within six months after such termination of employment or death. If the Award Recipient’s Continuous Service Status terminates under certain circumstances related to his or her permanent disability, death or retirement, then the Award Recipient (or his or her personal representative or beneficiaries, as the case may be) may exercise the Option for up to the number of shares that are vested and eligible to be exercised under such circumstances for the applicable period specified in Section 10(c), 10(d) or 10(e) of the Plan.

Payment The amount of payment required to exercise this Option is equal to the product of the number of shares being exercised times the Option Price Per Share. Payment for the exercise price may be by personal check or wire transfer from the Award Recipient, or to the extent the Company is permitting such program on the date of exercise through a cashless-brokered exercise/same-day sale arrangement through a participating stockbroker.

Mechanics of Exercise To exercise the Option through a cash exercise, the Award Recipient should contact Aspect’s Stock Administration Department at stockadministration@aspect.com. To exercise the Option through a cashless-brokered exercise/same-day sale arrangement, the Award Recipient should log on to his or her E*Trade account at etrade.com. Following completion of appropriate Option exercise documents and delivery of payment,

stock administration will coordinate with Aspect’s stock transfer agent to send the Award Recipient or his or her broker the appropriate number of shares.

Sales and Dispositions Subject to the Company’s Trading Policy and the general prohibition on trading in Company securities on the basis of material nonpublic information about the Company and its business, the Award Recipient may sell, gift or otherwise dispose of the shares received on exercise of this Option. Note that a cashless-brokered exercise/same-day sale arrangement involves a public sale of shares and may result in adverse tax consequences with respect to an Incentive Stock Option.

Merger, Dissolution, Etc. This Option may terminate early in the event of certain Corporate Transactions, as reflected in Section 14(b) and 14(c) of the Plan.

Adjustments in Option Shares The existence of this Option shall not in any way restrict the right of Aspect to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. If any change is made to Aspect’s outstanding common stock (whether by reason of merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination of shares, exchange of shares, or other change in corporate or capital structure of the Company) the Board of Directors may make appropriate adjustments to the kind, price per share, and maximum number of shares subject to this Option. Adjustments made by the Board of Directors will be final, as set forth in Section 14(a) of the Plan.

Employment Rights Nothing in this stock Option award or in the Plan shall confer upon the Award Recipient any right to continue in the employment or service of Aspect or any of its subsidiaries for any period of specific duration or otherwise restrict in any way the rights of Aspect, its subsidiaries, or the Award Recipient to terminate such employment or service relationship at any time for any reason.

Compliance with Laws No shares will be issued in response to a notice of exercise of this Option unless the exercise of the Option and the issuance of the shares shall comply with Applicable Law. The Company will have no liability for failure to issue shares upon attempted exercise of this Option if it cannot do so in compliance with the Applicable Laws.

Acknowledgements By clicking the “Accept” button, the Award Recipient acknowledges receipt of a copy of the Plan and the Plan Prospectus, and accepts this Option subject to all of the terms and conditions of the Plan. The Award Notice, this Agreement, and the Plan constitute the entire agreement of the parties as to the subject matter hereof, and supersede all prior understandings, undertakings and agreements among the parties, with respect to the Option, the shares and all matters related thereto. The Award Recipient agrees to accept as final and binding all decisions and interpretations of the Board of Directors of Aspect or a Committee thereof, upon any questions arising under the Plan or with respect to this Option.

Notification of Address Change The Award Recipient agrees to notify Aspect’s Human Resources Department of any change in mailing address to facilitate correspondence about this Option.

Withholding Taxes As a condition to the exercise of Options granted hereunder, the Award Recipient shall make such arrangements as the Administrator may require for the satisfaction of any federal, state, local or foreign withholding tax or similar obligations that may arise in connection with the exercise, receipt or vesting of such Option, or with the disposition of shares following exercise of the Option. The Award Recipient agrees that, if necessary to cover any tax withholding obligations of the Award Recipient upon exercise of the Option, the Company may withhold the appropriate amount from his or her cash compensation at or after the time of such exercise. The Company shall not be required and shall have no liability for failure to issue any shares pursuant to this Option until the Award Recipient has satisfied any tax withholding or similar obligation.

Governing Law. The Option, and all determinations made and actions taken with respect thereto, shall be governed by the substantive laws, but not the choice of law rules, of the state of California.

EX-10.108

Exhibit 10.108

ASPECT COMMUNICATIONS CORPORATION
1999 Equity Incentive Plan

Form of Stock Award Agreement

     Name of Participant:                                                                      

     Date of Grant:                                                                                 

     Number of Shares of Common Stock:                                           (the “Restricted Shares”)

     [Other Information Required to be included, e.g., SSN or Grant Number:                ]

     Pursuant to the Aspect Communications Corporation 1999 Equity Incentive Plan (the “Plan”), a copy of which has been delivered to you, along with a prospectus describing the material terms of the Plan, and in accordance with the terms and conditions of the Plan and your agreement to such additional terms, conditions and restrictions as are set forth below, you have been granted as of the Date of Grant an award (the “Award”) the Restricted Shares, meaning shares of Common Stock (the “Shares”) of Aspect Communications Corporation (the “Company”). Capitalized terms used but not defined in this Stock Award Agreement (the “Agreement”) have the meanings ascribed to them in the Plan.

     1. Acceptance of Award. As a condition to the grant of this Award, you are required to accept the Award, and all the terms and conditions that apply to it, by signing this Agreement in the space indicated below. The Award is effective as of the Effective Date set forth above.

     2. Restricted Shares. The “Restricted Shares” refer to the Restricted Shares referenced above and to all securities received in replacement of such Restricted Shares, including as a result of stock dividends or splits, all securities received in replacement of such Shares in a recapitalization, merger, reorganization, exchange or similar transaction, and all new, substituted or additional securities or other property to which you are entitled by reason of your ownership of such Restricted Shares. Unless otherwise provided by the Administrator, the Company’s rights with respect to the Restricted Shares under Section 3(c) below will be assigned to a successor to the Company’s business in the event of a Change of Control and will, following such assignment, apply to the securities or other property received in replacement of such Restricted Shares.

3. Vesting Schedule; Forfeiture Conditions.

          (a) General. The Restricted Shares will vest and your right to retain them will become nonforfeitable in accordance with paragraph 3(b) below. The period beginning on the date hereof and ending on the date on which any Restricted Share becomes vested and nonforfeitable in accordance with paragraph 3(b) is referred to as the “Restriction Period” with

respect to any such Restricted Share. Each day on which you vest in any portion of the Restricted Shares (as specified in paragraph 3(b) below) is referred to as a “Vesting Date.” As of the 31st day (or 91st day if your reemployment is guaranteed by statute or contract) of a leave of absence, vesting credit will no longer accrue unless otherwise determined by the Administrator or required by contract or statute. If you return to service immediately after the end of an approved leave of absence, vesting credit shall continue to accrue from that date of continued employment.

          (b) Vesting Schedule. Subject to your remaining in Continuous Service Status through a Vesting Date, the Restricted Shares will vest and become nonforfeitable as follows:

          Percentage of Restricted Shares                           Vesting Date

          (c) Termination of Continuous Service Status. Any Restricted Shares that are not vested pursuant to paragraph 3(b) above on the date on which your Continuous Service Status terminates for any reason, including your death, disability or retirement, will be forfeited in their entirety to the Company and you will no longer have any right, claim, title or interest in or to such forfeited Restricted Shares.

4. Issuance of Certificates; Rights as Shareholder.

          (a) Issuance of Certificates. Certificates evidencing the Restricted Shares will be issued by the Company and registered in your name on the stock transfer books of the Company (through its transfer agent) promptly after the date hereof, but shall remain in the physical custody of the Company or its designee at all times during the Restriction Period. As a condition to receipt of this Award, you will deliver to the Company a stock power, duly endorsed in blank and attached hereto as Exhibit A, relating to the Restricted Shares. As soon as practicable after termination of the Restriction Period applicable to any Restricted Shares, certificate(s) for such Restricted Shares then vesting will be delivered to you or your legal representative along with the stock powers relating thereto.

          (b) Rights as Shareholder. You will become the record owner of the Restricted Shares pursuant to paragraph 1 above and will remain such until or unless such Restricted Shares are forfeited pursuant to paragraph 3 above. As the record owner, you will be entitled to all rights of a Common Stock holder of the Company, including without limitation voting rights and rights to cash and in-kind dividends, if any, on the Restricted Shares.

     5. Restrictions on Transferability. At all times during the Restriction Period, the Restricted Shares will be nontransferable, and may not be pledged, assigned or alienated in any way except by will or by the laws of descent and distribution (subject to Section 8 below) or pursuant to a qualified domestic relations order.

     6. Withholding Obligations. As a condition to receipt of the Restricted Shares, you acknowledge your obligation with respect to any tax or similar withholding obligations that may arise in connection with receipt or vesting of the Restricted Shares. The Company or its representative will have the right to take such action as may be necessary, in the Administrator’s discretion, to satisfy the obligations outlined in this Section 6. You further agree that the Company will have the right to deduct or cause to be deducted from your current compensation any federal, state, local or other taxes required by law to be withheld or paid with respect to such event. In addition, you agree that the Company will have the right to require you to withhold that number of Restricted Shares subject to the Award having a Fair Market Value equal to the aggregate amount of the withholding obligation. You understand that the Company’s rights to ensure satisfaction of applicable withholding obligations with respect to the Award and the Restricted Shares, either through the Company’s withholding Restricted Shares subject to the Award, or through your sale of the Restricted Shares themselves, or through other sources of funds that may be available to you, may require planning on your part, in advance of the expected Vesting Date(s) specified in Section 3(b) above. The Company may also in lieu of or in addition to the foregoing, at its sole discretion, require you to deposit with the Company an amount of cash sufficient to meet the withholding requirements. The Company will not deliver any of the Shares until and unless you have made proper provision for all applicable tax and similar withholding obligations.

     7. Other Tax Matters. You have reviewed with your own tax advisors the federal, state, local and other tax consequences, including those in addition to any tax withholding obligations you may have, of your investment in the Restricted Shares and the transactions contemplated by this Agreement. You acknowledge that you are relying solely on such advisors, and not on the Company or its agents or advisors, with respect to such tax consequences. You acknowledge your receipt of the Company’s prospectus relating to the Plan, which contains certain information regarding tax issues affecting the Award, including your right under U.S. federal income tax law to make an election which affects the timing of your recognition of income with respect to the Award under Section 83 of the Code ( a copy of the form of election is attached hereto as Exhibit B). You understand and agree that, should you choose to file an election under Code Section 83(b), the filing of this election is your responsibility and you must notify the Company of the fact of your filing on or prior to the day of making the filing.

     8. Designation of Beneficiaries. You may, in accordance with procedures established by the Administrator, designate one or more beneficiaries to receive all or part of any Restricted Shares to be distributed to you hereunder in the case of your death, and you may change or revoke such designation at any time; provided, however, that in the event you are married and reside in or are otherwise subject to the laws of a community property state or jurisdiction, and you desire to designate a beneficiary other than your spouse, you will be required to obtain your spouse’s signature consenting to such designation. In the event of your death, any Restricted Shares distributable hereunder that are subject to such a designation (to the extent such a designation is enforceable under applicable law) will be distributed to such beneficiary or beneficiaries in accordance with this Agreement. Any other Restricted Shares distributable will be distributed to your estate. If there is any question as to the legal right of any beneficiary to receive a distribution hereunder, the amount in question will be paid over to your

estate, in which event neither the Company nor any affiliate of the Company will have any further liability to anyone with respect to such amount.

     9. General. This Agreement, together with the Plan, represent the entire agreement between the Company and you with respect to the Restricted Shares. To the extent the provisions of this Agreement conflict with the terms of the Plan, the Plan provisions will govern.

     By your signature below, you indicate your acceptance of the terms of this Stock Award Agreement, and acknowledge that you have received copies of the Plan and the prospectus, in each case as currently in effect. You also acknowledge and agree that your rights to any Restricted Shares will be earned only as you provide services to the Company over time, and that nothing in the grant of this Award or this Agreement confers upon you any right to continue in the employ of the Company for any period of time, nor does it interfere in any way with your or the Company’s right to terminate your employment or consulting relationship at any time, for any reason, with or without Cause.

     By signing this Agreement, you acknowledge that your personal employment information regarding participation in the Plan and information necessary to determine and pay, if applicable, benefits under the Plan must be shared with other entities, including companies related to the Company and persons responsible for certain acts in the administration of the Plan. By signing this Agreement, you consent to such transmission of personal data as the Company believes is appropriate to administer the Plan.

Accepted and Agreed to by Participant:                                                             

Acknowledged and Agreed to by Company:                                         

                                                              Title:                                         

I, ______________________, spouse of ______________________, have read and hereby approve the foregoing Agreement. In consideration of the Company’s granting my spouse the Award as set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement and further agree that any community property or similar interest that I may have in the Shares shall hereby be similarly bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.

Spouse of Participant

Exhibit A

Stock Power

ASSIGNMENT SEPARATE FROM CERTIFICATE

     FOR VALUE RECEIVED and pursuant to that certain Stock Award Agreement between the undersigned (“Purchaser”) and Aspect Communications Corporation (the “Company”) dated ___, ___(the “Agreement”), Participant hereby sells, assigns and transfers unto the Company ___(___) shares of the Common Stock of the Company, standing in Purchaser’s name on the books of the Company and represented by Certificate No. ___, and does hereby irrevocably constitute and appoint ___to transfer said stock on the books of the Company with full power of substitution in the premises. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND THE ATTACHMENTS THERETO.

Dated:                                                             
Signature:                                                             

Spouse of Participant (if applicable):                                         

Instruction: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its rights with respect to certain forfeiture restrictions that apply to the Award without requiring additional signatures on the part of Participant.

Exhibit B

ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986

     The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code, to include in taxpayer’s gross income or alternative minimum taxable income, as applicable, for the current taxable year, the amount of any income that may be taxable to taxpayer in connection with taxpayer’s receipt of the property described below:

1.	The name, address, taxpayer identification number and taxable year of the undersigned are as follows:
	NAME OF TAXPAYER:
	NAME OF SPOUSE:
	ADDRESS:
	IDENTIFICATION NO. OF TAXPAYER:
	IDENTIFICATION NO. OF SPOUSE:
	TAXABLE YEAR:
2.	The property with respect to which the election is made is described as follows:
	shares of the Common Stock of Aspect Communications Corporation, a California corporation (the “Company”).
3.	The date on which the property was transferred is:
4.	The property is subject to the following restrictions:
	Forfeiture restriction in favor of the Company upon termination of taxpayer’s employment or consulting relationship with the Company.
5.	The Fair Market Value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is: $
6.	The amount (if any) paid for such property: $0

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated:	Signature:
Dated:	Spouse’s Signature:

EX-10.109

Exhibit 10.109

via Inter-office Mail

February 27, 2005

FIRST NAME LAST NAME
TITLE
Aspect Communications
San Jose, CA 95131

     Dear «First_Name»:

     This letter agreement (the “Agreement”) is to confirm the terms of your ongoing employment with Aspect Communications Corporation (the “Company”) and supersedes and replaces all prior oral and/or written agreements regarding the subject matter hereof between you and the Company.

     1. This Agreement will commence on the date hereof and continue until February 28, 2006 (the “Original Term”), unless extended for one or more additional one-year terms upon mutual written agreement between you and the Company or unless terminated pursuant to the terms described herein. In no way limiting the foregoing, if the Company has not affirmatively renewed or terminated this Agreement as of the expiration of the Original Term or any extension thereof, this Agreement will be extended for a series of successive one month periods, pending an affirmative decision by the Company to either renew or not renew the Agreement. Affirmative renewal or termination by the Company shall be evidenced by the adoption of resolutions by the Compensation Committee of the Board of Directors of the Company (the “Committee”), or, alternatively, by the Board of Directors. In addition, in the event that the Company has entered into discussions with a third party regarding a Change of Control in the beneficial ownership of the Company (as defined below) and such Change of Control discussions are ongoing at the end of the Original Term or any extension (including any one month extension as provided for above), this Agreement automatically shall be extended until the later of (a) the end of a period of eighteen (18) months following the closing of such Change of Control transaction or (b) the time that the parties have ceased their discussions.

     2. Your title, reporting structure, job duties and responsibilities are described on Exhibit A attached hereto. As a condition to your continuing employment, you agree to execute and comply with the terms of the Confidential Information and Invention Assignment Agreement (the “Confidentiality Agreement”) that is attached to this Agreement as Exhibit B. You agree to the best of your ability and experience that you will, to the reasonable satisfaction of the Company and its Board, at all times loyally and conscientiously perform all of the duties and obligations required of you pursuant to the terms of this Agreement; provided, however, that you shall not be precluded from engaging in civic, charitable or religious activities, or from serving on the boards of directors of other business entities with the prior written approval of the Board of Directors of the Company (the “Board”), so long as such activities or service do not interfere with your

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responsibilities to the Company hereunder. You will comply with and be bound by the Company’s operating policies, procedures and practices in effect from time to time during the term of your employment. You will devote your best efforts to the interest of the Company and will not engage in other employment with any Company customer, competitor or supplier without the prior written consent of the Company’s Board of Directors. You will not accept any other position if such position will impair your ability to fulfill your obligations to the Company.

     3. You acknowledge that your employment is and will continue to be at-will, meaning that your employment with the Company may be terminated by either you or the Company at any time for any or no reason, with or without cause, and with or without notice. If your employment terminates for any reason, you will not be entitled to any payments, benefits, damages, award or compensation other than as provided in this Agreement. Notwithstanding the foregoing, upon the termination of your employment for any reason, you still shall have the right to receive (i) payment of regular base salary and any unpaid target bonus, in either case as earned but unpaid through the date of termination, (ii) payment of all of your accrued and unused vacation through the date of termination, (iii) following your submission of proper expense reports, reimbursement by the Company for all expenses reasonably and necessarily incurred by you in connection with the business of the Company prior to termination, (iv) vested contributions and earnings from the Company’s 401(k) plan, and (v) any post-termination benefits under the Company’s then-applicable employee benefit plans, policies or arrangements in accordance with the terms of such plans, policies and arrangements. Any payments described in this Section shall be made promptly upon termination, but in any event in compliance with applicable law and any applicable terms of the Company’s plans, policies, and arrangements. The rights and duties created by this Section may not be modified in any way except by a written agreement executed by the Chairman of the Board (COB), President & Chief Executive Officer (CEO) and the Board of Directors, as appropriate depending upon your position, on behalf of the Company.

     4. If your employment is terminated by the Company without Cause (as defined below) and other than as a result of your death or disability, or if your employment is terminated by you as a result of a Constructive Termination (as defined below), in either case in the period of time beginning three (3) months prior to the effective date of a Change of Control and ending thirteen (13) months following the effective date of a Change of Control, then, subject to your obligations and such other terms and conditions as described herein, including without limitation those set forth in Sections 8, 18 and 19 below, the Company will provide you with the following severance benefits:

(a)   The Company will pay you a pro-rated amount equal to the sum of (i) your regular base salary (at the rate that is in effect on the date of your termination or as of immediately prior to the effective date of the Change of Control, whichever is greater) for the period specified below, plus (ii) an amount equal to the Bonus Amount (as defined below) [times [B] 1.5 — for CEO only], which aggregate amount shall be paid in equal proportional amounts pursuant to the Company’s regular payroll

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	schedule for a period of [twelve (12)/eighteen (18)] months (the “Severance Period”).
	The “Bonus Amount” shall be calculated as follows: (1) if you were either not employed by the Company during the year immediately prior to the year in which your employment is terminated or you did not in such prior year hold the position you hold at the time your employment is terminated, then the amount shall be calculated using the three-year average of the actual percentage payment against the Aspect Executive Incentive Plan times your annual target bonus for the year of termination, or (2) if you have been employed by the Company during the prior year in the position you hold at the time of termination, then the amount shall be calculated using the average of your actual annual incentive bonus paid during the three years immediately prior to the year in which your employment terminates (or such shorter period as you have been employed with the Company in the position you occupy at the time of termination, but in any case annualized for a partial year), provided that this average shall not exceed your target bonus for the year of employment termination
(b)	Provided that you make a timely election to continue coverage under the Company’s group medical insurance plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company will pay the applicable premiums for you and your eligible dependents for such continued coverage for the lesser of the Severance Period or until you become eligible for comparable group medical insurance benefits from another employer or are otherwise ineligible for COBRA continuation coverage. Nothing in this Section 4 shall restrict the ability of the Company or its successor from changing some or all of the terms of such health insurance benefits, provided that all similarly situated participants are treated the same.
(c)	With respect to any stock option you hold that is not otherwise fully exercisable and vested as of the termination date, such stock options will become fully vested as of immediately prior to the termination of your employment with the Company, and will thereafter become exercisable as to those shares that become vested pursuant to this Section 4(c) over the Severance Period in eighteen (18) equal monthly installments, such that, subject to your continued compliance with the terms of this Agreement
	throughout the Severance Period, these stock options will be fully vested and exercisable as of the end of the Severance Period. Any other Company equity award that is not fully vested and/or nonforfeitable as of the termination date shall similarly become fully vested as of immediately prior to the termination of your employment, but shall remain forfeitable to the Company

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during the Severance Period in accordance with the following sentence. If the Company determines at any point during the Severance Period that you are not in compliance with your obligations pursuant to this Agreement, you will have no right to exercise the stock options as to, and you will forfeit all right, title and interest in or to, any option shares which, pursuant to this Section 4(c), have not become exercisable as of the first date on which you were not in compliance with such obligations; and further, the shares subject to any other Company equity award the vesting of which was accelerated in connection termination of your employment under this Section 4(c) (the “Accelerated Shares”) shall in the event you fail to comply with your obligations under this Agreement during the Severance Period be forfeitable to the Company (or, in the event you have sold or transferred such shares at the time of any noncompliance, the Company may recover from you any proceeds received by you in connection with your sale or transfer of such shares) but only to the extent of those shares or proceeds from those shares that equal the total number of Accelerated Shares multiplied by the quotient of (a) (1) 18 minus (2) the number of full months remaining in 18-month the period beginning on the termination date as of the month in which the events giving rise to the noncompliance occurs, divided by (b) 18. In connection with this Section 4(c), the Company will amend your current stock options to provide that such awards will be exercisable as to any vested shares following the termination of your employment until the later of ninety (90) days following your termination date, or, if you are eligible for acceleration of vesting and exercisability pursuant to this Section 4(c), until the ninetieth (90^th) day following the date on which the final installment of each respective stock option became exercisable. In no event shall any stock option subject to this Section 4(c) be exercisable following the expiration of the original term of such stock option.

               Notwithstanding the foregoing, you shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise nor, except for your eligibility for COBRA continuation coverage set forth in b.) above and except as set forth in Sections 18 and 19 below, shall the amount of any payment or benefit provided for in this Section be reduced or otherwise affected by any compensation or benefits received by you as a result of employment by another employer or self-employment, by any retirement benefits regardless of source, by offset against any amount claimed to be owed by you to the Company, or otherwise.

               Any severance benefits described herein will be subject to applicable tax withholdings and, except to the extent specifically required by applicable law, you will be responsible for all taxes arising in connection with any severance benefits provided for hereunder and you agree to fully indemnify the Company from and

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against any tax liability arising as a result of your receipt or entitlement to such severance benefits.

     5. In the event that the severance benefits provided to you by this Agreement (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or any comparable successor provisions, and (ii) but for this Section would be subject to the excise tax imposed by Section 4999 of the Code, or any comparable successor provisions (the “Excise Tax”), then your benefits hereunder shall be either

(i)	provided to you in full, or
(ii)	provided to you as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax,

whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by you, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Company and you agree otherwise in writing, any determination required under this Section shall be made in writing in good faith by a qualified third party (the “Professional Service Firm”). In the event of a reduction of benefits hereunder, the cash benefits provided under Sections 4(a) and (b) shall be reduced first and, to the extent reduction of such cash benefits is insufficient to avoid liability under the Excise Tax in the manner intended under this Section, then the benefits set forth in Section 4(c) shall be reduced to the extent necessary to avoid such liability. For purposes of making the calculations required by this Section, the Professional Service Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code, and other applicable legal authority. The Company and you shall furnish to the Professional Service Firm such information and documents as the Professional Service Firm may reasonably request in order to make a determination under this Section 5. The Company shall bear all costs the Professional Service Firm may reasonably incur in connection with any calculations contemplated by this Section.

               If, notwithstanding any reduction described in this Section, the Internal Revenue Service (“IRS”) determines that you are liable for the Excise Tax as a result of the receipt of the payment of benefits described above, then you shall be obligated to pay back to the Company, within thirty (30) days after a final IRS determination or in the event that you challenge the final IRS determination, a final judicial determination, a portion of the payment equal to the “Repayment Amount.” The Repayment Amount with respect to the payment of benefits shall be the smallest amount, if any, as shall be required to be paid to the Company so that your net after-tax proceeds with respect to any payment of benefits (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized. The Repayment Amount with respect to the payment of benefits shall be zero if a Repayment Amount of more than zero would not result in your net

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after-tax proceeds with respect to the payment of such benefits being maximized. If the Excise Tax is not eliminated pursuant to this Section or otherwise pursuant to this Section 5, then you shall pay the Excise Tax and the Company shall not bear any liability to you or any other party for taxes, interest, penalties or additions to tax as a result of your being subject to the Excise Tax. To the extent that the Company becomes liable to any party for any amount as a result of your being subject to the Excise Tax, you shall indemnify the Company for such amount.

               Notwithstanding any other provision of this Section, if (i) there is a reduction in the payment of benefits as described in this Section, (ii) the IRS later determines that you are liable for the Excise Tax, the payment of which would result in the maximization of your net after-tax proceeds (calculated as if your benefits previously had not been reduced), and (iii) you pay the Excise Tax, then the Company shall pay to you those benefits which were reduced pursuant to this Section contemporaneously or as soon as administratively possible after you pay the Excise Tax so that your net after-tax proceeds with respect to the payment of benefits is maximized.

     6. For purposes of this Agreement, the following definitions will apply:

               (a) “Cause” for your termination will exist if the Company terminates your employment for any of the following reasons: (i) you willfully fail to substantially perform your duties hereunder (other than any such failure due to your physical or mental illness), and such willful failure is not remedied within ten (10) business days after written notice, which written notice shall state that failure to remedy such conduct may result in an involuntary termination for Cause; (ii) you engage in willful and serious misconduct (including, but not limited to, an act of fraud or embezzlement against the Company) that has caused or is reasonably expected to result in material injury to the Company or any of its affiliates, or any act that constitutes any knowing misrepresentation involving or related to the Company’s financial statements, (iii) you are convicted of or enter a plea of guilty or nolo contendere to a crime that constitutes a felony related to your employment with the Company or a crime that materially adversely affects your ability to perform your duties on behalf of the Company, or (iv) you willfully breach any of your obligations hereunder or under any other written agreement or covenant with the Company or any of its affiliates, including, but not limited to, the Confidentiality Agreement, and such willful breach is not remedied within ten (10) business days after written notice from the Company’s Chief Executive Officer or the Board of Directors, which written notice shall state that failure to remedy such conduct may result in an involuntary termination for Cause.

               (b) “Change of Control” will mean (i) a dissolution or liquidation of the Company; (ii) a sale, lease or other disposition of all or substantially all of the assets of the Company so long as the Company’s stockholders of record immediately prior to such transaction will, immediately after such transaction, fail to possess direct or indirect beneficial ownership of more than fifty percent (50%) of the voting power of the acquiring entity (for purposes of this clause 6(b)(ii), any person who acquired securities of the Company prior to the occurrence of such asset transaction in contemplation of such transaction and who after such

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transaction possesses direct or indirect ownership of at least ten percent (10%) of the securities of the acquiring entity immediately following such transaction shall not be included in the group of stockholders of the Company immediately prior to such transaction); (iii) either a merger or consolidation in which the Company is not the surviving corporation and the stockholders of the Company immediately prior to the merger or consolidation fail to possess direct or indirect beneficial ownership of more than fifty percent (50%) of the voting power of the securities of the surviving corporation (or if the surviving corporation is a controlled affiliate of another entity, then the required beneficial ownership shall be determined with respect to the securities of that entity which controls the surviving corporation and is not itself a controlled affiliate of any other entity) immediately following such transaction, or a reverse merger in which the Company is the surviving corporation and the stockholders of the Company immediately prior to the reverse merger fail to possess direct or indirect beneficial ownership of more than fifty percent (50%) of the securities of the Company (or if the Company is a controlled affiliate of another entity, then the required beneficial ownership shall be determined with respect to the securities of that entity which controls the Company and is not itself a controlled affiliate of any other entity) immediately following the reverse merger (for purposes of this clause 6(b)(iii), any person who acquired securities of the Company prior to the occurrence of a merger, reverse merger, or consolidation in contemplation of such transaction and who after such transaction possesses direct or indirect beneficial ownership of at least ten percent (10%) of the securities of the Company or the surviving corporation (or if the Company or the surviving corporation is a controlled affiliate, then of the appropriate entity as determined above) immediately following such transaction shall not be included in the group of stockholders of the Company immediately prior to such transaction); (iv) an acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or a subsidiary or other controlled affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors; or (v) the individuals who, as of the date of this Agreement, are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least fifty percent (50%) of the Board. If the election, or nomination for election by the Company’s stockholders, of any new director was approved by a vote of at least fifty percent (50%) of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board.

               (c) “Constructive Termination” will be deemed to occur if you resign from any and all positions which you hold with the Company (including any membership on the Company’s Board of Directors) within forty-five (45) days immediately after one or more of the following events: (i) your duties and responsibilities to the Company (or a successor corporation) in the position listed on Exhibit A are materially diminished relative to your duties and responsibilities as in effect at any time from the time immediately prior to the occurrence of a Change of Control or at any time thereafter, without your prior written consent; (ii) you are subject to any reduction in the total value of your base compensation and benefits,

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provided that an across-the-board reduction in the base compensation and benefits of all other employees or consultants in positions similar to yours by the same percentage amount (or under the same terms and conditions) as part of a general base compensation reduction and/or benefit reduction shall not constitute such a qualifying reduction; or (iii) without your prior written consent, the principal place at which you perform your employment duties and responsibilities is relocated such that your new business office location results in a commute for you that is both (A) longer than your commute prior to the relocation and (B) greater than fifty (50) miles each way. For purposes of this definition and this Agreement, however, a change in title with substantially the same duties and responsibilities shall not be considered a Constructive Termination, should you have continuing responsibilities for the acquirer which are substantially the same as those you had for the Company prior to the Change of Control transaction.

     7. You hereby represent and warrant to the Company that you have, during your employment with the Company, complied with all obligations under the Confidentiality Agreement. You further agree that the provisions of the Confidentiality Agreement will survive any termination of this Agreement or of your employment relationship with the Company.

     8. Upon your involuntary termination of employment other than for Cause or upon your voluntary termination as a result of a Constructive Termination, in either case in the manner set forth in Section 4 above, and as a condition of the receipt of any benefits under this Agreement, you shall execute a release of all legal claims against the Company related to your employment on a form prepared by the Company (a “Release”). If you do not execute a Release within the period set forth in the Release (which period shall not be shorter than seven (7) days and shall not be longer than forty-five (45) days), or if you are given the right to revoke such Release and you choose to so revoke such Release within the subsequent seven (7) business day period, you will have no right to receive any of the benefits described in Section 4 above.

     9. You represent that you have not entered into any agreements, understandings, or arrangements with any other person or entity which would be breached by you as a result of, or that would in any way preclude or prohibit you from, entering into this Agreement or performing any of the duties and responsibilities provided for herein.

     10. Any successor to the Company as a result of the occurrence of a Change of Control (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) or otherwise which succeeds to all or substantially all of the Company’s business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this Section or which becomes bound by the terms of this Agreement by operation of law.

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          The terms of this Agreement and all of your rights hereunder shall inure to the benefit of, and be enforceable by, your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees or legatees.

     11. This Agreement, including any Exhibits hereto, constitutes the sole agreement of the parties and supersedes all negotiations and prior agreements with respect to the subject matter hereof, i.e., the rights and responsibilities of you and the Company in the event of certain terminations of your employment with the Company relating to the occurrence of a Change of Control.

     12. Any term of this Agreement may be amended or waived only with the written consent of the parties; provided however that you and the Company acknowledge that it is your mutual intent that no benefit arising under this Agreement shall be subject to the provisions of Code Section 409A(a)(1)(B), and you further agree that the Committee shall have the authority (but not the obligation) to amend without your consent the provisions of Section 4 in a manner designed to avoid application of Code Section 409A(a)(1)(B) to any payment arising thereunder; and provided further that the Company shall have no liability for failure to amend this Agreement in the manner specified in the preceding proviso.

     13. Any notice required or permitted by this Agreement will be in writing and will be deemed sufficient upon receipt, when delivered personally, by facsimile or email, or by a nationally-recognized delivery service (such as Federal Express or Express Mail), or 72 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if such notice is addressed to the party to be notified at such party’s address as set forth below or as subsequently modified by written notice.

     14. The validity, interpretation, construction, and performance of this Agreement will be governed by the laws of the State of California, without giving effect to the principles of conflict of laws.

     15. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to re-negotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision will be excluded from this Agreement, (ii) the balance of the Agreement will be interpreted as if such provision were so excluded, modified or replaced and (iii) the balance of the Agreement will be enforceable in accordance with its terms. Specifically with respect to the covenants contained in Sections 18 and 19 below, the parties intend that such covenants shall be construed as a series of separate covenants, one for each city, county, state, nation and other political subdivision of the Business Area (as defined in Section 19 below). If, in any judicial, mediation or arbitration proceeding, a court, mediator or arbitrator shall refuse to enforce any of the separate covenants (or any part thereof) deemed included in such Sections, then any such unenforceable covenant (or such part) shall be deemed eliminated from this Agreement for the purpose of those proceedings to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced by such court, mediator or arbitrator. It is the intent of the parties that the covenants set forth in this Agreement be

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enforced to the maximum degree permitted by applicable law. Further, in the event that any of the provisions of Sections 18 or 19 should be deemed to exceed the scope, time or geographic limitations of applicable law regarding covenants not to compete, then such provisions shall be automatically reformed to the maximum scope, time or geographic limitations, as the case may be, permitted by applicable laws.

     16. You and the Company agree to attempt to settle any disputes arising in connection with this Agreement through good faith consultation. In the event that we are not able to resolve any such disputes within fifteen (15) days after notification in writing to the other, we agree that any dispute or claim arising out of or in connection with this Agreement will be finally settled by binding arbitration in Santa Clara County, California in accordance with the rules of the American Arbitration Association by one arbitrator mutually agreed upon by the parties. The arbitrator will apply California law, without reference to rules of conflicts of law or rules of statutory arbitration, to the resolution of any dispute. Except as set forth in Sections 12 and 15, the arbitrator shall not have authority to modify the terms of this Agreement. The Company shall pay the costs of the arbitration proceeding; provided however that each party shall, unless otherwise determined by the arbitrator, bear its, his or her own attorneys’ fees and expenses. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this Section, without breach of this arbitration provision.

     17. You acknowledge that, in executing this Agreement, you have had the opportunity to seek the advice of independent legal counsel, that you have done so or knowingly declined to do so, and you have read and understood all of the terms and provisions of this Agreement.

     18. You agree that during the term of your employment (and any concurrent or subsequent consulting relationship) with the Company, and for a period of eighteen (18) months immediately thereafter, you will not either directly or indirectly solicit, induce, recruit or encourage any of the Company’s employees or consultants to terminate their relationship with the Company, or attempt to solicit, induce, recruit, encourage or take away employees or consultants of the Company, either for your own benefit or for the benefit of any other person or entity. Further, during your employment (and any concurrent or subsequent consulting relationship) with the Company and at any time thereafter, you will not use any confidential or proprietary information of the Company to attempt to negatively influence any of the Company’s clients or customers from purchasing Company products or services or to solicit or influence or attempt to solicit or influence any client, customer or other person either directly or indirectly, to direct his, her or its purchase of products and/or services to any person, firm, corporation, institution or other entity in competition with the business of the Company. You acknowledge that upon your breach of this Section 18, the Company would sustain irreparable harm from such breach, and, therefore, you agree that in addition to any other remedies which the Company may have under this Agreement or otherwise, the Company’s obligations to provide the benefits to you as described in Section 4 above shall immediately terminate, you shall have no claim to receive such benefits from the Company, the Release referred to in

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Section 8 above shall remain in all respects valid and binding, and the Company shall be entitled to obtain equitable relief, including specific performance and injunctions, restraining you from committing or continuing any such violation of this Section 18.

     19. If your employment is terminated under the circumstances set forth in Section 4 above, you agree that for a period of eighteen (18) months immediately following the termination of your employment, you will not (i) enter into or participate in the business of developing, marketing and servicing hardware and software related to contact centers, including those involving voice-over IP, traditional telephony, e-mail, voicemail, Web, fax, and wireless business communications of the type developed, marketed or serviced or being developed or proposed to be developed, marketed or serviced by the Company as of the date of termination of employment (the “Restricted Business”) or (ii) directly or indirectly own, manage, operate, control or otherwise engage or participate in, or become connected as an owner, partner, principal, creditor, salesman, guarantor, advisor, member of the board of directors of, employee of or consultant in any entity or business, or any division, group or other subset of any business, engaged in the Restricted Business. Subject to Section 15 above, the restrictions set forth in this Section 19 shall apply worldwide (the “Business Area”).

         (a) You acknowledge that upon your breach of this Section 19, the Company would sustain irreparable harm from such breach, and, therefore, you agree that in addition to any other remedies which the Company may have under this Agreement or otherwise, the Company’s obligations to provide the benefits to you as described in Section 4 above shall immediately terminate, you shall have no claim to receive such benefits from the Company, the Release referred to in Section 8 above shall remain in all respects valid and binding, and the Company shall be entitled to obtain equitable relief, including specific performance and injunctions, restraining you from committing or continuing any such violation of this Section 19.

          (b) You agree that you will be able to earn a livelihood without violating the restrictions set forth in this Section 19. You agree that the character, duration and geographical scope of Section 19 are reasonable in light of the circumstances as they exist on the effective date of this Agreement.

     20. You agree not to enter into any agreement, either written or oral, in conflict with the provisions of this Agreement. You certify that, to the best of your information and belief, you are not a party to any other agreement that will interfere with your full compliance with this Agreement.

     21. This Agreement (i) shall survive your employment by the Company (ii) does not in any way restrict your right or the right of the Company to terminate your employment, (iii) inures to the benefit of successors and assignees of the Company, and (iv) is binding upon your heirs and legal representatives.

     22. You certify an acknowledge that you have carefully read all of the provisions of the agreement and that you understand and will fully and faithfully comply with such provisions.

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Please indicate your agreement with the above terms by signing below.

Sincerely,

Aspect Communications Corporation

By:                                                                

Date:                                                             

Title:

Address:	1310 Ridder Park Drive
	San Jose, CA 95131

Facsimile Number: (408) 325-2261

My signature below signifies my agreement with the above terms.

By:                                                                                                                         

Address:                                                                                                     

Date:                                                                                 

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EXHIBIT A

Description of Title, Reporting Structure,
Job Duties and Responsibilities

FIRST NAME LAST NAME — TITLE

Aspect Communications Corporation

By:                                                               

Title:                                                             

Date:                                                             

Address:	1310 Ridder Park Drive
	San Jose, CA 95131

Facsimile Number: (408) 325-2261

     My signature below signifies my agreement with the above terms.

By:                                                                  

Date:                                                               

Address:                                                          

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EXHIBIT B

Confidentiality Agreement

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EX-31.1

Exhibit 31.1

CERTIFICATION of CHIEF EXECUTIVE OFFICER
PURSUANT to RULE 13a-14(a)[Section 302]

I, Gary E. Barnett, certify that:

1.	I have reviewed this Form 10-Q of Aspect Communications Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Gary E. Barnett Gary E. Barnett
President and Chief Executive Officer
May 10, 2005

EX-31.2

Exhibit 31.2

CERTIFICATION of CHIEF FINANCIAL OFFICER
PURSUANT to RULE 13a-14(a)[Section 302]

I, James C. Reagan, certify that:

1.	I have reviewed this report on Form 10-Q of Aspect Communications Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ James C. Reagan

James C. Reagan

Executive Vice President and

Chief Financial Officer

May 10, 2005

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Aspect Communications Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Gary E. Barnett, President, Chief Executive Officer of the Company and Director and James C. Reagan, Executive Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Gary E. Barnett	/s/ James C. Reagan
Gary E. Barnett President and Chief Executive Officer May 10, 2005	James C. Reagan Executive Vice President and Chief Financial Officer May 10, 2005