$10,000,000 SUBORDINATED BRIDGE LINE OF CREDIT

THIS AGREEMENT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED UNDER ANY SECURITIES LAW. THIS AGREEMENT MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS UNLESS THE PROPOSED TRANSACTION DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND, IF REQUESTED BY MAKER, MAKER SHALL HAVE RECEIVED AN OPINION OF COUNSEL (IN FORM AND CONTENT REASONABLY SATISFACTORY TO MAKER) TO SUCH EFFECT.



January 22, 1997



BEA Systems, Inc. 385 Moffett Park Drive, #105 Sunnyvale, California 94089 Attn: Chief Financial Officer



Re: $10,000,000 SUBORDINATED BRIDGE LINE OF CREDIT



Ladies and Gentlemen:



This letter agreement (the "Agreement") sets forth the terms and conditions of the subordinated bridge line of credit (the "Line") which Warburg, Pincus Ventures, L.P. ("Lender") has agreed to establish for BEA Systems, Inc., a Delaware corporation ("Borrower"), and to which Borrower has agreed as evidenced by Borrower's signing and returning to Lender the enclosed copy of this Agreement:



1. Subject to the terms and conditions of this Agreement, Lender agrees from time to time to make advances (collectively and severally, the "Advances" and, severally, an "Advance") under the Line to Borrower; provided, however, that the aggregate amount of Advances outstanding to Borrower under the Line shall not exceed $10,000,000 at any time.



2. All Advances made to Borrower hereunder shall be payable in full in accordance with paragraph 3 hereof on the date that is the earlier of (the "Maturity Date") (i) five (5) business days after the occurrence of an initial public offering of the common stock of Borrower, and (ii) July 22,





(a) PAYMENT OPTIONS. If the Advances are to be repaid on the Maturity Date described in clause (i) of paragraph 2, Borrower shall repay the Advances and interest accrued thereon (the "Credit Line Liability"), at Lender's option, (i) in immediately available funds by wire transfer to an account designated in writing by Lender to Borrower, or (ii) by converting the Credit Line Liability into shares of common stock of Borrower in accordance with clauses (b) - (d) of this paragraph 3.







(b) CONDITIONS PRECEDENT TO CONVERSION. The Credit Line Liability is convertible (in whole but not in part) into common stock of Borrower (the "Common Stock") at the option of Lender upon written notice for a five (5) day period following the date on which Borrower has completed an initial public offering of Common Stock in a firm commitment underwritten offering consummated pursuant to a Registration Statement filed with the Securities and Exchange Commission on or prior to February 28, 1997 (the "Initial Public Offering") filed under the Securities Act of 1933, as amended (the "Securities Act") and effective under the Securities Act.



(c) CONVERSION RATE. Upon any conversion of the Credit Line Liability pursuant to Paragraph 3(b), the Lender shall be entitled to receive that number of shares of Common Stock equal to the Credit Line Liability DIVIDED BY the Conversion Value (as hereinafter defined). The "Conversion Value" shall be an amount equal to the gross proceeds per share of Common Stock paid to Borrower (as reduced for underwriting commissions and discounts as calculated on a per share basis) pursuant to the Initial Public Offering described in Paragraph 3(b). Fractional shares shall not be issued, and Borrower shall make a cash payment to Lender on the conversion date for an amount equal to any fractional shares.



(d) CONVERSION PROCEDURES. In order to convert the Credit Line Liability into Common Stock as permitted hereunder, Lender shall deliver to Borrower at any time prior to expiration of the five (5) day period provided in Paragraph 3(b) above (i) this Agreement, and (ii) a written notice stating that this Agreement is being surrendered for conversion into Common Stock to the extent of the amount of the Credit Line Liability. Borrower shall, within ten (10) business days following the closing of the Initial Public Offering issue and deliver to Lender a certificate or certificates representing the aggregate number of fully paid and nonassessable shares of Common Stock of Borrower issuable upon such conversion pursuant to the terms of Paragraph 3(c) (the "Shares"). Such certificate or certificates shall be deemed to have been issued and the Lender shall be deemed to have become a holder of record of such Shares on the later of the closing of the Initial Public Offering or the date the Lender delivers this Agreement and its notice of conversion to Borrower. Borrower shall cancel this Agreement upon the issuance and delivery of the certificate or certificates for ...